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25pc of airlines now accept mobile payments: report

By
December 20, 2013

Airlines step up mobile efforts

The percentage of airlines that accept mobile payments has grown significantly in the past year and is only expected to grow more as consumers depend on their tablets and smartphones to buy airfare tickets, according to a new report from WorldPay.

WorldPay’s “Alternative Payment and Distribution Landscape” report looks at the different forms of payments that airlines are accepting, with mobile as one of the fastest-growing areas. One year ago, only 10 percent of airlines surveyed accepted mobile payments compared to the 25 percent offering it today.

“Airlines have long been reliant on credit cards as the primary payment type they accept online, but as carriers’ margins are increasingly squeezed, the industry is becoming more aware of the importance of enabling alternative payment methods to gain competitive advantage,” said Mike Parkinson, vice president of airlines of WorldPay, London.

Fly on mobile
The report includes data from 56 global airlines.

Fifty-seven percent of the airlines surveyed cited mobile as the greatest area in driving revenue in the next two years.

The same percentage of airlines said that credit cards represented the largest revenue opportunity, showing the quick growth in mobile in the past few years.

Overall, there is a 150 percent increase in the number of airlines accepting mobile payments this year, and 32 percent of airlines will accept mobile payments in the next two years.

Ecommerce wallets also gained some traction this year. Thirty-eight percent of the airlines surveyed said that they accepted ewallets as a way to let consumers pay for tickets, which is up from 33 percent in 2012.

When it comes to loyalty points, 54 percent of airlines accept them as a form of credit. In 2012, 45 percent accepted loyalty points or air miles.

Credit cards remain to be the top form of payment for airline tickets, but have decreased 4 percent year-over-year as an accepted form of payment for airlines.

Debit cards slipped slightly, too. Sixty-four percent of airlines accepted debit cards for payment this year, down from 67 percent in 2012.

Meeting consumer demand

The study also looked at the different reasons for why more airlines are pushing new forms of currency.

A whopping 89 percent of airlines surveyed are using alternative forms of payments to give consumers more choices. Additionally, 61 percent of airlines say that alternative payment methods are a point of differentiation in the industry.

Another 64 percent of airlines are leveraging alternative forms of payment to reduce costs, and 59 percent use them to increase revenue. Twenty-three percent of airlines leverage alternative forms of payment as part of a cross-border expansion plan.

Sixty-one percent of marketers are interested in alternative payments as a way to lower payment processing fees. Thirty-four percent of airlines want to leverage alternative payments to decrease shopping cart abandonment.

When it comes to challenges that are holding airlines back with alternative forms of payments, lack of integration, cost of implementation, fraud risk and lack of resources were all cited.

“Airlines are now focused on improving and innovating their mobile payment offering, meaning customers will see significant developments in the way they purchase tickets and services in the near future,” Mr. Parkinson said.

“Mobile services will become inherent to the airline experience, from booking to check-in, and even on board,” he said.

Final Take
Lauren Johnson is associate reporter on Mobile Commerce Daily, New York 

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