The New Payments Ecosystem: Solutions for Mobile-First Travel Merchants

The New Payments Ecosystem: Solutions for Mobile-First Travel Merchants

The travel commerce ecosystem has been fundamentally disrupted by mobile devices and alternative payment methods (APMs), notably mobile wallets from tech giants such as Apple, Google, and Samsung. Every stakeholder – from merchants and acquirers to payment service providers and issuing banks – understands that their technology and business processes must adapt quickly to new commercial needs, which are driven by consumer preferences – and not by what is comfortable or convenient for the ecosystem. Change is necessary and inevitable.

Nowhere is this dramatic upheaval more apparent than with the rapid adoption of mobile payments, which have disrupted traditional payment models and transformed how products and services are sold and paid for. Merchants and other stakeholders must adapt or they risk falling behind; the future of commerce will be driven by mobile-first and mobile-only consumers.

Indeed, this shift is already taking place.  Take, for example, the way mobile peer-to-peer payments provider Zelle was greeted with enthusiasm by legacy banking players upon entering the US market, inking partnerships with Bank of America, JPMorgan Chase, and Citi, among 30 other banks.  A year and a half ago, those financial institutions might have resisted such a disruptive, mobile first solution; instead, they have rushed to integrate Zelle into their apps – and reaped the benefits, to the tune of $33.6B in collective volume in the first half of 2017 alone.

The immediate challenge for businesses is to integrate alternative payment methods (APMs) and mobile wallets into everyday commerce, while building the architecture to continually adapt in an evolving mobile environment. This isn’t a simple solution for businesses that are still wedded to legacy technology and established ecosystems, but there are solutions that can help legacy operators start the shift now and prepare for the future.

Mobile Payments and the Travel Sector
For the travel sector, which is particularly burdened by legacy systems and entrenched business models, mobile payments represent an opportunity not only to expand payment capabilities and convert more mobile device users into sales, but to make travel easier by seamlessly weaving both payments and merchandising into a connected “journey” built around mobile channel. Many consumers and travelers have enthusiastically adopted mobile payments and mobile wallets because they are so convenient and integrated into the entire retail experience. However, consumers are also frustrated that many travel merchants have been slow to adapt payment capabilities to the overall journey, including areas such as ticketing and loyalty programs.

Understandably, travel merchants are still trying to figure out how to add mobile capabilities on top of legacy systems, and they are cautious about investing in the wrong solutions that can’t scale as mobile payments evolve. Travel merchants need quick, easy and cost-effective solutions that solve immediate problems (such as expanding acquirers in other countries), while also building a seamless, frictionless mobile experience for passengers, which means integrating mobile payments at every touchpoint in their journey. Flexibility, convenience and choice are what today’s mobile travelers are demanding, and merchants must solve their mobile challenges sooner rather than later if they hope to capture the growing travel demand from mobile-first consumers.

Quick and Easy Mobile Solutions
Since the introduction of the smartphone in 2007, alternative payment methods have multiplied as big tech companies and innovative startups realize the limitless possibilities for mobile commerce. There have been no clear “winners” in the mobile payments space, but major platforms such as Apple Pay and Samsung Pay have achieved widespread adoption, as have regional APMs such as MobilePay in the Nordics. This fragmentation of payments makes it difficult for travel merchants to keep pace with digital innovation and support every customer’s preferred payment method.

The Velocity payment platform was built specifically for travel merchants to reduce the time and cost it takes to implement new alternative payment methods and mobile wallets, and to solve immediate problems such as expanding their acquirer network and increasing conversions. Travel merchants need control over their payments environment to offset the fragmentation customers face with so many payment methods. In looking for the right solution, merchants should expect features such as pay by link, stored payments, and advanced fraud and transaction monitoring. The objective should be to make travel easier by making payment easier, and that requires on-going adaptability to new payment methods.

The bottom line is that travel merchants need payment strategies that are nimble, built on speed, and can keep pace with marketplace demand, devices and technology moving at lightning speed. This can be difficult to achieve when dealing with multiple acquirers across different countries and many currencies, but a solution with capabilities such as split-tender payments, dynamic currency conversion, installments and vouchers, a voucher bank and advanced reporting can alleviate much of this complexity.

The Opportunity for Mobile Payments
Mobile payments are a “gateway” to mobile commerce. Ultimately, the goal for travel merchants should be to embed revenue opportunities within every mobile interaction and transaction. Of course, this starts with the core business of travel: paying for flights, hotel rooms, train tickets and other travel inventory directly from a mobile device. Most travelers begin their journeys on a mobile device, and travel merchants should make it as easy as possible for customers to make the transition from searching to booking to payment. By accommodating customers’ mobile preferences (they carry a device almost anywhere they go), merchants can extend revenue opportunities at every touchpoint, making it easy for travelers to upgrade seats, pay for rail passes, order food and beverage, pay for destination activities and other ancillary merchandise, and take advantage of personalized and targeted marketing promotions via email, SMS or social media.

The cashless economy has taken hold faster in some regions than others, but across the globe, consumers want the same thing: seamless, frictionless and convenient payment methods. Mobile wallets have accustomed them to a centralized hub where payment information is stored, without having to re-enter it with every purchase. These kinds of simple payment capabilities are huge advantages for travel merchants to drive revenue: the easier it is to make a payment, the quicker a customer can be converted from looker to booker. Our solutions help travel merchants make travel easier for passengers at every point throughout their journey (ticketing, travel information, customer service) while expanding and maximizing mobile revenue capture.

You can learn more about our mobile payment solutions and the Velocity platform for travel merchants here. You may also be interested in the Mobile Journey article series, our look at the global trend toward cashless economies, and the expansion of Apple Pay into new markets.