Despite Challenges, Travel Companies Forge Ahead on Mobile Payments, a Report Says

More than anything else, customer demographics will drive mobile-commerce strategies for airlines, finds a study from CellPoint Mobile, a mobile-commerce vendor specializing in the travel industry.

In the Miami-based company’s “Mobile Outlook 2018 Report” released last week, it found that, among airline payment professionals in the North America, 56% cited customer demographics as the primary driver of their m-commerce strategies. That compares to 50% in South America and 42% in Europe.

What travelers want is critical, especially as more consumers make mobile devices a primary purchasing tool. Mobile already accounts for 40% of digital travel sales, CellPoint Mobile says. Airlines and other travel providers continually monitor and alter their commerce avenues.

Yet, challenges remain. A previous CellPoint Mobile survey found that almost 25% of airlines had a limited ability to store passenger payment data. Indeed, a survey from payment processor Worldpay Inc. found that 64% of consumers want to save their personal data to make subsequent m-commerce purchases easier. In another stat, 23% of them would not buy more than once from a retailer if there was no way to store payment details.

Airlines are trying. CellPoint Mobile says 78% of those surveyed use four or more third-party vendors for mobile payments, including many alternative payment methods like Apple Pay and Google Pay.

“Alternative payment methods—APMs, including the popular mobile wallets like Apple Pay and Google Pay—are a natural fit for travel enterprises pursuing strategies that involve personalized experiences, as they are primarily about meeting the customer’s preference for payment,” Jonatan Buus, CellPoint Mobile chief technology officer, says in an email to Digital Transactions News.

“Mobile strategies in general create convenience for travelers, as well as providing airlines and other travel operators with an omnipresent touchpoint through which to reach their customers throughout their journeys,” Buus says. “But mobile payments in particular are key, even for relatively high dollar-amount purchases like airfare; as we note in our report, Mobile Outlook 2018, total mobile-payment users are projected to reach 150 million by the end of 2020, or 56% of the consumer population. Travel companies, particularly airlines, may achieve early-mover advantage by offering APMs like these, but in the long run, supporting mobile payments will be a business imperative rather than a nice-to-have feature.”

Given the complexity of travel payments, managing airfare and traveler data—which can be tied into a global distribution system as well as into the airlines and government agencies—can present some limitations for airlines.

“Overhauling their payment capabilities is possible, but with proprietary systems built and maintained for a generation, it is extraordinarily capital-intensive,” Buus says. “The best bet for airlines in this situation is to find a technology partner that can integrate with their legacy systems and augment their existing capabilities with mobile payments.”

Airlines in particular are trying to expand their direct sales to retain more control and more of the profits, he says. “You can see this shift in the proliferation of responsive/adaptive airline Web sites and native mobile apps, both designed to accommodate the mobile traveler,” Buus says. “Airlines pursuing this route obviously need robust mobile-payment capabilities to make these channels viable.”