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Travel Payments Unlocked for Airlines
Historically, travel payments have been neglected by airlines as financials have been considered to be a back-office operation. But recently, new technologies have highlighted the importance of payment options, and how they can be key to improving the customer experience. A recent report by The Paypers highlights how new payment trends push traditional card methods further down the payments pipeline. So what new digital payment options are airlines exploring to keep up with customer demands? Read on to find out. How A2A Payments are Dethroning Cards as a Travel Payments Option Airlines are faced with increasing complexity. New generations of travellers have different preferences and behaviours. They are pushing for change in the travel industry and demanding smoother payment options. For an airline, this presents a great opportunity to differentiate itself from competitors. One reason that travel customers are demanding improved payment options is because of some drawbacks that come from a historical dependence on cards. Flights, package holidays, and other products sold by airlines are often big ticket items. Many consumers then encounter problems when making their purchases due to card limits. Airlines often also add their own additional card fees, adding further cost for travellers. This is bad news for airlines. As customers are forced to abandon their carts after trying and failing to pay with multiple cards. Account-to-account (A2A) payments present a much-needed solution to this all too common problem. Besides, with A2A payments airlines also benefit from faster settlements, less fraud, instant refunds for their customers, and greater flexibility in their travel payments infrastructure. A Shift is Already Happening This shift away from card payments has already started. In 2019, the IATA launched IATA Pay, allowing travellers to pay for flight tickets bought online by directly debiting their bank account. This is a step in the right direction, but A2A payments take airlines one step further. Direct debit payments offer clear benefits over the card alternative but are still not the best option. Banks can be slow, and direct debits require the manual input of data, which is a blocker and potential source of error that adds another hurdle to the buyer journey. A2A payments have several advantages over direct debit. Payments are transferred instantly, and the customer does not have to enter any of their bank details. But it’s not only at the checkout that consumers and airlines benefit from A2A. Passengers can quickly add extra services with ease. For example, upgrading to business class, purchasing extra legroom, or buying an inflight meal. This can all be done with frictionless transactions and without the need for the passenger to have an account with the airline or a card on file. In addition, A2A payments have a lower cost of acceptance compared to cards, allowing airlines to reduce the transaction fees they pay. The Growing Cost of Card Payments Card payment fees have been continuously rising, which has hit airlines hard as they sell big ticket items and charges are percentage-based. Visa fees range from 1.29%-2.54%, and Mastercard ranges from 1.29%-2.64%. However, the amount your airline will actually pay is difficult to determine. Not to mention that these fees, when applied at scale to hundreds of thousands of purchases of $1,000 plus, quickly add up to significant sums. Credit cards and other payment processing fees were once the burden of travel agents. However, they are now the responsibility of airlines. The total estimated expenditure for payment costs is estimated at $20 billion a year for the airline industry. This is equivalent to 3% of the industry’s total revenue and demonstrates the need for airlines to forge strategic partnerships and lower their payment costs. Unlocking the Potential of Travel Payments Airlines’ basic cost of doing business is steep. Not only are card fees high, but governments are also levying high taxes, further diminishing profits. In addition, airlines’ everyday expenses for revenue generation, such as sales and marketing, are far from negligible. As such, airlines need to examine where they can make savings in their operations. Travel payments are an obvious challenge; solutions are already available and ready to implement, but they are often overlooked. The major focus of airlines has historically been on sales and acquisition. However, according to McKinsey, airline sales and marketing acquisition costs are between $5 and $15. By comparison, merchant fees vary between 0.5% and 3% of the cost of the item purchased. Even on a mid-range fare, with a $300 ticket, that’s a $9 fee, placing sales and acquisition costs and payment fees well within the same ballpark. The Next Generation of Payment Solutions Any airline that wants to stay ahead of its competitors must start its journey to being more customer-centric, and it can do that through payment convenience. A2A payments not only provide an opportunity to reduce costs by eliminating high card fees but also offer a smoother customer experience. With Brite Instant Payments, an airline can use open banking to securely and instantly receive money from your customers in one click, removing risk, improving cash flow, and reducing commission fees. If your airline needs to transfer money fast and safely… let’s talk.
