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Airtickets about to evolve

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PayU, the company that secures payments for SAA, Mango, Flysafair and Skywise, believes that airline ticket payments are set to transition over the next five years, making it even easier and safer to secure seats.

Air travel may be statistically safer than other forms, but what about the transactions that surround it?

According to Airports Company South Africa (ACSA) figures, over 9.5 million passengers bought tickets for domestic flights in 2014. In this August alone – the latest statistics available – the number stands at more than 743 thousand.

International Air Transport Association passenger numbers are predicted to reach 7.3 billion by 2034, more than double that of 2014 and 2015. China with 856 million new passengers is expected to overtake the US (559 million) in volumes with India (266 million), Indonesia (183 million) and Brazil (170 million) sitting in the top five.

These figures underscore the importance of having secure and dynamic payment systems that tap into the trends and recognise how people use technology to purchase their tickets and handle their travel.

One fraudulent transaction can cost thousands of Rands, and for the airline companies sound fraud management is essential, as this will impact on the business significantly. Air travel is a capital-intensive industry – it costs around R100k to fly from Johannesburg to Cape Town and the margins are slim. While only 8% of payments are cash-free in South Africa, that 8% is valuable and needs to be driven even higher through availability, security and ensuring trust.

“All businesses are exposed to fraud, and it can be a big issue for airline operators and the consumer,” says Kirby Gordon, Vice President: Sales and Distribution at Flysafair. “The biggest hesitation around online transactions is always around the payment system. The fear of fraud and the reality of it are daunting as our transactions are often big numbers.”

When the plane takes off, the seats leave with it. Every detail must be attended to or there is potential for both the customer and corporate to suffer either loss of funds or, for the corporate, reputation.

“When profit margins are thin and the capacity to be defrauded is high you really need a stable payment system. We are conscious that all of our payments are maintained properly so that when a flight departs, we have the funds in our account,” says Gordon.

Airline ticket purchases make up the largest portion of e-commerce transactions in South Africa. And, according to Euromonitor, the local online travel market is estimated at approximately R17.7 billion in 2015.  PayU, the company that secures payments for SAA, Mango, Flysafair and Skywise, believes that airline ticket payment is set to transition over the next five years.

“The airline industry represents a microcosm of the payments industry as a whole, with nuances and challenges around dynamic stock movement and modifications keeping us on our toes,” says Mustapha Zaouini, CEO of PayU MEA. “This will only get more intricate as the power continues to shift to the consumer and payment methods become more on-demand.”

The fast-evolving ticketing ecosystem will play a significant role in the flying experience, says Gordon. “There is a need for high level augmentation in the airline payments environment, not a standard payment gateway,” says Gordon. “In our world, modifications to bookings are a frequent occurrence – changing flights, adding a suitcase, buying an extra seat or insurance. That payment needs to be taken a second time and recorded against the first to ensure we have a complete record. It can get complicated. The next phase will be accepting in-flight payment.”

Corporate travellers commit the worst offences in airline booking with around 31-37% of reservations requiring modifications. Flysafair has led the way in unbundling in South Africa, taking the suitcase out of the net fare paid and making check-in optional. With 42% of passengers booking a bag it means that the remainder may change their mind at the last minute, impacting the transaction and the tally. While this presents challenges it also offers further opportunity.

“The trends we are seeing in mobile development are huge and are playing a giant role in how the payment industry is advancing. This means that working with a partner like PayU, one that is aware of these shifts and is prepared for them, ensures that our customer’s credit cards stay as safe as they do when they fly with us.”

Juniper Research has predicted that mobile tickets and digital ticketing are expected to take more than one in two ticket transactions by 2019. This means that payment methods such as credit and debit cards will increasingly move to digital and this demands that the security around payment needs to be completely watertight.

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How to predict the future

Forecasting the future is about people, not technology, ARTHUR GOLDSTUCK discovers on a visit to the HP Innovation Lab in Barcelona

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When HP chief technology officer Shane Wall talks about the world three decades from now, the trends to steers clear of technology. That’s startling, given that he is also global head of HP Labs, the advanced research group within the world’s leading PC and printer manufacturer.

