The complexity and future of travel payments – how merchants can adapt to it

The Paypers interviewed Kristian Gjerding, President Founder of CellPoint Digital, to discuss the major challenges in travel payments and which merchant strategies work best for ecommerce success.

Travel payments are inherently complex. What are the major factors contributing to this complexity, and how do they impact merchants’ operations?

The complexity derives from the infrastructure and architecture of travel. Travel technology and process management involve multiple impactful variables: routes, passengers, currencies, regions, legislation, and compliance, among others. There's also a whole range of components that, when layered on top of all these factors, further multiply the complexity. 

From a technology perspective, a whole range of systems is involved in the end-to-end travel experience. You go through booking, departure control, post-travel processes, luggage, and several other similar elements, such as loyalty platforms and systems. For a travel merchant, this translates to millions of technical interactions in any given day, and every stakeholder contributes to an intricate ecosystem where even small disruptions can create tremendous complexity. 

The rise of digital sales channels in the early 2000s added another layer of complexity. These continue to diversify (think the current hype surrounding agentic AI), prompting travel operations to evolve along with their changing dynamics. 

At the same time, the payment ecosystem is fragmented and highly complex, with thousands of participants globally – each with its own rules for transaction processing, settlement, and reconciliation. For travel merchants, this legacy system is yet another constraint, as it is a global standard used by all, and they can't easily change or avoid it. 

In essence, travel merchants manage several moving parts and details that must come together, but that can easily fall apart, and it’s what people see when something breaks: a ripple effect across a whole range of travel operations. For example, when major regional delays happen in the US, it takes days for the network to recover. That is what the complexity is about: a whole array of components. Just by looking at the payment supply chain, from the moment of checkout all the way through settlement with partners and reconciliation at the other end, that alone is a highly complex process for the merchant. 

What changes in travel retailing models have you noticed in recent years? How should payment infrastructures evolve to support this industry shift?

Travel merchants, particularly airlines, want to be retailers or aim to ‘do retailing’, meaning they want to focus on ancillaries and other areas within the travel ecosystem. Recent examples include Southwest Getaways partnering with car rental companies and hotel chains to offer bundled packages. What we're noticing is the ability to offer, order, settle, and deliver a new kind of architecture, infrastructure, and framework for actual airline retailing. It means moving away from the sequential booking flow – where you pick your flights, seats, meals, pay for Internet, check out, receive the ticket with everything displayed, and where if you modify anything, everything changes. 

With the new, so-called Amazonification of travel, you're creating a basket-based shopping experience, enabling travellers to pick and choose several travel products. To exemplify, it can include travelling with one carrier from A to B and then with another from B to C, adding hotels or other ground components like tours, insurance, credit products, and completing the purchase in one single transaction – while having the ability to change components individually later on, according to fair rules and whatnot. This capability mirrors buying a complex racing bike on Amazon, where I would select the frame from one vendor, the wheels from another, brakes from a third, add everything to the cart, and check out only once. 

Similarly, airline retailing promises a transformational experience for passengers, and we will see stronger partnerships emerging, with the industry heading on an offer-order trajectory. 

Which payment strategies and solutions are best for travel merchants, and how do they impact their day-to-day operations?

For merchants, the name of the game is conversion and nothing else. They want to increase it, and obviously, if they can decrease costs, the money translates into net earnings. Consequently, a proper payment strategy should do both, providing airlines with improved cash flow and net earnings and enabling them to serve travellers better. 

A payment strategy requires flexibility to accommodate the complexity of the sales channel and adapt over time, so you don't get stuck in an infrastructure that doesn’t change with the reality of the front-end fast enough. On the payment side, you need something resilient, with capabilities to handle hundreds of payment ecosystem partners, expand, and evolve with the needs of travel merchants and the market. 

Importantly, an effective payment strategy should be able to provide value across various areas by:

• improving cash flow and earnings by increasing conversion and decreasing cost; 
• managing operational complexities to create a great user experience – which means presenting the right payment method at the right time and taking care of any technical errors happening in the ecosystem; 
• abstracting from the legacy environment to provide a mission-critical, Tier-1 platform capable of supporting peak periods and scaling at the same time with the merchant business. 

What challenges do other travel verticals face, and how can a holistic approach benefit the wider travel ecosystem?

There are multiple similarities across travel verticals: optimising payment capabilities and flows for increased conversion is a common challenge throughout. While different sub-problems exist underneath, the objective is generally the same: improve net earnings and cash flow to handle payouts during low-season periods, thus managing the full payment supply chain. 

Now, when you look at airlines, they are ahead of the hotel industry, in that ‘online bookings represent the game’. Hotels are still kind of legacy-bound (guests come to the front desk to check in and get the key), which can be frustrating during peak periods. What is changing in the hotel space is what's called above-property payment, which means that you will actually pay and settle everything online, and won’t have to go to the front desk, unless you prefer to.  With very few people on-site to service clients (manage pantries, check-ins, check-outs, and guest requests), you need to automate as much as possible, switching from on-property to above-property payments. I think this marks a big shift in hospitality compared to airlines. 

Which changes do you foresee with the advancements of new technology, and how should merchants future-proof their travel operations?

Future-proofing means getting a solid, Tier-1, mission-critical payment orchestration platform, not just a service provider. A proper platform will be able to accommodate changes, particularly on the front-end, where a lot is happening currently with Agentic AI. In reality, travellers will use even more sophisticated tools, which they will manage, and merchants will see a massive increase in hits on the front end. Consequently, beefing up capabilities to receive AI-based request calls and checkout processes is a must. Merchants require the back end to accommodate that – and a strategy for differentiating between phoney calls and legitimate booking requests. I think we're going to see consumers employ simple, natural language query tools to find the best trip and book it on their behalf, based on parameters that require sorting. Merchants must be ready for that. 

Just looking at myself, a traveller with multiple preferences for each flight, another change I can think of comes in the form of the different components a system could take into account. I tried resorting to travel agents, and it's very hard to find one that can remember all the details and execute them accordingly. Agentic AI can handle that, and if you, as an airline or a hotel, don't cater and offer me the ability to employ AI for my needs, you'll start losing business as we progress over the coming years. Customers will pick providers that can accommodate these things. 

Managing that entire flow should happen in real time, as customers now have multiple opportunities thanks to AI tools and agents able to make travel bookings. If you don't start accommodating a very affluent travel-buying market, you'll see challenges in terms of conversions, as well as changes in product pricing. Combined with the range of options available to consumers, I think the biggest change will be deciphering how much merchants can get from inventories and how they can sell those inventories with the biggest conversion. For that, you desperately require a platform that can follow suit and manage all the increase in fraud, as a lot is expected to take place. 

About the author

Kristian Gjerding is an entrepreneur and leader in digital transformation and payment solutions. With an extensive background in enterprise business, including positions at Amdahl, Network Appliance, and Sun Microsystems, he is the President Founder of CellPoint Digital. With strategic acumen and operational expertise, Kristian drives the company's innovation and commitment to supporting customers in the travel sector. 

 

About CellPoint Digital

CellPoint Digital is a global fintech leader in payment orchestration and optimisation for the airline, travel, and hospitality sectors. Its One Source Orchestration Platform supports modern ‘Offer-Order-Settle-Deliver’ (OOSD) models, enabling merchants to unify payment experiences, accelerate new payment options, increase conversions, and reduce costs. With offices in Copenhagen, Dallas, Dubai, London, Miami, Pune, and Singapore, CellPoint Digital powers intelligent, scalable payment ecosystems worldwide.