European regulation demands that all electronic payments are secure. In effect, this means chip and PIN for face-to-face, card and cardholder present transactions, and the 3D Secure protocol for Internet sales.
The September 2019 deadline for this regulation has been extended for 18 months, however, as the banking and retail industries were not fully prepared for the enormous changes this regulation represents.
“Airlines, for example, face special challenges for all the transactions made in shared industry infrastructures, such as travel agencies and at the airport positions,” explained Christophe Kato, IATA’s Head, Industry Payment Services.
There is nothing worse than seeing your efforts to convince the client to buy negated because you don’t support their payment instrument
Though workstreams are in place to address this issue, the growing cost of payment acceptance and the profusion of new payment instruments being developed are still a concern. For each development, airlines must evaluate if it makes sense for their sales.
Card, the dominant payment instrument today, is more or less standardized globally. But most new payment instruments are local, developed for each individual country.
Bank transfer illustrates the point. On the face of it, the principle is the same everywhere but, actually, standards are developed each time by the national banking community. As a result, accepting instant bank transfers across the world means working with a profusion of local bank accounts and protocols.
Payment providers are exploring how to support global merchants, including collecting on their behalf.
Perhaps the biggest change though is payment processes moving from the technical arena to become a differentiator in the highly competitive aviation industry.
“Nowadays, we understand that payment is the final part of the shopping process and that a comprehensive distribution strategy must encompass the payment part,” said Kato.
“There is nothing worse than seeing your efforts to convince the client to buy negated because you don’t support the payment instrument she expects to use, or to suffer a decline in sales because you have not optimized your acceptance process.”
Payment habits are changing and vary according to customer segment. The one-size-fits-all approach is no longer enough. It is also the case that payment instruments must match the diversity of sales channels.
Mobile users expect a payment experience optimized for mobile devices. E-wallets work well on this channel as few people are prepared to enter card and other personal details on the small screen of a phone.
The financing of the purchase is another method of potential differentiation that is gaining traction. Extended payment plans may become part of airline strategies in future.