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Investment Priorities
As travel companies strive to improve the passenger experience, grow revenue and reduce cost, a number of
technologies are expected to play a role in the short
and long term.
The technologies expected to make the biggest impact for payments leaders in the next 12 months are:
%
Digital payments
%
Digitalization
%
Data analytics
%
API driven innovation
%
Generative AI
Looking out five years, this picture changes as respondents give greater weighting to Generative Artificial Intelligence (Generative AI) and machine learning. Extended reality also features in the top five, with enduring relevance for digital payments and digitalization.
The technologies
expected to make
the biggest impact
in the next 5 years
according to payments
leaders are:
Machine learning
Generative artificial intelligence
Digital payments
Extended reality
Digitalization
Payments professionals were asked to choose their current challenges.
Three ever-present issues compete for top spot.
It’s interesting to see such a large number of travel companies recognize the significant challenge of orchestrating payments across a global footprint.
Travel merchants are well aware that payments can be costly and difficult to manage – imagine an airline or Online Travel Agency (OTA) that needs to accept payments across more than 100 different markets. Merchants of this scale typically need to accept hundreds of local payment methods, establish relationships with multiple different acquirers and/or fraud partners and build all the technical connections necessary to support such a global set-up. Then they need to harmonize data collection, analytics and reporting to provide actionable insight into their payments flows. It’s no simple matter.
That’s why platforms have emerged that cater to travel company needs with pre-built connections to partners, easy-to-use analytics and AI-powered orchestration. It’s this logic that allows the merchant to set rules to guide how each payment is treated, and to dynamically adjust those rules as the environment changes. For example, if the travel brand receives a card payment in Germany through its website, it might be routed to acquirer ‘A’ because they offer the best rate for handling that specific type of card. This is a step forward for most merchants in travel, but it’s still just scratching the surface of what’s possible.
Travel is different to most other industries as the sector has access to data insights that can help with a wide range of automated decision-making, including how payments are handled. Looking at each payment in terms of acquirer fees alone is one dimensional. What about the broader costs involved in the end-to-end payment, like reconciliation? Or the riskprofile of a payment? Handling a card-not-present payment originating in a market with significant levels of fraud carries a very different risk profile to a Strong Customer Authenticated (SCA) payment made in Europe using biometrics. It’s such additional layers of insight that can help the industry make better payments decisions.
Top challenges according to payments leaders in travel are:
%
Cost of payments
%
Cybersecurity and fraud
%
Keeping up with new
payment methods
%
Orchestrating global
payment flows
%
Chargebacks and
refund process
“There’s an opportunity to treat each payment in an optimal way.”
Damian Alonso
Head of Commercial and Partnerships
Outpayce from Amadeus
Payments leaders are focused on
implementing the following capabilities:
Next 12 months:
%
Virtual cards for
B2B payments
%
Accepting alternative
payment methods
%
Consistent payments
experiences across
multiple channels
%
Payments in NDC
%
Orchestration
and analytics
%
Strong customer
authentication
%
Buy now pay later
%
Fraud management
%
Back-office
reconciliation
%
Acquiring
%
Chargeback
management
%
Open banking
It is interesting to see that even mature capabilities like virtual cards for B2B payments, typically made by travel agencies to providers like airlines and hotels, remain an implementation priority in the near-term. Virtual cards were pioneered in travel and the industry is now seeing such payment methods within booking systems, in corporate self-booking tools and even stored in business traveler’s mobile devices to pay for on-trip expenses from the company’s own bank account.
Perhaps another explanation for the renewed interest in virtual cards is increased adoption by airlines. As carriers seek to retail third-party products like hotels, cars and destination experiences, they need to start making outward payments. Virtual cards improve reconciliation, simplify payments and generate incremental income from rebates. After many years of accepting virtual cards, it could be that airlines are now making them a central pillar of their own pay-out strategies.
