Airlines Gradually Moving to Mobile Payments

by , Dec 27, 2013, 4:15 PM
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Mobile payments are gradually taking to the air.

Well, at least they’re on the way to being used to get passengers in the air.

While credit cards remain the top choice for being able to buy airline tickets, but mobile payments are accepted by a quarter (25%) of airlines, a substantial increase from the 10% accepting mobile just a year ago, based on a recent survey of 56 carriers by WorldPay.

The top reason for alternative payment methods is customer related, with most (89%) airlines saying the top motivation for offering alternative payment methods is satisfying customer demand. Here are the top motivations based on the survey:

  • 89% -- Meet customer demand, offer choices
  • 64% -- Reduce costs
  • 59% -- Increase revenue
  • 41% -- Keep up with competition
  • 23% -- To fit in with cross-border expansion plans

More significantly for commerce is that mobile usage is at the top of payment methods with the greatest potential to drive airline revenue in the next two years. Here are the payment methods seen as having the greatest potential to drive revenue:

  • 57% -- Credit card
  • 57% -- Mobile payment
  • 48% -- E-wallet
  • 43% -- Debit card
  • 36% -- Bank transfer online
  • 30% -- Charge card
  • 20% -- Frequent flyer points
  • 13% -- Prepaid cards

Airlines see the benefits of alternative payments as reaching new customers (63%), lower processing fees (61%) and a lower fraud rate (50%), based on the survey.

Part of the push for mobile payments is actually in the airlines’ version of shopping cart abandonment.  More than a third (34%) of airlines surveyed said reducing booking abandonment is a benefit of offering alternative methods of payment.

A number of airlines (21%) also see alternative payments as causing a higher conversion rate.

As in other industries being impacted by various aspects of mobile commerce, most notably retail, the airlines face a host of challenges. Here are some, based on the survey:

  • 73% -- Lack of integration with current systems and processes
  • 39% -- Cost of implementation
  • 32% -- Fraud risk
  • 32% -- Lack of knowledge, resources
  • 7% -- Selling in to the business internally

All that being said, about a third (32%) of airlines plans to accept mobile payments within two years and almost a third (29%) plan to offer e-wallets.

So while the majority (57%) of airlines see mobile payments as the greatest potential to drive revenue, only a third (32%) plan to accept them.

Hmmmmmm.

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