The Labs play host to numerous futuristic technologies, from 3D printing to virtual reality, so one would expect its vision of the future to be all about the gadget. Instead, it’s all about the people who will use the gadgets of the future.

HP CTO, Shane Wall

“When we think long term, we try to look 15-20, even 30 years into the future,” he said during the HP Innovation Summit at the HP Innovation Lab outside Barcelona, Spain, last week. “The way we do it is that we don’t start with technology. In HP Labs we invent all manner of incredible things in basic areas like biology, physics, and 3D printing. Those give us an idea, but we’re careful not to extrapolate those into the future, because by extrapolating you miss disruption.

“Instead, we look at people. We’ve done this for a number of years, looking every year at what’s accelerating, what’s gone slower, what’s new. We call these megatrends, that look at humanity rather than technology.

“In 2019 we stood back and took a different look at humanity. Everyone does market segmentation, analysing who the customer is and how they buy things. Instead, we looked at economic segmentation, we looked at where the money is moving in the next 30 years. We conducted numerous interviews with economists.”

The key megatrends identified by HP for the next three decades revolve around rapid urbanisation, changing demographics, hyper-globalisation, and accelerated innovation.

Rapid urbanisation

“We’re changing where we live,” said Wall. “People are moving out of rural areas and densifying cities. Cities themselves are getting bigger. In 1991, there were 10 megacities – defined as urban areas with 10-million people or more. By 2013, there were 41, by 2030, there will be over 60. Those cities are changing the very nature of everything we do, from the nature of work to the manner of how we do product development.”

The challenge of how to get goods into cities and waste out of them, he said, will result in a much greater focus on sustainability and energy management.

“That is going to change our go-to-market approach. Currently, we focus on countries as markets. Now we are seeing how important cities are becoming. In Nigeria, you may care about all of humanity, but for sales, you care about Lagos. In China, by 2035 any tier 3 city’s gross domestic product will pass that of the entire country of Sweden.”

Changing demographics

The very nature of the population is changing, said Wall. The impact of the post-Word War 2 population boom, resulting in the American concept of “baby boomers”, has now evolved into the “silver spenders”, who are living longer thanks to healthcare advances. They expect technology to address solutions to their toughest problems.

“On the other end of the spectrum, we are seeing a whole new generation, Gen Z, a generation like we’ve never seen, very focused on experiences and values, less focused on purchasing. They are also driving a change in our behaviour as businesses in terms of go-to-market. Understanding them deeply shapes the very nature of the enterprise.”

Hyper globalisation

Wall points out that, because we live in a world that is hyper-connected, we expect things to move at speed of light, while at the same time we expect it to be local. This has given rise to the concept of “glocalisation”.

“It is the expectation that things be both global and local, thanks to connectivity and mobile phones. Startups in emerging markets growing at 20% a year. It will be not only ideas that will move at this speed, but in the near future physical goods will also move at that speed.”

Accelerated innovation

Finally, technology must, by its very nature, play a key role.

“Tech itself is moving faster; it’s not just a perception. It started with Moore’s Law and the doubling of capacity on a transistor every two years. That happened at a systems level, and eventually, it brought artificial intelligence and machine learning into being. The algorithms were invented 10-20-30 years ago, but because of scale we have seen that only now are they becoming usable.”

The impact

What does this mean for consumers and businesses? On the one hand, it represents massive opportunity. On the other, even greater challenges.

“Over the next 30 years we will see incredible economic expansion, where the number of haves with the ability to spend on products we sell is going to grow at an incredible rate. The number of have-nots will shrink. But in order to meet that economic growth, we will see a 16% shortage in skilled labour, which means we must drive higher levels of automation to reach that growth.”

A big question is: What can prevent it from happening? The answer is highly relevant to South Africa.

“The challenges lie in basic infrastructure, like roads, buildings, and airports, but one thing at the root of it all is energy. When we look into the future, energy will become the critical piece: how well, how fast, we can build it out to meet those needs. In many economies, it is not being built out in a sustainable way. We need to change the equation.”

One of the solutions lies in 3D printing.

“Products can be designed digitally anywhere, and you can transmit the design on a digital supply chain, perhaps using blockchain and security tech, to cities where they are printed or manufactured on demand using 3D printers. That’s digital manufacturing and it’s already happening in some places today.

