Airlines: Get Ready for The "Ancillary Revenue Revolution" Made Possible by Mobile Payments
CEO, CellPoint Mobile
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Airlines: Get Ready for The “Ancillary Revenue Revolution” Made Possible by Mobile Payments

It won’t be long until making a payment on a smartphone is the norm, not the exception, according to recent reports that track the growth and adoption of mobile payments around the globe.

And in the travel sector, much of the impetus is provided externally – by device manufacturers, new payment technologies and innovative retailers that are forcing airlines and travel companies to follow rather than lead market changes and travelers’ behaviors.

Amazon, of course, set the stage early by making shopping and buying from a computer, smartphone or app a simple 1-2-3 operation.

Companies like Uber and Lyft have built automatic mobile payments into their very business models, such that paying for a ride is now an afterthought to the process of finding a nearby driver and getting to a desired destination.

The “ancillary revenue revolution”
Imagine the possibilities for additional airline and travel revenues, when mobile payments – built seamlessly into the process of booking and paying for a ticket – can also support up-selling and cross-selling opportunities. As they book and pay for tickets, travelers will be able to add other travel products and services to their shopping carts easily and quickly – upgrades, on-board food and beverages, in-flight entertainment, and other amenities.

The revenue streams from such ancillary purchases can be robust. A recent IdeaWorks report links the rise of airline mobile apps to what it calls “the ancillary revenue revolution,” the reality that all airlines at some point will have to support all transactions on passengers’ smartphones, because that’s where the market – and travelers – are headed.

  • Consumers in China already make more payments on mobile devices than computers, and a 2016 MobilePayments today roundup indicates the same pattern of mobile dominance will emerge by 2020 in the United States and UK.
  • “Since essentially everyone in the world uses a mobile device that runs on either Android or iOS, the integration of a built-in mobile payment system will be too tempting not to use,” noted the author of the Due blog in 2016.
  • A recent WorldPay survey hints at what might be next: increasing interest in parts of Asia for payments made via virtual reality devices.

Increased security supports the trend
Several other factors are moving the world gradually (but with increasing momentum) toward a mobile-centric and mobile-first payments environment. One of those is increased security for mobile payments – a major stumbling block to wider adoption in recent years. Some consumers remain wary of mobile payments because of concerns about security and data privacy.

But TrendForce estimates that the global mobile payments market will reach $780 billion (USD) this year – an annual increase of nearly 26%. Fueling the growth are added built-in security measures, including “hardware technologies in encrypted chip design, advances in encryption algorithms and multi-factor authentication methods will increase efficiency in user verification, payment confirmation and secure data transfer.”

Make travel easier by making it easy to pay
Moreover, more smartphones are now manufactured with built-in fingerprint or iris ID functionality – capabilities that make mobile payments less vulnerable to hacking and stolen-identity schemes, according to TrendForce.

All of this movement in the mobile payments ecosystem coincides with recent studies showing that today’s travelers consider their smartphone or mobile device as “their most indispensable” travel companion.

Airlines and travel companies that put passengers’ smartphones to work as easy-to-use shopping carts and mobile wallets will be well positioned to take advantage of the lucrative ancillary revenues that await.

CellPoint Mobile’s Velocity solution supports the quick and seamless launch of some of the world’s most popular payment solutions from our partners, including Android Pay, Apple Pay, PayPal, Visa Checkout and MobilePay.