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.