Airlines want credit where credit is due so they will be taking a hard look at airline payment processor SITA's new Horizon PaymentServices platform, which is geared for direct-selling.
Unveiled at SITA's Air Transport IT Summit in Brussels today, Horizon PaymentServices is part of the organization's Horizon Passenger Service System.
For “a low cost” transaction, the infrastructure can provide a single entry point to the world of payment services with a wide variety of different payment vendors and types enabled. It will have a business rule service so that the single connection can support multiple rule sets for each channel as required.
Horizon PaymentServices, which is available to airlines whether they are Horizon customers or not, in theory will have value for the airlines.
By simplifying the plethora of functions and requirements to have multiple payment gateways, this multi-currency, multilingual platform will not replace payment service providers, but will simplify the connection process.
For many airlines, this will enable them to save money and eliminate the number of gateways they currently use.
These clearly are early days, but this service holds great promise in enabling airlines to gain back some control over their payment processes.
Will it save them money over the long run? I believe so. However, it will require the airlines to be better managers.
The new platform is no panacea, but it was certain that something needed to be done. For those in the payment gateway business, the new product serves notice that the airline world is opening up.
For the airlines, a new era of control becomes possible. Let’s hope that the cost structure is commensurate with the service provision and that Horizon PaymentServices doesn’t end up being cost and bureaucracy additive.
Airlines have long been struggling with the entire payments process, and this has been a festering sore in their financial models.
With the vast majority of their transactions paid by credit cards, airlines know that this is a big expense, one that's right up there with the cost of GDS distribution.
Big payment providers, such as American Express, Visa and Mastercard, and smaller or regional players, including Diners Club-Carte Blanche, JCB and Discover have been joined recently by newer providers like Paypal and Western Union.
The airlines' own payment facility, UATP, is deployed widely. But this creates an immense complexity for the different channels the airlines utilize for distribution.
In the past, the payment/credit card battle has escalated into all-out wars between airlines and their payment providers. For example, in the early years of the new millenium, there was a big battle between British Airways and American Express over the level of the fee.
BA even filed a lawsuit in 2002, and the litigation eventually was settled three years later. Today, BA offers a branded American Express card.
Credit card fraud is a problem for all businesses, particularly those which operate online, and airlines are no exception. There are a dizzying array of choices, many of which are specific to the channel. And online fraud protection is very tight compared with looser and different payment systems for the call centre and offline fulfillment processes.
As fraud protections were tightened with such services as 3-D Secure, the percentage of failed, but valid transactions increased. Thus, many airlines are faced with the dilemma of tight antifraud practices with low fraud rates, but high failure rates for valid sales. The alternative is higher percentage of successful approved sales, but increased fraud. This is a dilemma which no airlines like, with rates on both sides of the battle sometimes more than 10%.
SITA says Horizon PaymentServices has embedded "sophisticated fraud screening."
"These sophisticated settings, combined with advanced reporting systems, give airlines the maximum control in this complex sales environment," SITA says.
That's the hope.