There is an untapped $14 billion revenue opportunity for airlines if the sector gets its payments strategy right, the B2B Airline and Travel Payments Summit was told last week.
Tal Dadia, chief executive of multi-buyer split payments specialist Leeway, set out four pillars the sector needs to tackle to eradicate inefficiencies.
Payment Collection – How to reduce time from payment to collection and allow consumers and trade partners to pay easily and efficiently.
Dadia said streamlining the management of payments collection can save agencies seven days of work a year, the equivalent of $11.5 million.
Of the 20% of transactions that are declined, 45% are due to insufficient funds. Dadia said an increase in the approval rate of just 2% can equate to $1 million a month in revenue.
For example high value group bookings where individuals want to use different payment methods requires an automated clearing system that can allow this.
Alternative Payments Methods – how flexible airlines can become to support more payment methods in a B2B2C context.
Only 11% of airlines currently accept alternative payment methods due to legacy technology, said Dadia, and 30% say their number one challenge is enabling alternative and regional payments.
“Modern travellers expect modern payment solutions. Enabling more ways for your customers to pay and more ways for travel agents and OTAs to get paid will ultimately result in generating more revenue.
“There are other ways to allow payments to be done which are not being explored. Think about splitting payment with credit cards and loyalty points or travel agents through UATP.”
Reconciliation Automation – how much money is being “left on the floor?”
Dadia said 2.5 million transactions a year are being handled manually by airlines and OTAs and $1.5 billion is spent on reconciliation.
“This is one of the biggest problems that needs to be tackled. The solution is a a streamlined automated process that gives real-time visibility.”
A unified pay-in pay-out platform – a “central payment cockpit” – can eliminate the need to impose credit limits and allow firms to minimise or absorb hidden bank cross-border fees in different ways.
“The future of OTAs, airlines and payments should be a more simplified and centralised, and a more traveller centric approach,” Dadia told delegates.
Payer Experience – what tools do today’s travellers expect that increase their satisfaction and booking rates.
“This is a nuanced space airlines are not tackling enough,” Dadia said. “OTAs are much better. Airlines should learn from the e-commerce space.”
Dadia said payment gateways have solved the challenge of paying and being paid online, and payment orchestration has solved the issue of efficiently organising different payment options regionally.
“The third layer is around payment experience,” he said, like embracing well established buy-no-pay-later payments players like Klarna and Affirm.
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