Ai Editorial: Working out an apt infrastructure for payment optimization

First Published on 21st September, 2018

Ai Editorial: Airlines intend to take steps to control their payments strategy holistically. This gives them visibility into  payments in all their sales channels and in all countries, allowing them to identify inefficiencies, writes Ai's Ritesh Gupta

What can pave way for optimization of payment-related experience? It is a vital question, especially for travel merchants with cross-border operations.

Businesses can't wait for long to embrace a new payment method. Every minute detail is being scrutinized as far as removing friction from the shopping process is concerned. And if a customer abandons the shopping cart owing to inflexibility in payment-related options, then the likes of airlines aren't doing any good to their business.

Roadblocks to innovation

According to a recent study by Amadeus' payment business, travel e-commerce companies are pulled back by many factors when it comes to innovation in this space. The list includes consumer data security, credit card data security, fraud losses, complexity of existing payment systems etc.

So how to combat such major roadblocks to payments innovation?

"Airlines looking to innovate while at the same time keeping customer data safe should first carry out an audit of all the systems in their infrastructure which are storing or using that data," recommends Klein Wang, Head of Merchant Services APAC, Amadeus’ payments business.

Wang further added, "Then look to limit – or even eliminate – that data from their systems using techniques like tokenisation. When looking for a tokenisation provider, it is critical to find a provider whose tokens are compatible with all those systems which will need to use and interact with them."

Simplifying infrastructure

There tend to be issues with payment-related infrastructure and the role of partners that facilitate a payment. For instance, not all global payment processors handle acquiring banks and routing the same way. "Airlines work with a number of different acquiring banks and other related service providers. To simplify their payment infrastructure, airlines should look for payments providers which can give them access, control and visibility over their payments infrastructure in a single place. A single source of data and a single entry point to monitor and identify payments from across all their providers," mentioned Wang.

Also, talking of payment acceptance, it is vital for airlines to minimize costs with a more fluid workflow. For instance, what needs to be considered to route a payment to an appropriate acquiring bank? What does the study by Amadeus suggest? "It’s important for airlines to look at the total cost of their payments infrastructure, not just the direct acquiring cost. And many of them are doing that – although not all. With that in mind, the greatest opportunity for airlines today is in reducing the indirect costs of accepting payments caused by manual processes and inefficiencies which are the result of the complexity of managing payments across many different providers in different sales channels and markets," said Wang.

Alternate payment methods

According to Amadeus, many airlines have been adding new payment methods and today accept on average between six and ten different payment methods.

There are two challenges for airlines adding more payment methods: user experience and reporting.

"From a user experience perspective airlines need to find a way to offer the right payment method to the right customer without providing a bewildering list of different payment methods. From a reporting perspective, each new method of payment has a different reporting format so airlines need to work with a partner which can help to harmonise all these different formats so they can get a single view of all payments from all payment methods," said Wang.

Other than most popular or new options, airlines also need to work out a local checkout experience and at the same time being in a position to curb possible criminal fraud.

Wang mentioned that there is always a trade-off between verifying that a payment method is being correctly used by its owner on the one hand and creating an easy-to-use and seamless check-out experience.

"Using a fraud management tool to check the details for signs of potential fraud – in a way that is transparent to the end user – can really help here. Combining such techniques with the application of stronger authentication practises, 3D Secure for example, when the fraud management tool suggests dubious transactions, is a good way to balance consumer experience with effective fraud control," said Wang.

Airlines need to sort payment infrastructure related issues. In fact, as Wang says, for airlines looking at passengers from Asia, these problems even get more complex. "Many airlines are still not offering book and pay functionality on their mobile apps – in many markets, however, mobile is the default. In China, for example, 73% of all e-commerce purchases by value are made on a mobile device (Kleiner Perkins) and mobile payment volume grew 116% in 2017 over the previous year," said Wang. Asia has more diverse local payment practices, more local regulations and more payment providers to work with.  

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