I've seen the impact of the pandemic across all the industries we work with, but the hardest hit was the travel sector. However, the beginning of vaccine distribution in the coming months is encouraging travel operators to prepare for recovery.
The pandemic proved to be the catalyst to advance innovations in payment technology born of customer demand. The industry faced unprecedent numbers of refund requests and witnessed dramatic changes in customer expectations and behavior, such as shorter booking windows.
The need to adapt quickly is make or break for most travel businesses. Online travel agencies and airlines can and should leverage payments to prepare for the post-COVID-19 rebound in order to protect their revenue and turn payments into a profit center.
We commissioned a white paper on this subject in collaboration Edgar, Dunn & Company and with participation from Visa entitled:
Redefining Travel Payments In The Post-COVID-19 Era
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This comprehensive research paper is grounded on interviews with airlines, OTAs and other travel businesses. It discusses not only the challenges of the current state of travel but outlines the best practices and how to design a payments strategy to implement them.
Our research shows that the primary focus of travel businesses moving forward is to protect their cashflow, gain additional revenue, and reduce costs.
With that in mind, I'll share six best practices from the white paper, six tactics that travel operators can - and are – implementing to mitigate the economic impact of the pandemic.
1. Ensure digital-first and touchless travel to reassure customers
Research shows that the traveler of the future will be more health conscious in much the same way that the post-9/11 traveler was more safety-conscious.
For travel operators, this means that digital and touchless travel payments is the future. Our research shows that 71 percent of travel operators are already implementing changes to make this happen, as contactless, QR codes and e-wallets are more in demand than ever.
In airports, we're already seeing technology implemented that will remove the need to make physical contact. Touchscreens are being replaced with biometric identification scanners, baggage check-in is going self-service, and boarding passes may soon exist only on your phone screen. From the perspective of payment technology, we saw a big uptick in the use of mobile applications.
For examine, the Book Lugano app, is a smart city solution powered by Nuvei’s QR code payments. It allows Lugano residents and tourists to reserve, pay and visit the city’s utilities and activities while maintaining social distancing. It tracks and controls attendance numbers, enabling people to have fun safely.
2. Develop new payment features to address evolving customer demands and behaviors while limiting risk
The pandemic has boosted the creation of payment innovations that will restore the confidence of apprehensive customers, and it will become best practice for travel merchants to offer these. This is vital because one of the biggest blows to the travel industry has been the tidal wave of refunds and chargebacks.
Features like installment payments, "hold my fare" options, subscriptions and even escrow accounts for vacation payments are being implemented by airlines and OTAs in their efforts to win customers back and strengthen their loyalty.
3. Leverage payments data on the transaction level
As traveler behavior changes and the market becomes more competitive, a critical factor for airlines and OTAs in maintaining and increasing conversion rates will be the collection of detailed payment data with a mind to improving their customer UX, preventing fraud and improving transaction acceptance rates.
Payment services that provide centralized reporting of granular data are already a central part of many merchants’ organizations because they enable them to understand trends and adjust their offerings.
This was exemplified by Cliff Trotta, director of sales for distribution and commercial planning at Iberia, who was interviewed for our white paper: “We have an entire data team dedicated to finding ways to optimize conversion.”
4. Develop payment retry solutions
Although retry functionality is not new, it is now an emerging trend in the travel sector as generating revenue is critical to operators’ economic survival.
Payment retry can include cascading to a different acquirer for card authorization or offering another form of payment method to complete a booking if a transaction is declined. A smooth payment retry solution reduces customer frustration and generates additional sales that would otherwise have been lost.
5. Leverage Strong Customer Authentication (SCA) to protect and increase revenue
At the start of the pandemic the focus for travel businesses had been on operational aspects of managing the high volume of refunds and chargebacks. The focus has now shifted to securing sales and maintaining cash flow.
With this in mind, travel merchants selling to European travelers must also focus on compliance with payment regulations including the second Payments Service Directive (PSD2) with its requirements for SCA.
Travel merchants need to engage with their payment partners to understand the impact of the regulation and, if not done yet, urgently put in place strategies that will enable them to optimize the use of SCA throughout the EEA and the UK while minimizing declines.
With the right payment technology, PSD2 can be a big advantage to airlines and OTAs, optimizing approval rates, protecting against fraud and in some cases removing chargeback liability completely.
Nuvei’s approach is to minimize complexity for our merchants, reducing friction for their shoppers and optimize exemptions which ultimately achieves exceptionally high conversions.
Our success is attributed to our agnostic solution, combing Dynamic 3DS routing with our unique position as an acquirer with our own proprietary, acquirer-agnostic 3DS2 MPI (merchant plug-in) which is proven to be highly effective in recovering soft declines.
6. Invest in your relationship with your payment partners
The COVID-19 pandemic has reinforced how important it is for merchants to have a strong relationship with their PSP and acquirers, and even spread risk across several payment partners.
Our white paper found that travel merchants consider working relationships with payment providers vital to maintaining revenue, handling refunds and chargebacks, and reducing fraud.
Many of the companies surveyed told us that they have almost daily conversations with their payment partners to make sure their strategies are aligned. We experience this first-hand as our team of travel payments professionals dedicate countless hours to conversations with our travel clients to implement the best payment strategy for their individual challenges.
Redefining Travel Payments in the Post-COVID Era
Leveraging the best practices
As mass vaccine rollouts have begun, people will soon be able to satisfy their pent-up desire to finally go on vacation again. We already see encouraging signs that travel is already rebounding.
The travel sector recognizes that payment is a strategic growth and recovery driver. Implementation of payment-related best practices can positively impact the financial situation of any travel business. Our white paper serves as a guide to help them actualize their rebound plans.
If you are wondering how you can identify best practices and how you can implement them, our white paper will serve as a guide to help in your rebound plans.