Payment trends to watch in 2019

09 January 2019

New airline payment options from IATA and traveller habits to consider

Traveller preference and loyalty: A survey of US travellers by WEX and Mastercard found 65% use their personal credit card for booking with airlines and hotels direct, with 37% using company cards and 24% using other methods like cash. More than half, 62%, plan to redeem loyalty points this year with 45% using a TMC to book and 7% using an in-house booker.

This may not reflect the behaviours of travellers in every market but it does suggest firstly that loyalty still has its place in business travel and secondly that the out of policy bookings challenge will roll on (or not, depending on your programme).

However hotel chains and airlines have been big targets for data hackers, which dents traveller trust and could steer some towards other preferences.

Improved security: That said, in the payment sector specifically there have been “dramatic” increases in processing power and safety measures such as encryption technology which are making payments more secure and robust, according to Peter Keenan, co-founder and CEO of APEXX Fintech. Data regulations such as GDPR also provide additional protection to this kind of information.

New airline payment systems?: This week the first airline ticket purchase was made using IATA Pay - a new initiative from IATA and fintech company Ipagoo. It means airlines could offer direct debit options to travellers through their own websites, which doesn't sound like it would affect business travel but as we know, anything can happen. For context, Aleksander Popovich, IATA’s SVP of financial and distribution services is quoted saying, “Today’s consumers, and especially millennials, have expectations of multiple payment options including mobile and peer-to-peer. IATA Pay responds to these expectations. At the same time, airlines are trying to manage significant card payment costs -- $8 billion per year and rising. A large part of this cost is incurred in direct purchases from airline websites. One of IATA’s strategic objectives is to support airlines’ financial sustainability including controlling costs”. 

Mobile commerce is mainstream: 60-70% of online purchases globally are made on phones, Keenan tells me, so offering mobile solutions has become a “hygiene factor”. Merchants mostly keep card details on file either on websites or apps, with travellers entering security details for each purchase.

Increased integration: Travel suppliers have often described ‘ecosystems’ of companies working together and connecting up to ease processes for travel buyers and travellers. It also brings more visibility to total travel spend - especially as it appears that a lot of travel isn't paid for by corporate means. Recent integration examples in payment and expense include an AirPlus and Booking.com partnership as well as TripActions and Expensify.

In the B2C world, “the travel sector is one of the few that is truly global so it has a unique need for [payment] acceptance. Payment used to be Visa, Mastercard and Amex but now there’s so many others and lots of global schemes. Global brands have to keep pace with all these methods and learn to incorporate quickly,” Keenan adds.

Even Apple tentatively opened up its own chip last year so Apple Pay is now easier to use; it doesn’t even require a machine to tap. This means the move is potentially a leap forward for the Internet of Things, as this Mobile Payments Today article explains.

Blockchain: There’s still a long way to go yet but Keenan believes blockchain will “change the world a lot”. Not so much for B2C, but for corporate and government payments or tracking contracts Keenan thinks it’s a “phenomenal product”. Travel buyers are rightly not quite on side yet though – a recent Business Travel Show survey found 57.5% of buyers think blockchain will have minimal or no impact in the next three years.

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