The Airline Payment Guide for 2023/24

By 2024, the global airline industry is forecast to recover to the pre-pandemic passenger levels of 2019. 2022 finished at 72% of 2019 levels, and airports at the end of May this year experienced the busiest day of travel since the pandemic.

As travel demand continues to grow, so does the expectation for a seamless payment experience tailored to the needs of travellers, wherever they are and however they choose to pay.

Airlines that embrace innovation within their payment systems will have an edge over their competition. Since over 35% of travellers report that the payment experience is extremely important when booking flights, viewing payment strategies as a commercial lever can be valuable to attracting, converting, and retaining customers. A secure and agile payment experience at every stage of the consumer journey, starting from the website or branded app right through to payments onboard the aircraft, can impact an airline's bottom line. It builds confidence and trust with consumers, while still delivering the frictionless experience today's digital consumers expect.

In this guide, we'll go over current and predicted payment trends within airlines, such as instalment payments, NFT (Non-Fungible Token) payments, and the rise of alternative payments, while highlighting ways airlines can improve the payment experience for their customers, improve conversion rates, and become payment leaders in the industry.

Why the payment process matters:

The payment process is an integral part of the travel booking experience. Nearly 30% of travellers stop the checkout process and move to another airline if their preferred payment method isn't available. Flights are typically a high-value transaction for travellers, so they tend to give these purchases more consideration. This makes it critical for airlines to ensure minimal friction throughout the process by offering the right payment types across different markets.

Consumers expect each of these payment experiences to be seamless, regardless of their preferences. The transition between starting the booking process and paying for it must be optimised to make it easy, efficient, and secure.

Airlines must have the proper technology - websites, native apps, and mobile services - that can offer all this and more while still being fast and user-friendly.

Let's take a closer look at some of the ways airlines can optimise their payment processes to provide insight, increase top-line revenue, and reduce costs, all while improving the customer experience.

Maintain and offer flexible payment options

Consumers have strong preferences in their online payment methods, so if their first choice airline doesn't accept their favoured payment method, a booking is likely to be lost. And even if the traveller reluctantly uses a different payment method, future bookings may be lost, as 18% would consider going elsewhere for travel arrangements.

Travellers have many reasons for choosing their preferred payment option, but it's about more than just using what'spopular or available in their country. Many people use credit cards or other payment methods such as Paytm in India because of the loyalty programme associated with the method. Earning points or cashback on an expensive purchase like an airline ticket makes them a top choice for travellers.

But being flexible enough to offer this much choice to travellers is a challenge for most airlines. While global companies, they still must work within their tech stack, vendor options, and payment processor framework when it comes to payments. Creating a centralised payments infrastructure that integrates with consumer-facing channels (website, app) allows airlines to support more payment methods globally – and provides for the preferred form of payment in the applicable market. It is better to be able to manage, increase and optimise payment experiences for travellers while still ensuring their preferred method is available.

Aside from integrating with global payment options, what else can airlines do to offer more payment flexibility? Keep reading to find out more.

Increase market share with an instalment payment program

Flights are often the most expensive part of a travel experience, especially when flying long haul. In fact, the cost of flying is becoming even more expensive, with international flight prices from the UK increasing by around 18% from last year, according to Kayak data, and up 42% in the US. That's why many airlines now offer instalment payment options through services like Affirm, Klarna, Afterpay, and Uplift. Also known as point-of-sale loans, these services allow travellers the option to pay for the flight or trip over a fixed period.

Airlines, especially during the pandemic, realised that implementing buy-now-pay-later (BNPL) options doesn’t just benefit their customers but their financial performance as well. For instance, in a BNPL transaction, the customer pays the provider, not the airline, so any chargeback the customer might file won't affect the airline.

Offering instalment payment options globally could also expose airlines to new customers in new and existing markets. Travellers in Latin American markets expect this option more than the rest of the world, as, credit and debit cards aren'tpopular due to a sizeable proportion of the region being unbanked. Research from Mastercard found that in 2020, only 55% of adults had a bank account with a traditional financial institution, and even fewer (19%) had a credit card. Other regions would be open to instalment payments for flights, too, with India, Spain, and the U.S. also showing that close to or more than half of travellers would pay for flights by instalments.

Younger generations and those embarking on Visiting Friends and Relatives (VFR) journeys are emerging as prime users of BNPL. Where we see less interest in BNPL is for business-class seats and shorter flights, where the cost may either be covered by a business or be too low to justify payment in instalments.

Payment orchestration can significantly enhance the implementation of BNPL solutions for airlines by simplifying technical integrations, optimising revenue management, improving the customer experience, and providing operational efficiency. It enables airlines to offer a variety of BNPL options while managing risk and compliance effectively.

