Despite costs, airlines deploy mobile payments to leverage revenue opportunities
A new CellPoint Mobile-commissioned survey of more than 50 airline revenue and payments professionals finds common agreement around revenue opportunities that arise from deploying mobile payment capabilities, even as they cite common challenges for turning payment potential into revenue realities.
The findings, contained in a newly published Airline Industry Brief, reflect the opinions of airline payment, e-commerce and mobile commerce managers in North America, Europe and Latin America.
While motives vary for mobile payment strategies, a recurring theme acknowledges a demographic change that is filling airline seats with raised-on-mobile travelers who increasingly expect mobile payment capabilities – passengers who can also take advantage of improved Wi-Fi connectivity to purchase products and services as they travel. It's also clear that airlines see more revenue potential from the growing number of alternative payment methods now arriving in their markets and regions.
And despite the fact that about one-quarter of the respondents say they lack executive support for a mobile payment strategy, nearly all are implementing mobile strategies to remain competitive. As one respondent noted, "It is important to be easy to do business with, and mobile payments are necessary to be competitive in this market."
The opportunities that are influential in their decisions to offer APMs to their passengers include:
- Customers are younger, raised-on-mobile travelers who are receptive to mobile payments (48 percent)
- Mobile payments are increasingly easier because of improved Wi-Fi connectivity during travel (46 percent)
- Consumers are already using mobile payments and mobile banking services for non-travel transactions and purchases (43 percent)
- More alternative payment methods (APMs) are available in their markets (39 percent).
By region, payment experts in the Americas are more likely to cite customer demographics as a primary driver of mobile commerce strategies – 56 percent in North America and 50 percent in South America, compared to 42 percent in Europe/UK. But the same European/UK (50 percent) and South American (40 percent) experts say the availability of more APMs is a key factor in their decision to roll out new payment solutions, a response chosen by 22 percent of North American experts.
Across the globe, airline payment experts face similar challenges as they shift from online and card-based payments to payments made from smartphones, digital devices, apps and even wearables. The challenges:
- New APM integration is costly (41 percent)
- Integration is complex and time-consuming (30 percent)
- Outdated payments systems/databases are a limiting factor (30 percent)
- Security issues, fraud and data breaches (30 percent).
Airlines in recent years have been slower than some other industries at embracing technological innovation or anticipating and effectively addressing the desires of many travelers. But mobile innovation cannot be postponed indefinitely. Business Insider predicts that mobile payment users will rise at a 40-percent, five-year compound annual rate to reach 150 million by the end of 2020, or 56 percent of the consumer population. By then, it may be too late for an airline to get on the mobile payment train.
The good news is that awareness is growing in the travel sector around the technology, behavioral and revenue opportunities that exist around mobile payments capabilities. In parts of China, in fact, more payments are now made on mobile devices than on desktops or computers a trend that no doubt will eventually spread to the rest of the world.
Airlines and travel companies must prepare to make mobile payment capability a reality soon, because the market is headed that way.
Kristian Gjerding Kristian Gjerding CEO of CellPoint Mobile, a payment solutions provider for airlines. Gjerding has helped shape the digital payments environment through his work with best-practice standards groups at airline organizations globally.