By Jeremy Dyball, head of commercial, payments, Amadeus
Just a few years ago it was customary to pay for travel with cards, or perhaps even cash in some markets. We knew Europe’s second payments directive (PSD2) was being introduced but many in the travel industry hadn’t heard about the new Strong Customer Authentication (SCA) requirements, let alone devised a plan to implement them. In the B2B world some agencies had experimented with virtual cards but the vast amount of volume was paid via legacy methods like lodge cards. And the concept of ‘frictionless payments’ in travel was nothing more than a dream as customers battled against poor checkout flows, a lack of choice and limited price transparency. How things are changing.
Fast-forward to the present and we’re seeing a range of trends that re-define how people pay for travel. Here are my predictions for how four trends are going to play out in 2020.
Delivering SCA
By now we’ve probably all heard about the importance of delivering the SCA requirements for electronic payments made within the EEA to be subject to two-factor authentication. But 2020 is when things get real for the travel industry as the revised enforcement date of December 31, 2020 draws near.
For airlines, agencies and hotels that sell large volumes indirectly and who are part of multi-merchant packages, authenticating card holders with two-factors is far from straightforward. We’re going to see a rush to build in the industry’s new 3D Secure protocol which helps address this challenge, particularly for direct sales. When it comes to indirect sales, particularly in the corporate travel world, there’s going to need to be even closer collaboration between issuers, technology partners, travel providers and TMCs if we’re to rise to this challenge.
The explosion of payment methods will intensify
According to our own Travel Payments Guide data analysis, 2019 marked the year that local, or alternative, methods of payment surpassed cards and cash combined for the first time. There are now over 300 ways for travellers to pay and I don’t see this exposition of innovation slowing any time soon.
Polish mobile payment specialist BLIK was handling around 200,000 transactions just a couple of years ago and is now on course to hit 200 million this year.There is a host of similar examples from right across the world. It’s my belief that in 2020 many travel players will underestimate the pace of change and are likely to lose out on business simply because they don’t allow people to pay the way they want. The US is a card dominated market but even there, 45 percent of millennials don’t have a credit card according to PPRO’s consumer market survey.
Cards are going virtual, 2020 is the tipping point
We’ve been talking about the fraud-reduction and reconciliation benefits of virtual cards for a number of years but they still represent just a fraction of how agencies pay suppliers like airlines. This transition is definitely going to ramp-up in 2020 as trends like SCA and NDC-adoption naturally push consumers towards the data-rich capabilities of virtual payments. There are also moves to put virtual cards in the hands of business travellers via their mobile, whilst it’s not something we’re involved with I can see growth there as well. Virtualising card payments is preferable for corporations, travellers, agencies, suppliers, technology companies and the banks – 2020 looks like the tipping point.
Frictionless payments will arrive
I’m an optimist, so I’m going out on a limb to say I think at least a handful of travel brands will deliver a payments experience that can legitimately be described as ‘frictionless’ in 2020. For me, that means being able to pay how you want, with just a couple of clicks – preferably none, via your device of choice, with FX transparency and real-time fraud checks that don’t slow down the payment. And importantly, this is right across the travel experience, whether booking at home or buying lounge access at the airport.
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