Implement a multi-acquirer strategy to increase opportunity

During the pandemic, acquirer appetite with airlines reduced significantly, as they sought to reduce their exposure and risk by not having 100% ownership of payments. Acquirers began demanding airlines to bring in another acquirer to distribute the risk or require them to deposit significant funds in an account in case the airline were to collapse. Airlines quickly grasped the need for diversification, forcing them to explore and implement a multi-acquirer strategy, which airlines are now reaping the rewards from.

A multi-acquirer strategy involves using multiple acquirers to process payments, which can provide several benefits, such as improved payment reliability, redundancy, cost optimisation, and enhanced geographic coverage. Realisation of these benefits has now led to the adoption of a multi-acquirer strategy by most airlines. Although some are still in the exploratory phase of this approach, its trajectory suggests substantial traction soon.

When implemented, the benefits of a multi-acquirer strategy include the following:

More reliability:
if one acquirer experiences technical issues or downtime, transactions can automatically be routed to another acquirer, minimising the risk of payment disruptions, and increasing conversion rates.

Optimised payment routes:
multi-acquirer platforms can dynamically route payments based on a range of factors, such as transaction volume, currency, card type, and geography. This optimisation can lead to better authorisation rates and lower processing costs.

Global reach:
different acquirers might have stronger networks or partnerships in specific regions. A multi-acquirer platform allows airlines to tap into these regional strengths, easing international transactions and scalability with expansion.

Reduction of risk:
if an acquirer faces regulatory or compliance issues, airlines can quickly switch to another acquirer without disrupting their payment processing.

Better negotiations:
airlines that use a multi-acquirer platform can negotiate better terms with acquirers since they could switch between them. This can lead to more favourable contract terms and better packages.

More features:
different acquirers may offer unique features or services. By integrating multiple acquirers, airlines can take advantage of the latest payment technologies, fraud prevention tools, and other innovations.

Payment orchestration simplifies the otherwise complex process of managing multiple acquirers for merchants. It improves transaction success rates, enhances reliability, optimises costs, and provides valuable data insights. By leveraging a payment orchestration platform, airlines can implement and maintain an effective multi-acquirer strategy while focusing on their core business operations.

Use existing technology to save payment details

Many eCommerce sites offer the ability to check out as a guest without registering for an account on the website. While many travellers prefer to create an account on your airline website to save their data securely, others don't. This could be due to their cultural or personal preferences, so airlines that offer both options will please more travellers.

Further, some travellers save their payment details in their web browser or password manager extension. Giving the airline's website payment processing functionality access to this data would encourage these travellers to book more often. This is a major feature for American travellers, with nearly 70% saying they are more likely to purchase a flight if they can use the payment details saved in their browsers.

Here are some other benefits of adopting payment-related capabilities that are common in eCommerce settings:

Reduce declined transaction rates with automatic payment detail updates
It is important to offer travellers the ability to store cards securely, and some acquirers can automatically update expired or replaced credit card information for payment details airlines have on file for registered travellers. Card schemes such as American Express and Mastercard offer this service, but not all travellers like it. Some surveys show a strong preference for it in China, India, and Mexico but not in other areas of Europe and the Americas.

Add local and preferred currency payment options to booking portals
Another element that can encourage travellers to book flights is paying in their local or preferred currency. The difference in pricing for different currencies can significantly affect a traveller's buying decision. They can avoid high or unexpected exchange fees and take advantage of good exchange rates.

For example, a European traveller may appreciate paying for a flight on a non-European carrier in Euros to take advantage of the positive exchange rate and avoid potential bank charges. To do this, airlines would have to implement dynamic currency conversion (DCC) software in their payment processing system and then integrate it into their end-user interface to highlight the cost in the traveller's chosen currency.

Offer extras up-front
Another way to reduce the payment friction for travellers is to sell additional services at the time of purchase. For example, selling a meal voucher when the ticket is purchased, so travellers don't have to worry about buying their meal on the plane. Or offering upgrades and add-ons to their flight that could be purchased easily at the gate or airport with a tap of their bank card. Research reveals that two-thirds of Brits (69%) paid for one airline extra on their last flight, with nearly half (48%) saying it was because it’s easier to do so.

This idea only works, however, by considering the offline traveller touchpoints throughout their trip. Give them a chance to combine purchases where appropriate to make it simpler and more efficient for travellers to upgrade and enhance their travel experience. Each touchpoint must have the appropriate payment solution available, whether a contactless point-of-sale device at the airport gate or an additional product list and purchase feature in your eCommerce web app. The challenge with offer and order management is the fulfilment throughout the customer journey.

Nurture traveller relationships by increasing trust and loyalty

Trust is a critical element of an online relationship and helps to build loyalty. Reassuring indicators help airlines build the trust and confidence of prospective travellers, ensuring they complete today's transaction and come back for others in the future.

It starts by adding reassuring indicators to your airline website and app, such as logos and links that show your commitment to security, privacy, and industry regulators. Communicating the payment process expectations as early as possible can reduce drop-off rates and increase customer trust in your airline.

