Opportunities Expand for Airlines To Adopt Mobile Payments, But Challenges Persist

Mobile payments are on the radar for many airline executives. Fully 72% of North American airline executives responsible for revenue, finance, payments, and commerce, said the increase in customers using mobile payments and mobile banking is a factor in deploying digital wallets and alternative-payment methods, finds a new survey from CellPoint Mobile, a Miami-based global payment technology company that provides mobile commerce solutions to the airline and travel sectors. Globally, that fraction is 43%.

Other factors influencing these mobile and alternative payments decisions for North American airline operators include: improved Wi-Fi connectivity on airplanes, 61%; a younger, raised-on-mobile customer more receptive to mobile payments, 56%; and more customers using smart phones, 33%.

“Eventually, mobile payments will be as commonplace as using plastic or cash for everything from tickets and upgrades to purchases made on the way to the airport, in the airport, on the plane, and at the destination,” Kristian Gjerding, CellPoint Mobile’s chief executive, tells Digital Transactions News via email.

Yet, there remain challenges, just as with other merchant types. Many airlines operate legacy software that makes integrating new technology, like mobile payments and other alternative-payment methods, difficult. In North America 44% cited integrating these new payment methods as too costly, designating it as a top challenge. Forty-four percent also cited the lack of customer requests to pay using a smart phone or digital wallet as another factor. Rounding out the top five challenges are: payments system/database is outdated, 33%; fraud and security risks are too high, 33%; and integrating new payment methods is too complex or time-consuming, 22%.

As with other merchant types, the airline industry’s propensity to adopt mobile payments differs among companies. “Mobile payments vary widely around the world, depending on each airline’s openness to mobile commerce and the availability of mobile-payment solutions in their key markets,” Gjerding says. “Solutions like PayPal are available around the globe, while Android Pay and Apple Pay have been rolling out country-by-country across the world, based on demand and capabilities in each market or country.”

The potential for increased spend is significant. New York-based research firm eMarketer Inc., in a July 2016 report, forecast that digital-travel sales would reach $817.5 billion by 2020.

“Mobile’s share of digital-travel revenues will grow over time as more smart phones come pre-equipped with built-in payment solutions and as more airlines embrace mobile commerce as part of their revenue streams and more digital-payment solutions roll out across the globe,” Gjerding says.