Payments was once the functional task of 'taking the money', something that happened after an airline had met the traveler’s expectations with personalized offers, and historically making a payment tended to be a bit cumbersome.

But attendees at Amadeus’ Future of Payments – Airlines conference heard from a range of experts that all expressed a common message: innovation means payment is slowly becoming a frictionless experience and that’s a huge opportunity.

Despite the progress shared at the conference, some challenges remain, for example 24% of travelers still abandon their purchase because there are too many steps in the checkout experience. However, with the rapid pace of payments innovation, a number of advances from simplified foreign exchange, to a raft of new payment methods and easily accessible instant credit are combining to make a smooth and hassle-free payment experience tantalizingly close.

There’s been a blossoming of innovation in payment methods with travelers increasingly choosing to pay using local methods and e-Wallets. According to PPRO , local non-card methods will account for 77% of e-commerce spend by 2024, with 45% of millennials choosing not to have a credit card. The competitive opportunity for airlines that manage to offer travelers their preferred way to pay at a granular, country level, is enormous. A striking 67% of consumers told PPRO they’ve abandoned a purchase when they couldn’t pay using their preferred payment method, so the ability to experiment with over 150 local methods based on a single integration to Amadeus means airlines can offer what travelers demand.

According to foreign exchange experts at Continuum Commerce , another major turn-off for travelers is forcing them to pay in a foreign currency. If you’re a Singaporean citizen flying to Kenya, the price is likely denominated in Singaporean Dollars, but if you’re booking a subsequent internal flight, it’s more likely to be presented in Kenyan Shillings, so you don’t have price transparency or price certainty at the point-of-purchase.

That’s confusing, so why not offer multi-currency conversion services for the traveler so they can pay in their preferred currency of Singaporean Dollars here too. According to Continuum this can boost airline margins by 3% for cross-border transactions, whilst supporting happy travelers that are 20% more likely to convert. As well as allowing airline customers to pay in their preferred currency, multi-currency services allows airline customers to pay in their preferred payment method as well. So, our Singapore citizen can not only pay for the Kenyan flight in Singapore Dollars, he or she can also pay for this flight with the Singaporean eNETS online payment solution.

If we consider a broad definition of friction then really, it’s any barrier preventing someone from buying an airline’s products. One of the biggest barriers for some people is a lack of funds at any given moment in time - there have been historic ways to access credit for travel but they’ve tended to require a lengthy application process or have charged high interest rates. Now, innovation in financial services and digital technology are combining to deliver completely new ways that make it easier to buy airline products.

Imagine you want to take a dream holiday in January when many airlines run sales, but it’s been an expensive end to the year, and your bank balance is running low. Enter instant credit, a quick and easy service from Santander and Amadeus that means you can pay for the trip in six- or twelve-monthly installments, facilitated by your airline through all of its channels in a couple of clicks.

Of course, credit isn’t new, but this approach is underpinned by sophisticated AI technology that, in the near future, will help an airline not only to make a judgement on whether credit should be offered to a traveler following an application, but before they even make an application. This means the service is only communicated to those travelers to whom it is relevant, preventing any disappointment, and helping travelers access credit much more easily and cost effectively than traditional lending approaches.

With instant credit you’re not just preventing abandonment or reducing the friction associated with credit applications, you’re making it possible for people to say yes to higher value products, in fact, pay later services lead to a whopping 40% average increase in basket value.

So, far from being a functional task, it’s clear to see how payments innovation offers savvy airlines the building blocks to assemble a service where travelers can pay using any method they desire, in the currency of their choosing and using an installment plan if they wish. It’s time to say goodbye to clunky and prescriptive checkout flows and welcome the new era of frictionless airline payments.

All these topics and more were discussed at our Future of Payments – Airlines conference in Madrid. If you’re a travel retailer interested in attending future events, please check out our website for more information.

Jeremy Dyball - Head of Commercial, Payments, Amadeus