For example, adding an industry regulator logo such as IATA (International Air Transport Association) to an airline website can increase conversion rates for travel bookings. Again, since flights are a high-value purchase, adding payment authentication and logos, such as "Verified by VISA" and "MasterCard Secure" reduces fraud, improves the travellers’ confidence, and increases the likelihood they will complete the purchase.

According to WorldPay from FIS, these are the selected percentages of traveller that are more likely to book a flight if they see a digital security logo:









Be transparent and communicate

There's nothing like getting to the end of an online checkout process and seeing extra fees or hidden charges that you weren't prepared for. Travellers are no different and don't want to be surprised at any part of the payment process.

Airline websites and native and mobile apps should be transparent about any costs and fees that may arise based on travellers' options. That builds trust and improves the overall payment experience.

Likewise, clear communication about what has happened through useful error messages and annotations is essential when something goes wrong during the payment process. Clear error messages are critical during the payment process, as travellers may already be nervous about entering their payment details online. Consider the difference between "Please validate your payment details" and "We're sorry. There was a technical error on our end. Can you please re-check your payment details so we can try again?" Most online shoppers need a detailed payment error message to feel secure enough to retry the payment, so make sure your payment solution can provide them.

Online verification of banking information during the payment process can increase cart abandonment rates due to payment declines caused by data entry errors. For example, if paying by credit card and the traveller enters a card number that is too short or an expiry date in the past, a noticeable highlight and meaningful error message can help make it obvious and easy for travellers to fix, avoiding cards being declined.

For a positive spin on the communication tactic, airlines can be more transparent about their payment process by using interface elements to showcase progress. Paying for a flight often involves several steps, so showing where they are in the process with a progress bar improves the customer experience, increases conversions, and builds loyalty.

What to expect heading into 2024

The future of payments is continually evolving as more innovative technology is introduced to the industry. The more technology makes our lives frictionless at multiple touchpoints, the more airline customers will expect to see these new innovations when bookinga flight.

Here are some to keep your eyes on as we enter 2024:

NFT Tickets

The South American market has seen the emergence of NFT (Non-Fungible Token) flight tickets through initiatives like TravelX. This concept empowers consumers to buy flight tickets as NFTs, allowing them to resell them and update the passenger information when they do, up to 72 hours before the scheduled flight departure. The airline receives the transaction fee with every resale, fostering a symbiotic relationship between the airline and the passenger. The convenience and flexibility offered by NFT tickets have the potential to reshape the ticketing landscape, marking it an exciting trend to observe as Flybondi becomes the first airline to implement it.

Apple Pay

Apple Pay is gaining traction as one of the most popular payment methods in the world – and its interest is not slowing down. There are 2.3 billion mobile wallets in the world, 507 million of which are Apple Pay. With the rise of contactless payments and the increased focus on health and hygiene, Apple Pay offers a touchless payment option that aligns with the evolving travel landscape. With many travellers now using their mobile devices to research, book flights, and manage their travel, integrating Apple Pay supports this mobile-first behaviour, making it easy for passengers to complete transactions using their smartphones. Over the next year, we expect to see more airlines implementing Apple Pay also in the booking process and onboard aircraft.

In-flight payments

With WiFi becoming the norm on many flights, especially long-haul flights, we are seeing more innovation on how customers can pay for goods while in the air, touch-free. Whether it’s by uploading your payment details to your online profile with an airline to allow instant chargeback to your seat number or by a QR (Quick Response) code, these types of innovations are expected to take off over the next year as filled flights look to speed up the onboard service with seamless payments.

Bleisure travel

On average, corporate airfares are expected to be about 9% higher than pre-pandemic prices. Despite almost 18% of corporate travel being replaced by virtual meetings and businesses being more conscious than ever of their carbon footprint, Morgan Stanley found that the the company’s travel expenditures are already back to pre-pandemic levels, which will continue to grow. As a result of a more flexible work culture, business executives are now taking advantage of more travel, combining it with leisure, as they realise they can effectively travel for longer periods while adding in a holiday. The rise of the ‘Bleisure traveller’ will encourage new spending habits, and airlines will need to navigate these as they arise, mainly as it refers to business loyalty programmes and corporate/leisure travel becoming mixed.

Find your partner in payments

Refining the payment process for airlines can lead to increased bookings, higher conversions, and a smoother customer experience. As flights meet the same demand as pre-pandemic levels, and with travellers' increased exposure to alternative payment innovations in online shopping, airlines must up their digital eCommerce game significantly.

It's about delivering a payment experience that supports the varying expectations of travellers globally without compromising security. How airlines structure their tech stack and integrate the right solutions at the right time will dictate how well they deliver it. Done well, payments will be another reason travellers will come back to your airline over and over.

To learn more about how CellPoint Digital can help optimise your airline's payment ecosystem, get in touch with us today. We would love to speak to you and see how we can create a customised payment solution for your airline.