Is there an ideal time for airlines to launch mobile payments?

Sept. 20, 2016 | by Kristian Gjerding

A lot is at stake when airlines decide whether the time is right to launch some of today's newest mobile payment solutions to their passengers, including Android Pay, Apple Pay, Visa Checkout and Masterpass.

How much? eMarketer estimates that $762 billion in digital travel sales will be in play by 2019, as is nearly $60 billion spent annually in airline ancillary revenues, according to IdeaWorks.

Airline decision-makers will approach mobile-payments challenges from different angles, based on their roles and the departments in which they operate such as finance, ecommerce and IT.

Collectively, however, they share the same end goal: supporting more efficient mobile payment functionality and driving more revenues. All are trying to find ideal solutions from their unique perspectives, hoping to stay up-to-date and nimble in a marketplace that is driven by external factors: device manufacturers, payments innovators, technology experts and the shifting-toward-mobile behaviors of today's travelers.

Another challenge: an airline's internal payments ecosystem. It most likely relies on legacy processes that were built for plastic credit and debit card transactions. Those legacy operations need specific upgrades and mobile-first expertise to support today's new touch-tap-swipe-scan payments from high-tech smartphones and mobile devices. They also need to lay the groundwork for future payments from wearables, key fobs and other innovations. They also need to be nimble and capable of capturing and reconciling revenues from multiple channels – online, offline, from apps and mobile web.

Different divisions within an airline can find common ground by focusing on their shared goals and ensuring their specific needs and organizational limitations are addressed. Finance, ecommerce and IT managers should keep these points in mind in their discussions about which payment methods to implement, which vendors to work with and when, where, and how to deploy.

Finance: Focus on revenues

With a focus on cost efficiencies, revenue generation and profitability, finance professionals must monitor and justify investments in new payments solutions, just as they should maximize relationships with the Payment Service Providers (PSPs), acquirers and other key vendors involved in the payments process. To boost revenues and stay competitive, they should insist that mobile payments functionality accomplishes two key goals: protecting existing revenues and generating new revenues streams from the mobile marketplace. That is, know your markets, know your passengers, and support payments accordingly. Financial professionals should also keep in mind that in this new and rapidly evolving mobile payments environment, parity is no longer enough; innovation and a cutting-edge mindset are paramount if airlines finances are to remain healthy, modern and robust.

Ecommerce: Turn "lookers into bookers"

Often considered an airline cost center, the ecommerce division must stake its claim in the airline's growth and profitability by proving that investments in mobile payments can produce results quickly. Ecommerce's primary goal should be "turning lookers into bookers." Enabling passengers to pay for tickets and ancillary products from an airline’s website or mobile app will create the foundation of a mobile-first payments strategy and can generate critical new revenue streams that airlines seek. IT also will help ecommerce teams take control of the mobile channel, including upselling and cross-selling opportunities, instead of sharing it with partners. Taking the first step to enable mobile payment functionality and payment apps is crucial for e-commerce professionals, especially if they are responsible for tracking their division's progress and success.

IT: Pursue flexibility, innovation and speed

Resources, time to market and expertise are always top-of-mind among IT professionals. So are the challenges of adapting complicated and legacy infrastructures so they can support the new technologies and devices that transact payments from smartphones and other mobile devices. Mobile operating systems, devices, data streams and payment technologies can change and evolve every few months, raising the bar for IT departments to adapt and modernize just as quickly. IT professionals must figure out the best ways to stay in sync with new innovations – even if they are not leading it. Their focus should be on internal mobile expertise and third-party mobile-first vendors who can speed time to market for complicated payment projects. Solutions might lie in plug-and-play business solutions, self-service platforms, SDKs and APIs that ease the burden on internal divisions, and reporting capabilities that help IT monitor results and track growth.

Every industry finds it difficult to stay up-to-date and modern in such a vortex of industry change and innovation around how customers pay. Every airline, and every division within an airline, however, must approach mobile payments in a way that makes sense for their respective markets, their increasingly mobile-reliant passengers and, of course, the airline's revenue goals.

The bottom line for a mobile payments strategy is the bottom line. In pursuit of higher profits, airlines must ask the right questions, develop strategies that resonate across all involved divisions, and identify the solutions that support ongoing innovation, revenue generation and their mobile-centric passengers.

Topics: In-App Payments, Loyalty Programs, POS, Retail, Trends / Statistics

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. View Kristian  Gjerding's profile on LinkedIn

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