Ai Editorial: Understanding peculiar issues associated with emerging payment methods

Ai Editorial:  Bitcoin, Alipay, convenience store transactions etc. exemplify the diversity in payment methods. And such options call for management of atypical issues, too, says Ai’s Ritesh Gupta 

Any sort of improvisation in a payment strategy requires introspection on several counts, be it for evaluating payment complexity, impact on the user experience, ensuring security for that particular sales channel or ability to monitor the fraud chargeback activity.

And today change is inevitable considering the increasing popularity of specific payment options in different markets. Airlines have to adjust as for many it’s a cross-border business.

There are certain market nuances such as prevalence of local domestic payment methods that can drive payment strategy – for example, convenience store payment in some Asian countries. Also, unlike credit card, each of the payment options in Asia has its uniqueness, e.g. transaction limit, availability of refund, chargeback rights etc. It requires airlines to design and implement necessary payment interfaces and processing flows.

Overall, airlines need to look at peculiar issues as they embrace new form of payments. Here we assess a couple of aspects:

• Cost analysis

An airline might be running operations smoothly in several markets, but a similar move may result in additional expenditure in a new one.

For instance, in case of China, it’s imperative for travel brands to offer options like Alipay and or let Chinese consumer pay via WeChat.

As per the feedback from specialists pertaining to Alipay, operating in China requires a separate integration cycle and payment acceptance service level than would typically be needed for other regions and markets.  “PSPs like Stripe and Braintree provide for a more seamless integration on the backend, however because of regulations in China and Alipay’s market size, it is easier for brands with interests in China to work directly with the payment platform,” shared a source. Importantly in order to integrate a PSP like Alipay, a company based in the U. S. may need dedicate resources and staff for processing and acceptance for the Chinese renminbi.

“While enabling Alipay payments is critical to gain visibility and drive transactions in China, for smaller hotel chains, airlines or OTAs this additional resourcing is a large undertaking that can put a strain on cash flow and carry higher requirements for security against chargebacks. Additionally as Alipay remits payments through SWIFT, OTAs and travel brands will have to plan around payout timetables - which vary from country to country- and the applicable fees,” shared a source. “Another thing travel brands should consider the user experience, as travellers are completing their travel booking or reservations. Several PSPs oftentimes redirect users away from the branded site or app to complete their transactions an experience that travel brands cannot control or manage, which can lead to confusion, or worse, booking abandonment.”

• Infrastructure related issues

For airlines, the fact that the process can involve their legacy infrastructure, it only adds up to the work that’s needed to be done.  

“One of the key issues faced by airlines is heavy reliance on legacy infrastructure that prohibits them from adapting to the fast changing world of payments. If this is not addressed in a timely manner, airlines can risk becoming uncompetitive and non-relevant,” says Shreyansh Durgesh, Director of Sales and Business Development, Asia Pacific, Bitnet Technologies.

Delving deeper, Durgesh says, “Sometimes it is seen that airlines are unable to or take too long to launch new payment capabilities due to their backend system being too complex to work with new technologies. Lot of airlines have built their functionalities and respective business processes on top on a legacy mainframe application.”

“Most of the time these legacy infrastructure and their limitations determine how payment related processes or functionalities can be changed,” he says. For example, an airline’s DCS (departure control system) may follow certain rules to flag a risky booking based on fraud detection systems for further checks during check-in. But if the fraud detection and legacy platform are not compatible, it can lead to sub-optimal usage of such fraud detections services.

• Fraud management

In addition to coping up with the challenge of system integration (each payment method works differently which means that each implementation can be costly and lengthy), another hurdle that comes with the new methods of payment is fraud as fraudsters always evolve to find ways of exploiting weak spots in payment processes and systems. So fraud management should be on top of the agenda for any airline integrating new payment methods.

There is also need to clarify certain points, too. For instance, bitcoin is like digital cash. So is there any way to recover or whom to approach when bitcoin is stolen?

Here it needs to be understood that bitcoin wallet private keys are the only proof of ownership of bitcoins. Once these keys are stolen it is impossible to reclaim ownership of bitcoin, says Durgesh.

“Bitcoin is decentralised protocol and not regulated, hence there is no central authority to turn to in case you lose your bitcoins. There have been number of bitcoin related compromises in past but they are not due to weakness in bitcoin protocol itself and rather due to because of weakness of security system employed or negligence of bitcoin service providers,” he says.

So it is important for consumers to carefully select their bitcoin service provider who has appropriate security system and policies to safeguard consumers’ bitcoins. There are specialists who keep bitcoin stored in secured, geographically separated cold storage as well as insure users against any losses, says Durgesh. Also, as the bitcoin ecosystem continues to grow we will see a lot more innovation in provision of wallet security services. 

Being nimble

As the payment ecosystem continues to evolve, airlines need to be nimble. Be it for gearing for EMV liability shift in the U. S. or capitalizing on the popularity of an offering like Alipay in China, there would be changes for merchants. It is of paramount importance to be aware of requisite resources and the level of expenditure required to set up a new method of payment. Plus issues associated with integration with legacy systems, back-end operational systems etc. as well as fraud management, too, need to be scrutinized.

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Delivering data-backed seamless payment experience

Ai Editorial: Airlines need to plan diligently for an omni-channel payments offering. Ritesh Gupta finds out what needs to be done, and how to reap rewards.  

The value of delivering an omni-channel payments solution is in the ability to deliver data-backed, personalized customer experiences across all sales channels.

This requires the ability to capture data across all payments channels through a single integration. With a single overview, it’s possible for airlines to reduce their internal workload, streamline processes, and gain valuable insights into cross-channel customer payment preferences. The ultimate result is the increase in revenues.

Here we explore how to craft an omni-channel payment experience: 

• IT infrastructure:  There are airlines that are still using legacy systems that have been designed to handle credit card transactions only. Such infrastructure has limiting capabilities, and not designed to integrate with new technology. Importantly, it ends up being an investment decision. A mechanism is worked out taking into consideration all the sales channels and this layer deals with one or more payment service providers, and streamlines operations such as multi-acquiring switching, alternative forms of payment, reporting etc.