Use Transaction Timestamps to Build Trust
A lack of trust will quickly lead to a lack of growth for an online trading platform. Unfortunately, fraud exists in many aspects of financial services, and online trading is no exception. Even in 2022, sleazy brokers and platforms create scams and deceive unsuspecting traders. For example, the online trading site RagingBull.com was recently forced to pay over $2.4 million for fake stock-earning claims and hard-to-cancel subscriptions. It is no wonder that consumers are cautious when depositing funds with online brokers and trading platforms. The question for these brokers is how can your trading platform work to build trust with new customers? Your customers need to trust that their money is safe. One way to help reassure them is with a transaction timestamp. In automated trading platforms, millions of trades can happen in a single week. An accurate transaction timestamp is necessary to prove reliability, show customers when and where their money is going, and in turn, increase deposits. What is a Timestamp? Timestamping is not a new idea – historically, people have always searched for ways to track and authenticate documents securely. Post stamps are viewed by many as the precursor and first utilisation of timestamping. But from this early and somewhat crude authentication method, transaction timestamps have dramatically evolved. Within modern financial services, transaction timestamps can now have millisecond precision. They are a monotonically increasing number, sometimes tied to the system clock of the system on which they are created. Typically, timestamps are used so that the transactions within a system are organised and appear in timestamp order. However, within trading, they can also give consumers the confidence to know when their money will appear and when they made a purchase – down to the second. How do Transaction Timestamps Build Trust? A timestamp for every transaction creates a form of ‘Proof of Existence’ to reassure your customers. Your business, customers, and all parties involved in the transaction will know exactly at what point a transaction started and its contents. Why does this matter? Let’s say Business A sent a payment to Customer B. The customer claims that they received no money. Business A (the sender) could then use the timestamps as evidence of the money being sent. Timestamping solves other issues too. For example, it eliminates the possibility of double-spending – where your platform user could spend the same assets more than once. Greater transparency also reduces the number of counterfeit products in the market and improves compliance and visibility for businesses. These are all major positives for trading platforms. Why Transparency Matters in Trading Customers have more product choices than ever when it comes to online trading. It is becoming harder for platforms to differentiate themselves and establish trust with new customers. Transparency is one way to do this, and it’s becoming increasingly important. According to Salesforce, 74% of customers say communicating honestly and transparently is more important now than before the pandemic. Transaction timestamps increase your platform’s transparency and give your customers what they want. Inaccurate timestamping not only breaches trust, but can also result in cancelled transactions, which is costly to your business. Consumers will have greater trust in your trading platform when they know when they will receive their payments, and that trust grows further if those payments are instant. Instant Payouts and Transaction Timestamps Timestamps are only one transaction element that can help foster customer trust. Customers want to know when they will get their money, and they want it to arrive fast. Our research found that customers within the trading industry are concerned with instant payouts. Brite surveyed 300 Swedish consumers about how important it is for a trading company to offer instant payouts. Overwhelmingly, respondents across age groups said that it was important: Not only did our research find that consumers want instant payouts, but they are also willing to pay more for it. Our survey respondents were willing to pay up to 15% extra to receive an instant payout. Brite’s Time2Money Feature Brite Payments offers Instant Payouts that allow your trading platform to deliver instant payouts 365 days a year with a simple, secure, and fuss-free API. Not only will your customers receive their money in seconds, but they will also know exactly when their money will land in their bank account. Brite Instant Payouts boasts a Time2Money feature that is unique to Brite. Time2Money ensures that every payout is time-stamped, so your customers know exactly when they’ll get their money. Timestamps are customised to each and every user and are accurate down to a few seconds. This helps your trading platform operate in a fully transparent model, build trust with customers, and save them time. The Next Generation of Payment Solutions Brighten up customer experience on your trading platform’ by increasing your transparency. Not only will transaction timestamps foster trust with new and existing customers, but they will also help you differentiate your trading platform from competitors. Get in touch to learn more about how our simple API integration can offer your trading platform an easy way to offer instant payouts with timestamps.