“Imagine you go to Amazon, you find a product, you edit it, personalise it, make it yours, and at the push of a button it is printed at a local manufacturing facility and shows up at your door two days later. It’s estimated that we can save 25% of our energy using digital instead of traditional manufacturing. Manufacturing itself takes one-third of energy use the in the world, so it will have a big impact on the world of the future.”

Arthur Goldstuck is founder of World Wide Worx and editor-in-chief of Gadget.co.za. Follow him on Twitter and Instagram on @art2gee



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Google launches open-source cloud for enterprises

Vendor lock-in is a thing of the past for Google Cloud users, writes BRYAN TURNER.

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A new way for enterprises to use cloud, that prevents lock-in, has been unveiled by Google at its Cloud Next event in San Francisco.

“Cloud Next is held in San Francisco, London, and Tokyo to cater for the various markets,” said Mich Atagana, head of communications for Google Africa. “The event aims to bring together cloud developers to showcase the latest cloud. You can think of it as the Google IO event for executives.”

At a round table, a team of Googlers broke it down for those of us who aren’t cloud developers. 

“There’s a lot of technicality in this event, and a lot of the magic could be lost on those who aren’t developers,” said Atagana. “That’s why we’ve assembled our Cloud team to demystify the technicality.”

Shai Morgan, head of Google Cloud Sub Saharan Africa, said: “Cloud Next started four years ago. The first one hosted 3600 attendees, while this year we hosted about 30,000. This shows the way Google moves across the industry and how we address businesses. We’ve seen large growth in our partner ecosystem. It used to be very niche players, and now it’s big players like Accenture and Deloitte using Google Cloud.”

Daniel Acton, regional tech lead for Cloud at Google, said: “We had a new CEO come in [for Google Cloud] and he said it’s all fair and well to talk about the benefits of the cloud, but it’s not always attainable for business.”

This is where Google comes in. It launched new products to assist businesses in customising the cloud, the transition to cloud platforms, and how much must remain on-premise.

First up is Anthos, a management system for hybrid environments.

Acton said: “Anthos addresses the journey to the cloud. Businesses know that this journey doesn’t happen at the snap of the fingers. Executives have to make carefully calculated decisions on how to get there. There’s also lots of friction to get to the cloud, with a big factor being cloud vendor lock-in.”

“One way to move a business to the cloud is through a ‘lift and shift’, which is simply moving all the components of the business off-premise and on the cloud. This isn’t always what a business needs. Anthos deals with “infrastructure modernisation”, which is how we go from what we got to what we need. That’s because not everything should be in the cloud. 

“We give businesses that option for hybrid infrastructure. Anthos exists to help customers on their journey to the cloud. We realise this is a multi-cloud environment and provide our customers on-premise, a bridge, and computation on the cloud, for example.”

Morgan expanded on this and said: “It’s a bridge to the cloud and a very well managed bridge at that. For an enterprise customer, it’s complicated to move assets, manage skillsets, all while thinking about lock-in to a cloud vendor. Open source in an enterprise environment prevents lock-in. We work very closely with existing vendors, walking with them in their cloud journey but they can leave at any time.

“Anthos can run on Amazon Web Services (AWS) and Microsoft Azure. That’s the beauty of Open Source, no lock-in. Containerising is a method that’s popular in the cloud developer environment but moving these containers across these environments is not trivial currently. Anthos allows this to happen.”

This brings the second major feature: serverless computing.

Containers and serverless computing go hand-in-hand. Acton explained that containers are like pre-setup computers, where a developer doesn’t have to spend time setting up a virtual environment and can focus on writing code, which ultimately delivers business value. He compared the proliferation of containers to Java, with the “write once, run anyway” phrase.

Serverless computing is split into many levels. At a low level, the Google App Engine allows developers to write code, and it takes care of hosting and handling the load. This is similar to the AWS Lambda service.

The enterprise nature of Google Cloud is not exclusive to large enterprises. 

“We address very small businesses as we treat our consumers,” said Morgan “They most likely use Gmail, Drive, Docs, and Calendar because those products are free and very easy to handle. Setting up an enterprise cloud environment is quite complicated. 

“If one invests enough time and energy, one can start a business that adds value and has its computing backed by Google Cloud.”

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