It is important for airlines to look at the entire payment chain, from gateway to risk, to acquiring, and identify areas in which they can prioritize improvements, says Sander Maertens, VP Travel, Adyen.

Airlines need to gear up for an integrated solution for the entire payment chain, as well as support alternative payment methods, and look for a single line of reporting and reconciliation. 

• Single view across all channels: It is important for airlines to capture data across all payments channels through a single integration.  Identifying travellers across payment channels, and thereby paving the way for a faster check out regardless of location or device they are using, is a clear benefit of an omni-channel approach.

• Making adjustments: Airlines need to adjust their operations, too. For instance, the settlement process of alternative payment methods can differ vastly. In case of SEPA Direct Debit, one of the preferred payment methods in Germany is asynchronous, meaning that there is no real time confirmation that the funds are guaranteed. As confirmation is given after several days, therefore this payment method should not be available with a short time to fly.

• User experience: The payment ecosystem is responding to the expectations of customers by looking at new ways in which you can shorten processing times and improve the customer experience. But even though mobile is now a primary sales channel, there are times when the experience isn’t optimized. The shopper flow is often compromised at the payment stage by two key failures – a clunky look and feel, and multiple steps to complete the purchase.

By offering dynamic payment pages that automatically detect the screen size of the consumer, the device, airlines can ensure a more seamless payment experience. In addition, offering features such as one-click payment, where at the checkout stage shoppers are given the option to have their payment details securely stored, will also optimize the mobile experience. With the rapid evolution of the mobile payment landscape, it is often key to work together with a payment to remain on top with the latest developments.

Benefits

• Combating fraud: In an omni-channel payment environment, data is again the key to minimizing fraud. By gathering data across channels, it is possible to determine a transaction’s fraud score by looking at specific data points such as device type, time to flight, ticket value and type of journey. By designing intelligent dynamic screening based on real-time analysis of the most comprehensive range of shoppers’ data, airlines can take a customized approach based on their specific requirements. This way it is possible to effectively reduce chargeback rates and minimize “false positives”, that is to say genuine customers that are declined.

• 3D Secure: Traditionally, online merchants have adopted a binary view to 3D Secure; implement it across all transactions, or don’t implement it at all. However, both of these approaches have problems. If you apply 3D Secure to all transactions, conversion will suffer, and if you don’t apply it at all, fraud will still be a factor. But there is a third possibility – selectively applying 3D Secure only to high-risk transactions, based on data customized to the airline. The way to do this is to dynamically assess and rank a transaction’s risk score on a scale from low to high, and then trigger 3D Secure only for the high-risk transactions. This means airlines can avoid routing genuine customers through 3D Secure, ensure a smoother payment flow, and minimize the potential conversion impact. By making 3D Secure a dynamic part of the payment flow, it becomes an asset rather than a conversion killer.

• Understanding cross-channel customer payment preferences: Once the infrastructure is in place, real-time API’s can deliver information about the payment preferences and behaviour. So be it for simplifying payment page, tailored options (for example, once its ascertained that the card user is a German, he or she could be offered a cheaper payment option suited for that nation), stored card details or optimizing for mobile, all can benefit a travel e-commerce brand.

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Ai Editorial: Gearing up for AFP's in Asia

Accepting AFPs in Asia – it’s about handling intricate issues

Alternative form of payments (AFPs) is flourishing in Asia. Each has its own unique application and settlement process, language/ currency support, and is subject to domestic rules and regulations. Ai’s Ritesh Gupta reports.

It can be quite demanding for any travel e-commerce entity, be it for a mature business or a start-up, to finalize an apt payment strategy in the Asia Pacific region.

AFPs have gained traction, and they generally tend to address a domestic economy. It’s a fragmented space, and airlines need to understand intricacies of each market.

In China, around 45% of online transactions are made using e-wallets, such as options offered by Alipay, China Unionpay and TenPay, and other emerging options include WeChat payment. 

A company needs to be spot on otherwise the conversion rate can take a dip. For instance, Uber, the mobile app-based transportation network, has worked out an effective zero-click payment mechanism. Users of the app simply register their card as card-on-file, request their drive, and their card is charged at the end of the ride. After registering, the payment will subsequently be made when you use the app, and there is no need for the customer to go through a payment process. But recently, Uber decided to introduce cash option to make it service more accessible in India. So customers can pay via prepaid wallet, debit/credit card or cash.

There are various factors airlines and travel e-commerce businesses need to consider while assessing which alternative form of payments to go for across the Asia Pacific region. A prime reason behind this is the variety of payment options that are available, which are as diverse as the region itself.

Low credit card penetration

Talking of the Asia Pacific region, Bangkok-based Mario Peng, ‎CFO at hotel mobile booking app HotelQuickly says a major challenge for accepting payments from customers is the low credit card penetration rate and acquiring bank charging cross border fees to customers. To reduce credit card acquiring fees, remove cross border fees charged to customers and to offer alternative payment solutions to reach non-credit card holders, merchants are required to set up local legal entities and/ or work with different payment service providers for markets in Asia.  

“It is quick and easy to setup global credit card acquiring. But there are many markets where credit card acceptance is relatively lower than say Hong Kong and Singapore,” says Peng. “So for markets like Indonesia, Vietnam, Philippines, Thailand etc. the team is looking at alternate payment methods – and for the same it evaluates both commercial and technical aspects of tying up with a payment gateway.” A local payment gateway fulfils certain legal requirements, and then airlines or OTAs assess the ability to facilitate payments for preferred payment channels. For instance, in Indonesia, as Peng told us the company is evaluating two payment service providers – while one can facilitate ATM transfer, convenience store (these are semi-digital payments - a consumer takes a code or a QR Code associated with a booking and pays), and online banking, the other isn’t able to offer online banking as an option.

Hong Kong-based Joseph Chan, CEO, AsiaPay says various non-credit card payment options have different rule sets. For example:

• Maximum payment limit cap;
• Mostly does not support pre-authorisation, void, partial capture and reversal;
• Refund could be offered online but only possible offline in some payment options;
• Settlement cut-off

Chan says an ePayment partner in Asia for airline can readily address the following challenges that airlines may face as they plan for added local payment options:

• Some local payment options in Asia may require the airline to have local registered entity, especially if the settlement goes directly to airline;

• Many different payment options are not readily designed for multiple channels and mobile response. Extra cross-channel payment interface design and development may be required if airline goes directly with local payment platform;

• Unlike credit card, each of the payment options in Asia has its uniqueness, e.g. transaction limit, availability of refund, no pre-authorization, chargeback rights. It will require airlines’ necessary effort to design and implement necessary payment interfaces and processing flows.

