Ai Editorial: Payments - a fascinating discipline to follow in 2020

21st January, 2020

Ai Editorial: Travel merchants are prioritising speed, trust and security when it comes to the payments-related experience. This, along with balancing CX and fraud prevention, and responding to regulatory requirements, are some of the priorities for 2020, writes Ai's Ritesh Gupta


There are several prevailing trends that today make payments a fascinating discipline to follow. Merchants and other stakeholders are keenly following the evolving payment economics, new standards set up to govern the flow of money, what's paving way for cost reduction and revenue optimization, dealing with fraud attacks etc.

For travel e-commerce players, their main priority is to simplify the checkout experience. Cart abandonment remains an issue, and losing out on a conversion is a huge painpoint. In addition, to this there are several other aspects.

The list is as follows:

·          Letting travel shoppers being in control: A recent study commissioned by PayPal to evaluate key trends related to mobile shopping habits and merchant readiness indicated that merchants must offer mobile optimized experiences if they are interested in attracting and maintaining younger consumers, such as GenZ and GenY. According to Amadeus,  24% of travelers still abandon their purchase because there are too many steps in the checkout experience.

In a recent blog post, Jeremy Dyball, Head of Commercial, Payments, Amadeus, mentioned that with the rapid pace of payments innovation, "a number of advances from simplified foreign exchange, to a raft of new payment methods and easily accessible instant credit are combining to make a smooth and hassle-free payment experience tantalizingly close". According to him, it's time to embrace the new era of frictionless airline payments.

·          Balancing CX and fraud prevention: Security and trust are significant considerations in consumers’ mobile purchasing decisions. Globally, 51% of consumer respondents would be less likely to engage with mobile commerce due to security concerns, according to the same PayPal study.

As LexisNexis Risk Solutions highlights, a frictionless customer journey “doesn’t equate to an absolutely friction-free experience. It’s about having the right type of friction, with the right action, at the right time. You have to figure out where and what that is”. From a shopper’s perspective, friction could be any feature or requirement that hinders their path through the sales funnel. It could be a compulsory registration, wearing form-filling and time-consuming authentication processes. For a seamless and secure experience, airlines need to embrace dynamic friction.

As Sift’s Trust and Safety Architect, Kevin Lee points out; merchants can’t get away with their airport screening approach. Travel e-commerce players have to ensure trusted shoppers or consumers can sidestep added authentication, while potentially risky users undergo that further screening. Since there is so much of data from customers via the app usage, device usage etc. there is a need to use behavioural fiction or behavioural dynamics looking at the signals to identify normal behaviour for an authentic shopper on an app or an online platform. And then being in a position to spot an anomaly where certain behaviour doesn’t seem to be normal. Then only there is a need to introduce certain friction or additional check in the shopping process. 

Highlighting e-commerce fraud trends in 2020, Riskified asserts that realistically, merchants can address fraud by leveraging the best fraud management solution: one that evolves to adapt to the latest attack vectors, with technology that can both register and analyze the vast amount of e-commerce data flows.

·          Payment flow: Other than counting on data for spotting fraudulent transactions or anomaly in behaviour, travel merchants are assessing the prowess of payment analytics and evaluating key metrics pertaining to the overall payment flow. Primarily, the focus is on the associated cost with each transaction, the rate of authorization, and the chargeback ratio. Delving deeper, payment specialists are counting on analytics for assessment of the risk profile, the relevance and performance of the acquirer, fee for alternative payment solutions etc. It is worth following how data and algorithms are shaping up to contribute both in terms of cost reduction and revenue optimization.

·          Regulatory environment: Regulations like PSD2 are paving way for new services and faster payments. PSD2 or the payment services directive in Europe is being associated with a major change in payments and data protection, and it is expected to fundamentally change the value chain. "PSD2 is opening up the (payment) industry, and breaking the monopoly of certain players on accepting payments," Simon Eve, Head of Travel, Trustly, told Ai in an interview last year.

The SCA requirements were originally planned for the 14th of September last year (with new migration completion deadline being 31st December 2020), but still concerns pertaining to PSD2 making online shopping more difficult and the same negatively impacting cart abandonment rates in the initial years of implementation are being highlighted.

·          Technology and digital commerce: Emergence of new technology or devices along with Internet connectivity means the need for payments to be processed automatically is already there. Overall, there is a need to keep an eye on options available for completing a transaction. So be it for things of IoT, which essentially refers to any kind of device, appliance or vehicle that can connect to the Internet, or the role of cloud services, merchants need to explore the emerging commerce features in a proactive manner. At the same it is vital to ensure that measures are in place for basic security and authentication.


Keen on exploring fraud prevention and payment-related issues?

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