In-flight Payments: today and tomorrow

Airlines increasingly rely on ancillary revenue streams to meet their revenue and profitability targets. They look to upsell customers at any and every opportunity. This takes place before the departure date, at the airport and also whilst on-board. Airlines sell seat upgrades, travel insurance, duty free goods, food, lounge access, ground transportation options, entertainment and tickets as well as other products and services. Ticketing revenue on its own is no longer sufficient.

Payment systems today must be highly secure, offer a great customer experience and work seamlessly across multiple sales channels. These payment systems have to meet high consumer expectations, comply with strict regulatory requirements and deliver operational efficiencies. In-flight systems have to cope with many specific environmental requirements and higher safety standards not faced by traditional retail merchants.

The majority of payment systems today rely on online communications for authorisation, verification, authentication and funds transfer. This is not available at 30,000 feet! As such inflight payment systems have to be able to work in an offline mode. Off-line PIN verification, transaction batch support, remote device management and international aspects related to multi country, currency and language all have to be supported. The risk to airlines from fraudulent transactions can be managed as they have full records of every customer flying with them including their passport details. It should be recognised that the cost of retrofitting planes with next generation payment systems is far higher than for a traditional high street store.

Since the migration to Chip and PIN technology, which now importantly includes the US market, on-board payment terminals must be able to process Chip transactions and capture PIN numbers and submit these transaction details to an acquirer once the plane has landed. This must follow specific processing rule variations agreed for the airline industry by the international payment schemes.

Contactless and NFC payment options have become expected by consumers and so all in-flight systems must be able to accept these payment methods in addition to physical chip cards. Airlines have until the end of 2019 to comply with Visa and Mastercard contactless acceptance mandates that all payment terminals must accept contactless transactions. It is important that NFC payment terminals must be compliant with the airline industry’s electro magnetic interference requirements. Wireless communications and WIFI usage are strictly controlled. In addition to traditional payment terminals passengers will increasingly be offered the opportunity to conduct payment transactions from the latest generation of seat back displays, supplied tablets or directly from customer owned devices such as smartphones, tablets or wearable devices. In-app payments will also become more popular and need to be supported by airlines.

Passengers are looking for the option to pay by their bank credit or debit card, using frequent flyer miles/loyalty points as well as by one of the new alternative payment methods like Alipay that customers are adopting. Some of these utilise QR code technology. Customers are also looking for consistency of payment options throughout their relationship with the airline. As such in-flight payment systems should support tokenisation technology in order to improve data security protection and work seamlessly across sales channels.

Thanks to the recent PSD2 regulations, which came into force in January 2018, European airlines are no longer able to apply surcharges to consumer credit card transactions. This has historically been standard practice for many low cost carriers. All payment systems need already to have been upgraded to stop this practice happening or face the consequences of regulatory action and fines.

The STS viewpoint

Here at STS we have had many years experience of working with transportation providers, including airlines, on their payments acceptance solution needs. We understand the specific requirements of this sector and have long standing partnerships with airline industry solution providers, POS providers and acquirers. Thanks to our close relationships with the international card schemes and our ability to deliver complex payment projects we were able to deliver secure in-flight chip processing. G8, our advanced, feature rich and agnostic payments acceptance application accepts Chip and PIN, contactless and NFC transactions.  In an industry first, G8 is being used in airport terminals at self-service kiosks to support multi-merchant usage. Also, PayOp, our next generation terminal management system, has great applicability to airlines, helping manage and updating devices that are constantly being moved around the world.

We would be pleased to discuss your in-flight payment solution needs, so do get in touch with our team of payment experts.

Friday, April 20, 2018