The airline industry has faced immense challenges in recent years, from volatile fuel costs to disruptions from global events. Yet, new opportunities are emerging for airlines to boost revenues by transforming their payment capabilities.
Two key payment trends are providing airlines with new tools to accelerate growth - multi-currency processing and alternative payment methods. By harnessing these payment innovations, airlines can optimise conversion, tap into new markets, and reclaim lost margin.
As airline customers become more global, a growing share of bookings involve cross-border currency conversion. Typically, these transactions cause airlines to lose margin on foreign exchange spreads. The customer pays in their home currency, which the airline must convert to its operating currency at wholesale FX rates after settling the transaction.
Multi-currency payment gateways enable airlines to reduce this loss margin by offering dynamic currency conversion. Instead of converting the transaction post-sale, dynamic currency conversion allows the airline to set the FX rate and convert the transaction in real-time. This allows airlines to margin the FX spread, earning back margin that would otherwise be lost.
More importantly, dynamic currency conversion improves customer experience for cross-border transactions. Displaying prices and accepting payment in the customer's local currency removes the friction of converting ticket prices. Customers can book flights in the currency they understand without extra hassle. Studies show that purchases increase by up to 20% when customers can pay in their own currency. By streamlining cross-border payments, airlines create a smoother booking experience. This catalyses conversion gains for foreign customer transactions.
To successfully expand into new markets, airlines must offer payment methods that local customers know and trust. Accepting only traditional payment cards restricts the customer base airlines can tap into. Integrating alternative payment methods allows airlines to capture more bookings by catering to local customer preferences.
For example, in China, mobile payments dominate retail transactions. Chinese travellers abroad prefer to pay via Alipay or WeChat Pay, which account for over 90% of China’s mobile payment market. Enabling Alipay acceptance provides a familiar, convenient booking experience for Chinese customers, which allows airlines to gain a competitive edge in winning Chinese bookings.
Similarly, bank transfers and cash vouchers like Brazil’s Boleto are commonly used for ecommerce purchases in Latin America. Offering these local payment options is key to unlocking new customer segments who prefer to pay this way.
By accepting the payment methods their target customers know and trust, airlines can boost booking conversion and provide a localsed customer experience.
While global payment methods provide new opportunities, integrating them can be perceived as a complex undertaking. Each payment method may require custom development effort and integration overhead.
This is where Payment Orchestration Platforms help streamline growth for airlines. With a single payment platform integration, airlines can rapidly activate and manage new payment methods, currencies, and features. By outsourcing payment processes to an orchestration platform, airlines can speed time-to-market while reducing compliance risk.
Built-in fraud screening and revenue optimisation capabilities also help maximising airline booking conversion and revenues. Moreover, data insights unlocked by the platform can be used to understand customer payment preferences and tailor offers.
For airlines looking to spur growth, transforming payments should be a top priority. Adopting multi-currency processing enables airlines to recover lost FX margin, remove cross-border friction, and boost foreign transaction conversion. Meanwhile, integrating alternative payment methods allows airlines to tap into new global customer segments that prefer mobile, bank transfer, and pay later options.
With the right payment innovation strategy, airlines can turn payments into a strategic growth driver and competitive advantage.
Payments have historically been seen as a cost centre by airline, but new opportunities exist to transform payments into a growth driver. As airlines rebuild and fuel expansion, unlocking lost FX margin, tapping into new markets, and boosting conversion will be key. By embracing payment innovations like multi-currency processing and local payment methods, airlines can accelerate growth. And, with modern payment orchestration, the integration process is simplified.
While the airline industry faces macroeconomic headwinds, the payments landscape is creating new opportunities. Airlines that transform their payment experience will gain a competitive edge to drive revenues higher through and beyond the turbulence.
Kristian is a visionary entrepreneur and esteemed leader at the forefront of digital transformation and payment solutions. With an extensive background in enterprise business, including notable positions at Amdahl, Network Appliance, and Sun Microsystems, he co-founded CellPoint Digital in 2007. As CEO, Kristian's strategic acumen and operational expertise drive the company's innovation and unwavering commitment to supporting customers in the travel sector. His profound understanding of the payments landscape and ability to navigate complex challenges have positioned CellPoint Digital as a differentiator in the industry.
CellPoint Digital, the inventor and leader of Payment Orchestration, is a pioneer in shaping the future of payments, with a focus on the airline and travel industry, using it’s cutting-edge Payment Orchestration Platform to enable customers to cut costs and grow revenues by streamlining payments between borders and using different payment methods – making payments work for them across all channels and markets.
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