• Considerable effort may be required by airline to consolidate payment transaction especially for easier reconciliation and reportings of sales and settlements across payment options, and not to mention for CRM, payment analysis reference. 

• Apart from credit card, some of the Asian countries are still in cash market so local alternative payment such as netbanking, OTC, debit card, ATM payment as well as cash counters etc are the major payment methods practice in these countries like Thailand, Philippines, Indonesia, Vietnam etc.

Penetration of AFP

As for AFP, there isn’t any consistency across the market.

Unlike most of the other countries in the Asia Pacific region, options for AFP are yet to take off in a big way in Australia. Carriers in Australia have listed POLi, an online real time debit payment system, as an option. It allows buyers to use their Internet banking to pay for their online transactions. POLi is currently available within Australia and New Zealand. Among other carriers in the region, Air Asia added POLi as a fee free payment option on their website few months ago.

“There is no credit card fee, and the system results in instant booking. Of course, a major lure that works in favour of POLi is that it results in consumers saving significant amounts of money. So say, for a family of four, booking via POLi would end up in A$30 savings,” says a senior airline executive. As for facilitating one-click payment via mobile devices, the executive says the market is still “2-3” years far off. “There are certain legislative issues, too, that can hamper the growth of mobile payments. For instance, it isn’t allowed to store CVV in Australia. The privacy laws are quite strict at this juncture. So this can impede the implementation and the take-up for services that are burgeoning in other markets.” 

Gurgaon, India-based Jibby Jacob Kollanoor, director, South Asia, UATP, says consumers want to be able to pay with the local AFPs they are used to and comfortable with. “One of the most popular AFPs in this region is Alipay, an e-wallet in China that is also capturing a large percentage of the mobile wallet space,” he says.

Preparing for bitcoin

Airlines also need to gear up for emerging digital currencies like bitcoin. To initiate a bitcoin transaction, a consumer must have a bitcoin wallet. “The easiest way to get one is by choosing one of web based wallet services providers such as Coinbase, Blockchain.info etc. Once the wallet setup is complete consumers must fund their wallets with bitcoins purchased from either local bitcoin exchanges or by other means. These bitcoins can then be used to purchase tickets at airline websites,” says Shreyansh Durgesh, director of sales and business development, Asia Pacific, Bitnet Technologies.

According to experts, bitcoin simplifies airline payment by eliminating any risks and unnecessary costs associated with payments. But there is still lot of apprehension among airlines regarding bitcoin due to its price volatility, regulatory concerns etc.

For its part, Bitnet has simplified bitcoin acceptance for airline merchants.

“With Bitnet, an airline will not touch, store or process bitcoin. Airline will be able to price their tickets in local currencies. We will accept bitcoin payment on their behalf and pay the airline in local currency of their choosing,” shared Durgesh, who added that Bitnet has simplified airline bitcoin payments with its UATP partnership.

Finalizing plans for AFP

Kollanoor says a lot of factors need to be considered before finalizing which AFPs to go for:

1. Know the local requirements, such as whether they are required to partner with a local entity in order to start connecting with local consumers.
2. Understand what types of AFPs the consumers in that market are used to – do they prefer bank transfers, e-wallets, bitcoin, local credit card, etc.
3. One of the most important to consider is to understand the complexities of integrating with a particular AFP; the goal is to expand payment acceptance and to get to market as quickly as possible to generate new revenue.   

Each payment option has its own unique application and settlement process, language and currency support, and is subject to domestic rules and regulations. Kollanoor says airlines can use their existing UATP infrastructure and reporting solutions to quickly bring AFPs to market. 

Airlines need to understand the limitations of their systems. It needs to be assessed whether airline should build a direct connection from scratch that constantly needs to be maintained, or rather they can utilize their existing acceptance platform and back-office processes to enable the new payment methods. Also, reconciliation remains a big issue for the airlines; it can be rather labor intensive and be a long, tedious process if done manually.  There is a need to gear up for simplified daily reconciliation.    

Ai Editorial: Fraudsters are smart, so you need to be smarter

A CEO books a trip worth $12000 with an OTA. But what if he is a fraudster, who has a found a way to deceive the agency. Ai’s Ritesh Gupta learns about a couple of real experiences of OTAs

Online travel agencies (OTAs), even the established global intermediaries, continue to be victims of online fraud.

Take the case of Booking.com, known for its agency model or letting bookers pay the hotel upon checkout. The OTA was in news late last year for fraudsters gaining access to contact details of customers, and they allegedly contacted them for pre-payment of their respective bookings. Booking.com acknowledged that 10,000 people were affected, and acknowledged that there is a need to combat fraud, which is now described as an organized crime. There were concerns, and stakeholders, including OTAs and hotels, were questioned about the security level of their systems/ websites.

So the question then is: how to shield customers’ personal and financial information?

Travel companies need to understand how hackers are gaining access to system data or server functionality.

The breach of data is happening and it could be owing to manipulating a web application and a fraudster tricks that application into performing commands and accessing data. Another way is to get hold of an authorized account via focus on session IDs, and eventually stealing them.

OTAs frequently receive complaints from customers about unauthorized credit card transactions. Experts recommend that additional steps can be implemented to curtail risk of credit card and personal data exposure, such as compartmentalization and tokenization on the inside of the company’s DMZ (Demilitarized zone. Network added between a private and a public network to provide additional layer of security). This is being considered to be a vital add-on to firewalls and external fraud measures. Such mechanism keeps a tab, acts and reports on dubious activity and can feature configurable fraud-alert rule sets, data- profiling modules, and other validation methods.                                                      

Also, at another level, it is important to know how to strike a balance while focusing on stringent fraud rules. These can result in reduced acceptance and revenue. Also, what safeguards exist to allow for loosening fraud rules? Optimizing acceptance means more fraud will slip through – an extra layer of defense is needed to catch it post authorization.

