How can cross-border payments improve the airline industry?
The airline industry is changing fast and expanding thanks to cross-border payments. Customers in emerging markets prefer alternative payment methods and installment plans and this has a direct impact on businesses. With revenue expected to hit US$1.02 billion by 2022, let’s explore how airlines are dealing with this reality.
João Paulo NotiniOctober 20, 2023
The airline industry must adapt to evolving consumer payment preferences and have efficient cross-border payment operations for global expansion in a rapidly changing world. This is especially vital in emerging markets, where traditional payment options like international cards are less accessible, and customers rely on alternative payment methods and installment plans.
Welcome aboard as we embark on a journey in this post to delve into the influence of cross-border payments along with alternative payment methods (APMs), and installment plans on the airline industry.
Travel Industry Financial Growth: A World of Opportunity
The travel industry’s financial outlook is extraordinary. As reported by Statista, revenue is set to reach US$1.02 billion in 2022, with a CAGR of 12.35% projecting US$1.96 billion by 2027. In-app purchases in the travel market will amount to US$88.05 million in 2022.
To harness this potential, cross-border and alternative digital payment methods and instant payments are necessary. They are one of the drivers of the industry’s growing demand for seamless and secure in-app transactions. Airlines and travel providers must embrace these solutions to meet the requirements of this “new era” of digitally-savvy customers.
Adapting to Changing Payment Trends in the Airline Industry
The airline industry has witnessed a paradigm shift in payment preferences. Installment payments, for example, are a trend in Latin America. According to a PhocusWire survey, over 50% of Latin American travelers actively seek installment options when booking flights.
This growing demand for flexibility in airline payment plans needs to change how airlines conduct their business. They are concerned about:
- Lower payment costs: Lower payment costs, especially for customers from emerging markets in regions like Latin America and Africa. Due to the lower purchase power of the population in these places, offering cost-effective payment plans is vital for airline businesses.
- Faster checkouts: another reason why travelers give up a purchase during the checkout process is because it is slow. Redirections, payment errors, and extended payment steps delay the whole process.
The Advantages of Cross-Border Payments for Airlines
Airlines can harness a multitude of benefits from cross-border payments when considering global expansion:
- Enhanced Control Over International Transactions: Cross-border payment systems offer airlines more control over global financial operations. This level of control ensures smoother and more efficient financial management across different regions.
- Risk Diversification: For airlines operating in various markets, cross-border payments become essential for diversifying risks. Airlines can ensure excellent stability and adaptability in varying economic landscapes by facilitating cross-border financial transactions.
- Expanding Customer Base: Access to cross-border payments significantly helps airlines broaden their customer base. This access facilitates the sale of tickets to travelers from different parts of the world, ultimately contributing to the airline’s expansion.
- Optimized Currency Exchange: Cross-border payment systems empower airlines to manage exchange rates more effectively, minimizing currency-related risks and costs. This optimization is a crucial financial strategy for airlines operating globally.
- Access to International Financial Services: Cross-border payments grant airlines access to various international financial services. This access simplifies financial operations across multiple countries, making it easier for airlines to operate globally.
Unlocking Opportunities with Alternative Payment Methods (APMs)
Alternative Payment Methods (APMs) are gaining traction, and their significance cannot be overstated. Estimates from the World Bank shows that, in Latin America, 72% of adults lack credit card, while this number reaches 97% in Africa.
Thus, the only way for many customers to purchase flight tickets and access travel services is through local APMs and a proper airline payment plan (through installments). These APMs include digital wallets, instant payments, mobile money, and more.
Time to Embrace Cross-Border Payments with Installment Payments and APMs
A seamless payment experience is not just a nice-to-have; it’s a must. Any glitches during the payment process can lead to abandoned bookings, and airlines must prioritize a smooth transaction journey for their customers.
Airlines need to stay flexible and responsive to shifting payment preferences to thrive in this evolving landscape. Offering cross-border payment solutions and adaptable installment plans is more than a way to attract a broader customer base; it’s a strategic approach to tap into emerging markets. So, how to do that?
Here’s where EBANX comes in. As the leading payment provider for international businesses willing to expand across emerging markets, we connect global airline companies with the payment platform to propel their growth.
Ready to take off?