Ai Editorial: Cash, mobile, cards, POS … not easy to deal with payments in Asia
First Published on 26th August, 2017
Ai Editorial: Be it for cash for transactions or an ecosystem like WeChat or use of credit/ debit cards, payment in Asia remains wide and diverse. How are airlines gearing up for the same, explores Ai’s Ritesh Gupta
Any airline operating in the Asia Pacific region needs to diligently prepare for accepting payments. Working on such initiatives features many aspects that go beyond finalizing payment methods, and these include setting up processes and controls (currency management, currency heading, fraud prevention, and reconciliation and reporting), and compliance (PCIDSS, sensitive data protection, costs and reliability).
For instance, there are many markets such as cash-driven countries like Philippines where credit card acceptance simply cannot be compared with Singapore or Australia. And then China can be completely different, considering the popularity of payment options such as Alipay and WeChat Pay.
“Payment is quite wide and diverse (in the Asia Pacific region). Go back by five years there were only few forms of payment -cash, credit card, debit card…and that’s changed significantly over the last couple of years. Even if you consider just one country, say Singapore, where Scoot is based, it is a credit card, debit card-led market. And if one considers Philippines, more than 85% is via cash. For an international airline, with operations across Asia, one size doesn’t fit all,” says Trevor Spinks, Head of Sales and Distribution, Scoot-Tigerair.
Relying on local agents/ staff
So how an airline can gear up for Australia, a market which is credit card, debit card-led versus Philippines which is going to be different with cash being the preferred payment option?
“There is a need to remain close to your international markets. Do we have the correct strategy for payments in these countries? There are some countries where you need to cater to cash, there are some countries where an airline would need to take payment via 7-Eleven convenience stores. We have recently witnessed (the emergence of) Apple Pay, Samsung Pay coming in to the market, and expect Google Pay to available soon. So each market has a lot of different payment methods,” explained Spinks.
“So relying only on credit cards and debit cards as a method of payment as an international carrier is wrong. There is a need to work on a payment strategy for each country you are in. The best way to approach the same is seek feedback from GSAs (general sales agents) or country managers. They are ones who know their respective markets inside out and share popular payment methods and trends. So one can prioritize and be ready to accept payment via methods that are relevant, and can be fulfilled by airline websites or call centres.”
Special preparation
China is a unique market in the whole of Asia.
It’s almost that you can think of China as one area, and can segregate it from the rest. Facebook and Google aren’t really relevant or functional in China, and as Spinks, says payment methods are even more distinctive in this market.
“Scoot flies to 18 destinations in China, and that’s a significant part of our network. We will be offering WeChat as a payment option soon. The complexity for WeChat pay is huge. It doesn’t use normal software language. WeChat Pay have their own language. So one needs to work with WeChat or 3rd party experts,” says Spinks. It is important as a massive chunk of population uses WeChat. “So it is about using what they use every day to fly Scoot. But, yes, China has very specific requirements, and different rules and regulations.”
He further explained: “So in terms of how you manage and work around this diverse payments world in this region, consider an airline which flies to 10 countries and each country has 5 forms of payments. And if all forms of payments are different from all the other markets, then there would be 50 forms of payments. You do need payment providers and acquirers. We work with Worldpay. They are already work with a number of payment distribution capabilities in several countries, and when airlines reach a certain point, they can work with one specialist and this allows an airline to straightaway tick, say 30 out of 50 payment methods, at one go. At times, there is a need to work directly with 3rd party suppliers. WeChat is a great example. We might have to work directly with WeChat to work it out for us. So it is a very diverse and hard area to manage. There is a need for a dedicated person within the airline to look after this. Also, you need expertise within each of the market to understand, whether say is 7-Eleven convenience store a viable option or is the popularity decreasing and in two years time no one would be interested in paying via this option. So then no point in investing in that payment method.”
As for consumers, airlines need to study how smartphones are shaping up their payment choices. How age and gender play a role in payments and where does travel as a shopping category fits in.
As new payment types become culturally engrained, users initiate to count on them for higher value transactions such as travel.
Other factors that need to be considered are:
· Know the local requirements, such as whether airlines are required to partner with a local entity in order to start connecting with local consumers. What sort of benefits does a local payment gateway offer, other than meeting legal requirements? Can one partner facilitate different methods - convenience store (tend to be semi-digital payments - a consumer takes a code or a QR Code associated with a booking and pays), online banking etc.?
· What are the complexities of integrating with a particular alternative payment method? Is extra cross-channel payment interface design and development 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. What is needed to design and implement necessary payment interfaces and processing flows?
· What is needed to consolidate payment transaction especially for more easier reconciliation and reporting of sales and settlements across payment options?
· Implement necessary payment controls according to the difference of processing by payment types (e.g. refund, void, capture).
· Implement fraud monitoring and prevention across payment options. “Fraud becomes a bigger problem, bigger the airline becomes. So when we were small, we weren’t worried about fraud, we had relatively bigger issues (to sort). But now we have around 40 aircraft, and flying to 18 different countries, fraud can be a big “number” annually. So a partner such as Adyen or Worldpay can also help with fraud solutions. But what you need here and what generally falls under the finance department, you need people would be measuring and tracking fraud. So if one country had a fraud value of 1% and the norm is 3%, then its fine. And another one had a value of 10%, so there are significant issues in that country and you have got to measure it. And the onus also lies on the 3rd party partner to sort it out. And of course, fraudsters also find new way of cracking the system, so it is always a cat and mouse game,” concluded Spinks.
Hear from experts at Ai’s 6th Airline & Travel Payments Summit Asia-Pacific, to be held in Bali (29 – 31 August). For more info, click here
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