Dealing with fraud

For a security professional, the risk of being too cautious can result in a loss of revenue.  OTA executives shared a couple of experiences of how the team manages fraud.

A senior executive associated with Mumbai-based OTA Cleartrip.com told us: “If a fraudulent transaction happens, then we filter it out and blacklist the card used, email and phone number. We can’t block the name as there could be multiple customers with the same name. Overall, the variables that are take into consideration while assessing transactions are IP address, phone numbers, device ID, email id (domain name) etc.” The same executive mentioned that there are times when certain transactions are doubtful, and put them on high priority for manual check. “That’s where smartness comes in, scrutinizing the confidence level of the booker. For instance, there was a booking worth US$12000 or so that we kept on hold. The claimant user of the card, actually a fraudster, was residing in another country, he intended to travel in that country, and was claiming to be the CEO of an IT company. He was repeatedly making calls to check why his booking wasn’t going through. And then when we assessed his LinkedIn account, we found there was not even a single connection. So that’s a call every security team has to make. You could be interacting with a fraudster, and you might abruptly ask him what’s the time where he or she is located. It’s all about getting closer to authenticity of the information or even checking the confidence level.”

Here it needs to be mentioned that the booking experience of a customer shouldn’t be jeopardized.

I know of a recent instance where an airline called up my colleague in the U. S. mid-night, who had booked me for Delhi-Bangkok trip. The airline had concerns about the itinerary, considering that the booker was in the U. S. But my colleague felt the check needed to be more vigilant, considering that the airline had information about him, and disturbed his sleep by calling at odd hours. 

Another OTA told us an interesting movement that was being witnessed on their site. It was related to “seemingly Russian citizens” booking itineraries featuring a particular LCC in the Middle East. “The bookings featured destinations like Moscow, Kiev, Bishkek, Almaty etc. Most of the passengers booked through these transactions sounded like Russian citizens (female names ending with “ova” or male ones ending with “ev”.” The carrier had strict policies, and before the OTA could verify and reach out to the airline, fraudsters were cancelling those flights, and gaining credit vouchers for future bookings. “We eventually decided to cancel the sector.”

Moving on

Fraudsters always move on. Managing online fraud is an ongoing initiative, one that needs constant improvisation for better results. If this is not the case, then a travel organization would end up being a soft target, leaking revenue that shouldn’t have slipped from its grasp. In fact, despite having a team in place, one can still suffer at the hand of fraudsters.

A spokesperson from Cleartrip.com told me: “With the RBI mandate for third level of authentication, the frauds on Indian issued cards have reduced. However, the fraudsters have now shifted their focus onto the cards issued outside India. They specifically target cards issued in the U. S. , the U. K.,  Australia etc. The current trend in the market is - the fraudster is booking non-refundable and non cancellable tickets to avoid any action from the fraud detection teams. Fraudster is also targeting the immediate flights on domestic and international sectors.”  

So what are the challenges that OTA typically face in detecting and neutralizing the fraud transactions?

The first issue here is limited help from the airline /supplier/ hotels. Cleartrip.com told us: “We lose lot of revenue on to the cancellation charges by the airline in case of fraud transaction and needs to be cancelled. Some time the tickets are non refundable and non cancellable and we need to let the fraudster to fly on these bookings even though we detect them well in advance.”

The second is limited help from the law enforcement agencies and issuing banks in case if there is any opportunity to nab the fraudster. In this case, merchants are looking at support from the issuing bank, which isn’t through coming in most of the cases at this juncture.  

Here are few recommendations from Cleartrip.com:

Effective transaction monitoring  

• In the current scenario, one must do the detailed review of the past and present transactions and identify in case if there is any suspicious activity happening around
• Detailed analysis of payment failed transaction.
• Regular updation of negative and positive data base of the customer.
• Detailed verification of the high value transactions.
• More co-operation and collaboration with the fraud departments of airlines / banks and OTA to exchange the fraud trends

Best practices to avoid chargeback debits

• Extend full support to the acquiring banks in resolving the chargebacks.
• The merchant must fulfill the requirement of supporting document within the time limit.
• Provide detailed information in the first response.
• Provide the proof of service utilization from the airline/supplier in case of service related chargeback.
• Modify the terms and condition to safeguard yourself in case of chargeback.
• The cancellation penalty, no show charges should be made more visible.

Ai Editorial: Wearable Tech - good for payments for travel?

What would it take to facilitate transactions via wearable tech devices?

Airlines are trying to make the most of wearable computing. Ai’s Ritesh Gupta assesses what would it take to develop apps for smartwatches that are ready to facilitate transactions

How can wearable tech devices be tapped for revenue generation?

The travel sector responded swiftly to the launch of Apple Watch with a spate of tailored apps, but a lot more is being expected from wearable computing.

The promise of augmenting the overall payment experience, propelled by data pulled together by smartwatches, (such as location and behavioral information) is luring. The past six months or so have been quite exciting, even though battery life remains one of the major drawbacks of these devices.  

Today there is talk of an option, bPay band, in the UK to wear a contactless wristband, add money from debit or credit card and then avail contactless payments, up to £20 wherever one comes across the contactless symbol.  

As the travel industry digs deeper to ascertain what can be done in this arena, it is clear that the immediate attention is on smartwatches, especially with the unveiling of Apple Watch. The device features contactless payments and integration with Apple Pay for the user account. This can be used for payments independently of the airline.

Coming to grips with reality

Talking of “in the moment” technology,  Kevin O’Shaughnessy, CEO, Indigo, says the day-of-travel content is key here. He refers to security fast-track passes, gate upgrades, ground transport - all fitting the bill.

Using geo-fencing, itineraries and other data sources can build these to a value-added experience that add great consumer value, says O’Shaughnessy, who spoke at the Ancillary Merchandising Conference, a part of 2nd Annual Mega Event Asia-Pacific (previously held in Singapore, 31st Aug 2015 – 2nd September 2015). 

Comparing existing platforms with the new wearable e-commerce segment, O’Shaughnessy says there are new limitations that need to be handled. “Instead of vast or curated choices, we must predict specific product needs: a new application for big data. Also, where once customers would browse, (it should be noted that) small screens support “triggered” purchases.”

