Travel industry must keep up with consumers’ payments demands

Payments providers must keep up with the fast-paced change of consumer demands in the travel sector, according to Kevin White, Mastercard’s director enterprise partnerships travel industries.

“Consumers are being quite vocal about what they want. The opportunity for B2B payment innovation is to keep up with those same expectations in a business setting,” said White, on the side lines of the Amadeus Future of Airline Payments Conference in Madrid on November 6.

“Over the past five years there’s been a lot of innovation with virtual card technology which can significantly reduce friction in the system across the entire travel space.”

However, a reliance on legacy payment systems has deterred innovation, particularly in travel payment environment is particularly complex.

“Historically across the travel ecosystem there’s been many different payment flows, legacy processes that have existed but not efficiently – people just haven’t really understood how much better things could work or had an answer to the problem.”

According to White, advances in digital payments and virtual cards have been significant in recent years, as they offer organisations a secure and efficient solution.

Mastercard have partnered with travel software firm Amadeus to offer issuing banks a B2B payment solution based on virtual card technology.

“With travel – because there’s so much complexity, you can innovate much more,” says Bart Tompkins, managing director at Amadeus.

“We provide solutions now for virtual payments from travel agencies to airlines – this is really coming out of travel more than anywhere else. So you actually get innovative in the industry, almost ahead of other areas.”

In his presentation at the conference, Tompkins pointed out that 80 percent of airline merchants considered their payment strategy key to the success of their business. Heightened customer expectation is likely an instigator: Tompkins also stated that 24 percent of customers had abandoned a booking without completing it because of too many steps or clicks in the payment process.

Apart from virtual cards, blockchain technology has emerged as an area of potential for payments innovation. According to Tompkins, Amadeus had worked to link a blockchain provider to an airline as a payment mechanism over the past couple of years, but the idea never reached implementation.

“Blockchain will probably happen more in B2B payments first rather than consumer. We are beginning to see things there … payments between hotels, travel agencies, airlines: that’s where blockchain could start to happen. But it’s going to be slow, long ramp up,” says Tompkins.

“We are in fact at Amadeus using blockchain in baggage tracing, so that’s the kind of space where you could use it. Blockchain will come in first for other areas of business, and payments will come a bit later. But I’m sure it will come one day.”

White also believes blockchain could be used to innovate the travel space, outside of payments.

“When you look at specific things in travel like loyalty, there are use cases where blockchain could potentially start to make an impact. For example, if you fly with an airline once and you don’t fly with them again within a year or two, that points balance is still set on their books. The ability to exchange those points with another carrier could make a big difference.”

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