Today, people expect a lot from their online consumer experience. Especially when it comes to how they pay online, their retail payment experiences now influence their expectations of the payment experience everywhere. Innovative airline companies have an opportunity to lead the way if they align their payment processes with consumer expectations.
Since over 35% of travellers report that the payment experience is extremely important when booking flights, your payment strategy can be valuable to attract, convert, and retain 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 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. Many times flights are a high-value transaction for travellers, so they give these purchases more consideration as they move through the payment process. This makes it critical for airlines to ensure minimal friction through the process by offering the right payment types across different markets.
For example, today's digital travellers may be open to booking and paying for flights in various ways:
51% of Indian travellers would book and pay for a flight through a mobile app such as an airline-branded or travel app.
43% of global travellers said they booked a flight after clicking through from social media.
19% of Brazilians would be willing to pay for flights in installments.
71% of U.K. travellers said they prefer to book flights via their computers.
30% of German travellers prefer using mobile wallets such as PayPal to pay for flights and travel.
Consumers expect each of these payment experiences to be seamless, regardless of their preference. The transition between starting the booking process (such as an app or website) and paying for it must be optimised to make it easy, efficient, and secure.
Airlines’ must have the appropriate technology, web / native apps, and mobile services that can offer all this and more while still being efficient and optimised.
Let's take a closer look at some of the ways airlines can optimise their payment processes to provide insight, increase topline 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 your airline doesn't accept their favourite, you could be losing out on the booking. And even if the traveller reluctantly uses a different payment method if their preference wasn't available, you may lose future bookings as 18% of them would consider going elsewhere for travel arrangements.
Below is a small sample of the variety of airline payment options preferred around the world:
Credit cards across North America
WeChat and Alipay in China
Paytm in India
PayPal in Australia, Germany, and Spain
Boleto Bancario in Brazil
MercadoPago in Argentina
Efecty in Columbia
Travellers have many reasons for choosing their preferred payment option, but it's about more than just using what's popular or available in their country. Many people use credit cards or other payment methods such as Paytm in India because of the loyalty program. Earning points or cashback on an expensive purchase like an airline ticket make them a top choice for travellers.
But being flexible enough to offer this much choice to travellers is a challenge for most airlines. While they're 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 your consumer-facing channels (website, app) allows you to support more payment methods globally – and allows you to present the preferred form of payment to the applicable market You'll be better able to manage, increase and optimise your payment experience for travellers while still ensuring you've got their preferred method 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 anyone's travel experience. That's why many airlines are starting to 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.
Offering the instalment payment option globally could open an airline to new customers in new and existing markets. Travellers in Latin American markets expect this option more than the rest of the world as paying by instalment is a popular method of payment elsewhere in their economies. It has since spread across the digital world there and become a very popular way to pay for online purchases across many industries. 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.
These third-party vendors make it easy to integrate this option into an airline's payment process, with many offering API webhooks or no-code ways of interfacing with your internal systems. But, since external vendors provide these services, airlines must do their due diligence and only partner with reputable loan operators.
Reduce losses on foreign exchange
Fluctuations in the foreign exchange (FX) market are frustrating for both airlines and travellers. Travellers often incur extra processing fees and get unfavourable exchange rates, leading to surprise when they see their bank statement. These surprises often cause an increase in chargebacks. On the other hand, airlines lose out on the difference between the exchange rate when the transaction is initiated and settled. Depending on how many transactions they do, this difference could be significant to an airline's bottom line. Multi-currency processing (MCP) is applied at the time of payment as an option to convert the purchase price into a currency of the buyers choice. It is not a payment option in itself
Adding a real-time payment (RTP) mechanism to a payment process can help both parties. Travellers would know precisely how much they're being charged in foreign currency, and airlines wouldn't lose out if the rate changed during processing. RTP networks operate 24x7x365 so that payments can be initiated anywhere at any time, and they'll be cleared within seconds.
With the advances in RTP offerings globally, it's possible to combine both an RTP and payment method in one, such as with PayPal. PayPal partnered with J.P. Morgan to offer RTP to its customers in 2019, allowing U.S.-based airlines the ability to save on foreign exchange rate differences.
Travellers have become increasingly flexible in their payment preferences, so ensuring your airline can handle them all is critical. Anything you can do to make paying easier and reduce the friction for travellers will increase revenues and passenger satisfaction.
Increase revenues by reducing payment friction
Friction in a payment process for customers could refer to many things, such as a declined payment without an explanation, an unexpected site redirect, or the need to re-enter their payment or contact information several times. Most travellers will react negatively to any payment friction, causing them to go with a competitor or skip the booking altogether.
Suppose you can reduce the friction by eliminating the obstacles that can happen during online payment. In that case, you stand a better chance of earning the immediate sale and keeping them as a loyal customer, for example, by automatically verifying correct payment details and providing meaningful error messages as needed.
Make it easy to enter payment details
Making it easy to purchase flights online starts by only asking for payment information once during the checkout process. If a web or mobile app requires travellers to enter the details more than once, they're more likely to exit the purchase process. In one survey, over 40% of travellers wouldn't continue a travel booking if they had to re-enter personal information more than once.
Allow travellers to upload payment details with a photo
Airline-branded mobile apps can also take advantage of the functionality that allows travellers to snap a photo of their credit card and have the photo app enter the information for them. The same technology lets iOS or Android users add their payment information to Apple Pay, Google Pay, or Samsung Pay. It can be incorporated into an airline's mobile app to make it easier for travellers to enter their flight booking details or save their payment details to their registered accounts.
Use existing technology to save payment details
Many eCommerce sites offer the ability to check out as a guest without having to register for an account on the website. While many travellers would 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 big feature for American travellers, with nearly 70% of them saying they're more likely to purchase a flight if they can use the payment details saved in their browsers.
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 currency or a preferred currency. Given the difference in pricing for different currencies, it can significantly impact 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 for them 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. Travellers would only have to go through the payment process once, reducing the friction while increasing your revenues.
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 efficient for travellers to upgrade and enhance their travel experience. Each touchpoint must have the appropriate payment solution available, whether it's 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
Trust is a critical element of an online relationship. Reassuring indicators help airlines build that trust and confidence of prospective travellers, ensuring they complete today's transaction and come back for others in the future.
It starts by adding those reassuring indicators to your airline website and app, such as logos and links that indicate 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 to an airline website can increase conversion rates for travel bookings. Again, since flights are a high-value purchase, adding payment authentication and their logos such as "Verified by VISA" and "MasterCard Secure" reduces fraud and improves the travellers’ confidenceand increases the likelihood they'll complete the purchase.