Explaining in detail, O’Shaughnessy says, “If you track the evolution of interactive devices from desktop web to mobile to wearable, we are facing one of the biggest interaction design challenges than we’ve seen before. We have learned that the larger the screen, the easier it is to browse and to comparison-shop. Wearable interactive devices takes this to an extreme: we’re literally down to “quick yes/ no decisions”. This means that the retail opportunity needs to be heavily targeted and contextually relevant.

“To date, airlines have focused on “wearable boarding cards” which is a pity — it has created a new “palm-reading gesture” which we now have to learn (O’Shaughnessy refers to an example - placing your wrist the wrong way around on a barcode scanner). We think the retail opportunity is much more exciting than this,” he says.

What can work and what can’t

He points out that the travel timeline is well-modelled and relatively finite, in spite of some internal complexity.

“We all have a solid understanding of “planning, booking, pre-departure, day-of-travel...”. Taking this into finer detail will expose natural purchase occasions which we can capitalize on. For example, booking an unknown hotel on mobile won’t work, however, booking your local Sheraton or a familiar hotel would. The key differentiator is trust and advance knowledge. Wearable ecommerce doesn’t have time for a new tab, extensive searching and browsing and an elaborate review of TripAdvisor reviews - the 5-dot score is a good idea however.” 

“The examples we see working in the short-term are actionable notifications (class upgrades moments before departure), security line passes (popular in Europe), ground transport (disclosure: Indigo is a GT provider), some onboard purchases, some push offers in the airport, room service and so on,” he says.

Trials in progress

O’Shaughnessy says the trialling of concepts such as contactless wristband is a positive development.

“The rule for any innovation like this, I suppose, is that when you think of a transaction, there are two parties involved. Both must evolve at the same speed,” he says. The average wallet now contains a bunch of “contactless” cards, every one of which can be used for access control, payment, loyalty and more, as long as there is some expression of consent from the holder and, if necessary, people on the other side of the counter start working together.

“The real innovation in wristbands is that it removes the last barrier to adoption for payments — its more easily used than the card lost at the bottom of a handbag or pocket. If added to a smart device, such as Pebble, Android Wear or Apple Watch, there may be some more consumer value which can evolve over time,” says O’Shaughnessy. “Current payment cards - stuff from your corner bank, issued by Visa, Mastercard etc. - can easily be upgraded to securely carry documents such as boarding cards which passengers could use at the boarding gate. It doesn't necessarily have to be on your wrist. In my view, this isn’t a step change, but it's nice to see the payment guys innovating.”

Facilitating transactions

So how challenging is to develop apps for smartwatches that are ready to facilitate transactions?

O’Shaughnessy says the same can be summarized into three key points

• No checkout and strictly yes/ no decisions: “Searching” and “Form filling” is the current interaction metaphor of ecommerce and online shopping carts — whether Amazon or airline. There are no forms that you can fill out from a watch. This means that any retailer has to, effectively, guess what a customer will require in advance of presenting a triggered sale (via notification). “Think Personal Shopper, not Bazaar,” says O’Shaughnessy.

• User accounts and Pre-clearance for Terms and Conditions: Users cannot read and accept terms and conditions as part of the checkout process; this implies a pre-existing relationship with the user (they have signed up to your service beforehand).

• Payment: No credit card details, no secure code/ verified by visa/ CVV checks. Payment details must be ready and on standby for that spur of the moment decision.

These create an imperative to create rich, deeply-integrated ecommerce experiences. The good news is that this effort can improve retail across all devices too, says O’Shaughnessy.

He says by focusing on the three key challenges, the solutions are actually closer to ecommerce platforms than device capability. “There are about five competing platforms for smart devices today across two major smartphone platforms. They are not compatible, but the differences required to support, for example, Pebble and Apple Watch are trivial in comparison to the changes required in the backoffice to support both,” he points out. 

The imperative for airlines is to choose carefully when to engage with the customer; the offer must be highly focused and relevant and to distill this into a snap “yes/no” decision. Bear in mind, any watch interactions are interruptions — you only have half a second of attention.

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Ai Editorial: Reduce Anxiety & Build Trust to step-up Mobile Conversion

Mobile customer experience has a major impact on the conversion rate. Ai Correspondent’s Ritesh Gupta assesses small steps that can help in improving the same

Every minute detail, every second that eventually leads to a transaction via a mobile device is being thoroughly studied by airlines. The level of introspection is getting deeper, owing to the fact that the rate of booking abandonment in the travel e-commerce category is as high as 80%.

So what are key the customer experience-related questions that are being addressed today?

Issues like simplifying data entry, curtailing the time taken or steps toward finishing a transaction, guarantee that the offer is the best possible one (pricing or perceived value being the best) or just ensuring navigation is top-notch take all the attention.

“The most critical issue in the mobile experience today is balancing the efficiency and seamless interaction that customers have come to expect with the security and safety that businesses must provide. Customers abandon transactions for a number of reasons, and if a company’s mobile site or app is plagued with slow load times, a clunky UI, or a labor intensive checkout process, consumers will naturally seek out a competitor who delivers a more convenient and pleasant experience,” says Marc Barach, chief marketing officer at Jumio.

Something as severe as a crash, too, should be avoided.

The most annoying thing is an app crash, especially after a long form is filled in, says Michal Juhas, Asian mobile booking specialist HotelQuickly’s co-founder/ CTO.  

“When we were starting with HotelQuickly iOS and Android apps, the team was very small. We faced some production defects every week. But as we grew and set up a proper QA department, we brought the crashes below 0.07%,” shared Juhas.

Brands should look at reducing anxiety and rather building trust at every stage.

Here are some key points that can help in improving upon on these core issues:

• Put yourself into a traveller’ shoes: It is vital for any supplier or intermediary to first strengthen the product itself. For instance, if I don’t like to rush all the time, how can an app go beyond last-minute travel booking option. There are apps that are answering such concerns with “tomorrow booking” feature. Also, as Jumio, points out even till date apps and mobile websites don’t embrace initiatives that don’t let customers to think they are actually trying to complete a booking on a relatively smaller screen. So automatically switching between the alphabetical and numerical keyboards based on what data is being typed is something that would not peeve a user. 

