Fighting The High Cost Of Travel Payments

Airlines and hotels are not payments companies — and they don’t want to be. They are in the business of flying planes and managing hotel rooms and that is where they would prefer to lay their focus.

But, like it or not, payments are not only a part of the travel business — they are a big, important and increasingly complex part in the mobile era. Travel payments often come in through multiple touch points, feature frequent adjustments and often involve a host of cross-border transactions. Not only is it hard work, but it’s also expensive.

According to a study, 5.4 percent ($74.5 billion) of global travel sales are going toward payment services providers. However, despite the knowledge that innovation is necessary on multiple fronts within the industry, the pace has been slow in recent years. Around 40 percent note that they find it extremely challenging to manage their relationships wiht multiple payment service providers.

And yet, for the vast majority of travel players that aspire to greater innovation over the next three years, only 15 percent have actually attempted new payment innovations.

Bart Tompkins, managing director of Amadeus’ Payments Business Unit, notes that the problem isn’t lack of interest — travel players of all kinds want to offer payment experiences that meet their customers’ preferences in terms of payment methods. It is obviously in their best interests to have their transactions go through without a lot of friction, and they know it’s mission-critical to offer those services because they lose sales without them.

The question for airlines is how travel players can do payments at a high level — and upgrade their services to modern needs and desires — without having to become high level payments players themselves.

The solutions, Tompkins noted, are going to be found in aggregation and third-party assistance. Travel companies need better capacity to live up to the service offerings their customers want. That doesn’t necessarily mean carrying on building internally — it is about finding the right external partner to do the heavy payments lifting.