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Interviews

The payments preferences and developments that shape the travel industry

Thursday 4 October 2018 | 07:55 AM CET

We interviewed Jean-Christophe Lacour, Head of Product and Offer at Amadeus, to understand the payments preferences and developments that shape the travel industry

What are the key developments in Amadeus’s offering since 1987? How did the company develop in portfolio and target markets?

Amadeus began processing travel payments when we started trading in 1992. By 2012, the payments technology revolution was gathering speed and we had noticed an increase in the number of requests from our customers to help them process payments. Therefore, we set up the payments business unit to proactively address these needs. Today, we offer a one-stop-shop smart payments hub that helps travel companies with all their payment needs, including processing incoming payments from customers and outgoing payments to suppliers. We process about EUR 100 billion worth of payments each year from 192 countries.

What are the specific payment and fraud challenges for the travel/airline industry?

The travel industry is – almost by definition – global. According to our research, over 30% of bookings made on airlines’ websites come from outside their home country, and 17% of bookings from outside their home continent. The complexity required to accept payments from around the world is huge: there are close to 300 different methods of payment around the world and international airlines typically manage over 20 different payment providers. There are indications that it hinders travel companies from innovating in payments.

The changing airline consumer retail behaviour varies across geographies; how does Amadeus help in tackling the payment needs of travellers globally?

Amadeus helps in two ways. Through our smart payment hub, we provide fully integrated access to over 250 different methods of payment so travel companies can process payments from around the world with a single technical integration and a single view of their payment transaction data. We also have a consultancy team comprised of experts with a deep understanding of the global payment market. This team sits side-by-side with our customers and helps them build an effective global payments strategy.

What payment methods for the airline/travel industry does Amadeus see coming up as alternatives for credit cards? Do you expect any growth in mobile wallets or in multi-currency cards for travellers?

Credit cards are a significant part of the payments ecosystem in travel and we believe they will continue to be, especially in markets where they already have a strong presence. In these markets, even when new payment methods are launched, there is often a card payment behind. We see alternatives, such as mobile money, gaining the most traction in markets where credit cards are less well established today, like China and most of Africa.

How do the western markets address the payment needs of Asian tourists, who are highly mobile-wallet users?

The growth of travel and tourism from Asia – particularly China – to western markets is a key opportunity for travel companies: tourism from China to the European Union has tripled in the past ten years.

To fully accommodate Chinese travellers, travel companies need to accept methods of payment such as Alipay or WeChat Pay. However, a one-off integration with just one or two payment methods would add unnecessary complexity to a global travel company’s payment infrastructure. It is critical for travel companies to be able to integrate payment methods into a global payment strategy in a convenient way. The travel companies we speak to are looking for a platform that can provide them with access to worldwide payment methods through a single connection, and access those payments via a single database.

What are the challenges of preparing for PSD2/ SCA for airlines?

PSD2 should be welcomed as an initiative to foster greater innovation and choice in the payments sector. Nevertheless, it presents a few interesting questions for those responsible for payments in travel companies. Travel companies need a way to distinguish between corporate cards and consumer cards when applying their surcharge policies. For the main part, their acquiring banks can help them with this. More complex, however, is ensuring that they are fully following the local implementations of PSD2. The UK, for example, has banned surcharges on all consumer payment methods, which is a step further than PSD2 that only bans surcharges on consumer cards offered by four-party schemes.

Travel companies are also looking hard at how to implement the Strong Customer Authentication requirement. This is especially a challenge in the travel industry where, in many cases, travel agencies pass payment details through to suppliers who are the ultimate merchant of record. Amadeus Payments is working with payment schemes such as Visa and Mastercard to ensure that 3D Secure can apply to the use case where the traveller purchases from a travel agent but the travel supplier is the merchant of record. In addition, Amadeus Payments plays an active role in a travel industry-working group designed to ensure that SCA recognises travel-specific B2B payments between consumers/ corporate travellers, travel agencies / management companies and travel suppliers.

Finally, PSD2 opens up the possibility for travel companies to offer their own direct payment methods. It could also be used to increase loyalty or reduce payment costs.

About Jean-Christophe Lacour

Jean- Christophe Lacour, or ‘JC’, is Head of Product and Offer for Amadeus’ payments business. The core offer is Amadeus’ smart payment Hub, which allows travel companies to manage payments across all countries, sales channels and payment methods. JC joined Amadeus in 2016. Previous to Amadeus JC founded, and was non-executive director for two different startups; and, before that, held a number of senior roles with Visa.

About Amadeus

Amadeus is a leading provider of advanced technology solutions for the global travel industry. Customer groups include travel providers (e.g. airlines, hotels, rail and ferry operators, etc.), travel sellers (travel agencies and websites), and travel buyers (corporations and travel management companies).

This editorial was first published in our Payment Methods Report 2018 – Innovations in the Way We Pay. The Payment Methods Report 2018 presents the key trends and developments in global and regional payment methods by highlighting the innovation, challenges, and developments in the use of the most important payment methods across geographies and verticals.

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