A customer shouldn’t be made to think during the booking flow. So one should focus on streamlining the process to whatever extent it is possible.

It should be remembered that overloaded apps can be just as bad as under-featured offerings.

Also, a customer can shuffle between devices for one transaction. As Barach says, today with everything on-demand from the cloud, the transaction is independent of the device. Consumers go back and forth between desktop, mobile, and tablet so frequently that businesses have really begun to realize the importance of responsive design and that their experience feels seamless across each device. When optimizing for different devices, it’s really critical to take into consideration what activities your users are most likely undertaking on that platform and put that functionality front and centre, says Barach.

Airlines need to conduct a variety of tests on the checkout funnel, and opt for an apt variation. Is the shortest path always the best one? Airlines need to assess this in detail.

• Seek constant improvement: This arena is still a work in progress, so there are new solutions that can take care of concerns like security.

For its part, Jumio recently stated that with its com­puter vision technology, lastminute.com group’s Bravofly.com app users are now be able to book flights in half-a-minute, six times faster than before.  

With Jumio’s BAM Checkout, a customer taps the scan button integrated into a mobile checkout form and holds up their credit card and, optionally, back of driver license to their mobile device’s camera. Their personal information and credit card number are auto populated in seconds, eliminating the need for customers to spend about two minutes typing an average of 75 keystrokes to fill in their name, address and payment data

• One final assurance: There is always plenty to learn from the other sectors. I came across a stage where a retailer displayed a particular date rather than number of days after which my order would be delivered. Such message definitely made an impact as I could see myself closer to something I had desired. So travel brands needs to be creative with their images or messages (of course, has to be clutter-free) that can add a tinge of positivity around the transaction.

• Payment option: The choice of offering card schemes or alternative payment option needs to be fully localized. For instance, HotelQuickly assesses the most used payment methods and integrates them if that individual payment method is compatible with its business model. “If a larger provider offers several local alternative payment methods, less used payment methods might also be integrated as there is no additional effort required to offer them. We want to bring enjoyable, stress-less last-minute travelling to as many travellers as possible which includes removing credit card payment barriers,” Mario Peng, co-founder and CFO, HotelQuickly mentioned in a previous article. 

• Don’t forget to address fraud: With near constant news around data breaches and hacks, customers expect their transactions and personal information to be handled with the utmost care, and airlines obviously need to ensure that travellers are not just physically safe, but also data safe.Airlines need to ensure that the person making a transaction is who they claim to be and to do it in a way that adds convenience to the process. Jumio’s offering matches the information on the credit card to that on the driver’s license and Netverify offers Face Match technology that compares the customer’s actual face with the photo on their ID and produces a likelihood-of-match score. 

According to Adyen, airlines need to selectively apply 3D Secure only to high-risk transactions, based on data customized to the airline. The way to do this is to dynamically assess and rank a transaction’s risk score on a scale from low to high, and then trigger 3D Secure only for the high-risk transactions. This means airlines can avoid routing genuine customers through 3D Secure, ensure a smoother payment flow, and minimize the potential conversion impact. By making 3D Secure a dynamic part of the payment flow, it becomes an asset rather than a conversion killer.

Juhas says mobile companies need to invest into high quality fraud detection software and build a dedicated team to identify and prevent credit card fraud and voucher misuse.

Never lose sight of overall experience

Even as mobile commerce is key to revenue generation, it shouldn’t be forgotten that airlines need to increase engagement with their apps by understanding that their customers want more than a place to look up flight times or status.

“They (travellers) want the holistic travel experience at their fingertips, from convenient ways to check-in, purchase of travel-related services from in-flight entertainment to seat upgrades and the ability to make additional travel accommodations, like United Airline’s integration of Uber into their app. Likewise, UAL’s integration of Jumio into their mobile boarding pass issuance process delivers greater speed and convenience than the old way of obtaining a pass,” says Barach.

The most important thing for airlines to keep in mind is that travel is more than just the flight itself, it’s the entire experience from start to finish, from booking the trip to arriving back home. The airline’s app has the opportunity to become the consumer’s control panel for the entire experience.

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Executive Interview: Jerome Seidita, Nok Airlines

Our chat with Jerome Seidita, mobile commerce director, Nok Airlines, outlines some of the issues facing airlines for mobile commerce, topics which were discussed and debated at the Airline & Travel Payments Summit (ATPS) Asia-Pacific (Bangkok, 26 - 27 Aug 2015) and will be covered at the 9th Airline & Travel Payments Summit (ATPS) Worldwide (Ft. Worth, 29-30 Oct 2-15)

From A Traveller’s Lens

Every country has its own inimitable challenges when it comes to accepting payment via mobile.

For instance, while some markets are showing signs of making steady progress with contactless ecosystem, there are others that are fairly new to this arena.

Yet airlines are adapting and trying to improve upon the payment experience.  For example, Thailand’s Nok Air has carved out a unique offline payment method when their customers book via its mobile channel.

So what is this initiative all about? What is Seidita’s take on 3D Secure, and dealing with regular changes in apps?

Ai’s Ritesh Gupta spoke to Seidita about mobile and payments in detail. Excerpts:

Ai: To what extent is your travel being simplified and how comfortable are you spending via apps?

In my opinion, mobile apps changed the world by simplifying complicated tasks in just few taps. Mobile behavior is different than desktop, users want reactivity, fast processes and simplicity. 

For me, amazing and efficient apps are the simplest one. Simplicity in the design, in the quantity of information, in the capacity or remembering past behaviors and information to make processes faster. 

The best example for me is the Uber application. It’s amazing how simple it became to order a private car. They know your location, your credit card number and your preferences, you just have to tell them where you want to go even though they probably knew it before you. 

When it comes to payment via apps, I feel very comfortable paying for goods and services from my mobile device. But it all depends on the application, if I have to spend more time giving the app my personal / payment information than selecting the product I want to buy, I prefer to use another channel such as web. 

Ai: Any anecdote that you would like to share while conceptualizing and designing apps and mobile website for Nok Airlines? What did you learn from that experience?

Nok Air is an innovative airline, we like very much exploring new technologies that would enhance our passengers journey. One of the latest initiatives was to make Nok Air one of the few first airlines to release an Apple Watch application on day one. 

When you start designing a new version of an app or mobile website you have to put yourself in the passenger shoes. Take everything that has been done on web and change it to be more simple, logic and fast on mobile. 

Few years back we started to work on “Low Fare Search”, a new way for passengers to look for the best fares available in an entire month instead of a single day. This functionality, still available today on our apps, was first implemented on our desktop website and we had to completely reinvent the user experience on our mobile channels. 

Desktop website did a great job by giving the user the cheapest flight of every day of the selected month but what if the user wanted to pay a little bit more but choose a flight that was leaving at night instead of the morning? Using a great user interface to cover complex API’s we have been able to create a flight result page that offered both the cheapest flights but also all other available flights accessible with one tap. 

What I learned from this project is that when designing apps for mobile devices you can get inspired from what have been created on other channels but you should never offer it exactly the same way. Passengers interact differently on their mobile, they have other expectations. 

Ai: What would you term as the toughest aspect of your role? Can you cite examples?

Mobile demand is growing very fast, technologies are changing every year but development is unfortunately not following at the same speed. 

Being innovative, offer a secure environment and implement airline requirement at the same time can be challenging for our developers who need to work on many projects, often never done before. 

To give a recent example, the Apple Watch app was released in April 2015 and less than 2 months later we learned that there was a complete new environment we could convert our application to. It’s a great improvement but it will require to change what we just finished to built in a very short time. 

Another tough aspect is that with Apple and Google in the market, offering amazing user experiences on mobile, people are expecting a lot more from developers than on desktop. If you want your mobile channels to work, you constantly need to plan for the next update and make sure your users are happy with it. Very challenging but we love it here.

Ai: Can you explain what should one look at while preparing for payment options via mobile?

Mobile payment was, as desktop at the beginning, difficult to trust but I believe people are now willing to spend on their mobile devices. We just need to make sure our offer is secure, trustable and offer the best user experience. 

At Nok Air we offer a very innovative offline payment method when you book on our mobile channels. You can book your flight and pay in the next 24 hours in 7-11 (supermarket) or any ATMs in Thailand. We also offer credit cards and almost finished to integrate Apple Pay. 

For credit cards, we found two solutions that any apps should be looking at, the first is to remember the last credit card number used and the another one is to copy all credit card information from the camera.

Ai: Shopper flow is often compromised at the payment stage by two key failures – a clunky look and feel, and multiple steps to complete the purchase. How to overcome such barriers?

For the clunky look and feel I believe we now have all the tools to create a great design, even when it comes to mobile payment. We just need more creative people. The only issue is when you get to the 3D secure page, as the only ones that can control this page are the banks and still a very few of them are thinking mobile for now. 

In my opinion, multiple steps are indeed a real key failure. Apple gave the best example by asking users their fingerprints today, nothing else. 

With a seamless payment as Apple, users don’t even feel they are spending their money and don’t need to seat and plan when they are booking. I believe Apple Pay is very promising.

Airlines are looking at selectively applying 3D Secure only to high-risk transactions, based on data customized to the airline. Can you explain how this is shaping in the industry?

Credit card fraud in Thailand is still high and at Nok Air we decided to apply 3D secure to every transaction. We are using a great tool to reduce fraud to the very minimum and it works great so far. If we had to take the same question out of Nok Air specific context I would say that this would be a great improvement as it would decrease number of steps and create a smoother booking experience. 

Can you cite few examples where airlines can face challenges with mobile payment?

The only challenge we had to face is the integration of direct debit transactions on mobile. The user has to connect to his bank online platform to accept the transaction but banks are still offering this functionality with non mobile friendly pages and it would deteriorate our user experience. We prefer to concentrate on channels that are ready and innovative. 

 LinkedIn: https://www.linkedin.com/in/jeromeseidita

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Innovative Airline Payments: Transavia Case Study

Ai Editorial: Managing 3D Secure

Managing 3D Secure- it’s a balancing act

Be it for optimizing security or sustaining favorable conversion rates, airlines need to plan for 3D Secure as part of their customer payment experience initiative, says Ritesh Gupta, Airline Information Correspondent

How to counter mobile fraud? How to make sure the conversion rate doesn’t go down owing to checkout abandonment? These are two key questions that airlines often mull over as they review the performance of their mobile portfolio.

In this context, one needs to careful with traditional 3D Secure, considering that fact that an extra step during the online payment process is added to ensure that the real user is using the card.

Traditionally, online merchants have adopted a binary view to 3D Secure; implement it across all transactions, or don’t implement it at all.

However, both of these approaches have problems. If you apply 3D Secure to all transactions, conversion will suffer, and if you don’t apply it at all, fraud will still be a factor, says Sander Maertens, VP Airlines and Travel, Adyen.

No doubt 3D Secure offers solid protection, however it does add a complication into the checkout for the consumer. As it emerges, experience on a desktop is sub-par and on a mobile it’s even worse. There are other issues that need to be addressed - very slow reaction from schemes and banks to address problem; some merchants live with the poor experience to maintain liability shift enjoyed from 3D Secure transactions; and many merchants have requested that 3D Secure be disabled for all mobile transactions.

It also needs to be considered that there are markets – like India – where 3D Secure is the norm, and so consumers expect it, says Madrid, Spain-based Celia Pereiro, head of payments at Amadeus.

“In these markets, and specifically in India, 3D Secure actually increases adoption. However, in the majority of markets the additional security can have a negative impact on conversion so airlines should be pragmatic about implementing 3D Secure; it may make sense, for example, to direct transactions which have been identified as suspect by the airline’s fraud management system to 3D Secure as a final check before rejecting the transaction outright. In this way, 3D Secure could be used to increase the conversion rate,” says Pereiro.

Optimal approach

Airlines and travel e-commerce companies need to assess their data by evaluating the value of transactions plus closely evaluate chargebacks. Accordingly, the transaction value limit can be finalized above which 3D Secure can be utilized as an extral layer of security to prevent fraud. As for RoI, positive results can be viewed as hike in revenue and reduction in chargebacks over a period of time.

Also, airlines can  integrate with fraud management tool to organize and work out the 3D Secure arrangement, lets say for local markets, in the backoffice. As for the customer experience, one can opt when to authenticate,   manage what a user sees, and embed authentication in the checkout.

Rather than having a binary view – either being in favour of preventing fraud or not hindering the customer payment experience by avoiding 3D Secure altogether, there is a third possibility.  

“(One can) selectively apply 3D Secure only to high-risk transactions, based on data customized to the airline. The way to do this is to dynamically assess and rank a transaction’s risk score on a scale from low to high, and then trigger 3D Secure only for the high-risk transactions,” recommends Maertens.

This means airlines can avoid routing genuine customers through 3D Secure, ensure a smoother payment flow, and minimize the potential conversion impact. By making 3D Secure a dynamic part of the payment flow, it becomes an asset rather than a conversion killer.

There are offerings that allows airlines to flexibly route transactions according to an intelligent set of business rules which is defined with the customer; these business rules allows airlines to avoid the authentication based on specific parameters, for example, frequent flyer passengers. So airlines can control which transactions are authenticated via a specific rules engine.  This can be categorized depending on the total sum of transaction, SKUs, IP or device used etc.

Travel companies cant really abandon 3D Secure, rather they need to plan diligently.

As Adyen recommends, airlines should evaluate aspects that are quite risky for operations, and contemplate automating 3D Secure as an additional security layer only for such transactions.

Also, as witnessed in the past, one can come across a lofty drop-off rate on 3D Secure transactions in case buyers are worried, considering is a security threat. So airlines should engage buyers on the security benefits wherever they can.

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Ai Editorial: Managing Cross-device Identity

Managing cross-device identity – it’s about helping and knowing customers

Passengers today look for better management of their digital identity, and brands, too, need to aid them and also serve them better via cross-device tracking, writes Ritesh Gupta, Ai Correspondent

How can I have more control over my digital identity? It’s a valid question as no ones like to manage so many usernames and passwords in one’s digital life.

We log in to apps, sites and devices. It can be quite a tedious job to remember all the passwords. Passwords aren’t expected to go away, but there is a chance that you could be soon logging in via facial recognition software.

Also, as much as a consumer is besotted by the idea of not to remember so many passwords, airlines, too, need to explore what they can do in this era of cross-device usage by identifying digital users with as much accuracy as they can. How tracking can be improved upon to serve a relevant message or aid in the journey of a passenger. This would translate into a customer experience, where one would be recognized for a true one-to-one experience.

Let’s assess some developments in the arena of digital identity and cross-device tracking, and how the same is impacting the overall customer experience:

• Making accessibility simpler: The use of several devices, and accessing same or different apps and sites is quite common. We would dread the idea of remembering passwords for all. Recognizing that passwords can be shared or stolen, Intel is already working on app that remembers passwords and automatically fills them in when one returns. Essentially it’s about logging in with your “face”. The company has come up with a limited version of facial recognition app, titled True Key.  So how does it work? A user’s distinctive features such as facial math and master password come into play. As for the security part, data isn’t shared or saved, but still nothing is “hack” free, at least of today. But Intel is definitely promising a robust protection in addition to the simplification of password management. A major attraction of this app – a user’s info syncs to all devices that are being used. It’s an absolute must in the age we are living. Intel continues to build and iterate the product. Airlines need to keep an tab on such developments and make the most of it to simplify accessibility of their digital touchpoints.

• Seamless experience across apps: The number of devices for our booking and also during the time of our journey that we are using is on the rise. In addition to a laptop, a tablet, and a smartphone, you might already be wearing a smart device on your wrist. Say, you are carrying all of this on the day of travel - iPhone, iPad and Apple Watch. Your digital identity and journey details need to “synced” across all devices. Tech-savvy brands are already doing this.

“With the addition of handoff and group data sharing HotelQuickly offers a truly seamless experience between all the HotelQuickly family of apps,” says hotel mobile-only booking app HotelQuickly’s COO and CMO Christian Mischler. If you make a booking on your HotelQuickly iPhone/iPad app, you will instantly be able to access that data on the Apple Watch app. If you’re looking at a previous booking on your Apple Watch, handoff will prepare that exact booking on your iPhone so you can view all the details in its entirety. “If you have not yet made any bookings and you are looking at the HotelQuickly app on the Apple Watch, we are preparing the HotelQuickly iPhone app for you to make a new booking. Just look for the HotelQuickly icon on the 'lock' screen of your iPhone and you know the handoff is ready,” says Mischler.

Airlines also need to know the limitation of each technology or app.

For instance, American Airlines, British Airways, New Zealand Air and easyJet have been in news for introducing smart watch services to help flyers check-in and board with QR codes, or alert passengers about flight delays or changes. However, as Leighton’s CEO Lyle McCalmont says, technical infrastructure needs to keep up. “We are already reading reports of Apple Watches not fitting under some airport access scanners,” he points out.

• Cross-device messaging/ ads: Cross-device tracking is all about recognizing a user behind various devices. Airlines will always struggle to craft an optimized customer experience programme if they aren’t sure of how passengers are interacting across devices. Similarly, what’s their conversion journey looks like. This if not done properly can result in wastage in ad spending, something that’s always been a point of contention when attribution is analyzed. Also, the timing and frequency of messages/ ads can hurt a brand if travellers receive meaningless content.

So what has improved in digital identity as far as tracking a user across various devices is concerned?

The debate around exact match or deterministic approach such as provided by Facebook or any other log in way, and implied match techniques or prediction-based approach continues. The specialists in prediction-based approach are increasingly saying the perceived gap in scale is coming down and so is the variation in the total figure of addressable users for each approach.

A major highlight of prediction-based tracking is that it is set up on data signals from ad requests across the web.

Those who specialize in probabilistic way assert that identify fragmentation is being handled better than ever, driven by machine-learning algorithms. Such specialists count on cross-device data points to probabilistically harmonize mobile device IDs to desktop cookies; forming a bridge between devices. 

So what’s the accuracy of prediction-based approach? There has been talk of over 95% precision. For instance, cross-device technology company Drawbridge shared that its model was 97.3% accurate in indicating a relationship between two or more devices (according to a release in April, 2015).

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