Alternative payment methods (APMs) have become a critical component of every airline’s payment strategy. Offering passengers a way to complete transactions using the payment methods they prefer helps reduce cart abandonment, improves conversion rates and boosts revenue. Supporting the specific APMs that are popular in individual regions or markets helps airlines expand their route networks more effectively and drives growth. Incorporating APMs also optimises and strengthens an airline’s overall payment system.
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Alternative Payment Methods: A Global Airline Challenge and a Key Priority
The majority of airline professionals surveyed in our Payments Come of Age study reported accepting APMs in their direct booking channels. Those who haven’t yet implemented APMs plan to do so soon, indicating that APMs will play a central role in airlines’ future payment strategy and that their effective implementation is crucial for success.
Here’s what else our airline payments study found:
- 62% of airlines currently accept APMs
- 31% of airlines support digital wallets like Apple Pay
- Airlines support an average of 11 APMs (8 local and 3 global), compared to an average number of 7 card schemes.
- Digital wallets and prepaid vouchers are the top 2 APMs, see below:
Even as the popularity of APMs surges and airlines recognise their importance to their payment strategies and operational goals, many airlines still encounter challenges in deploying and implementing them effectively.
In our survey, when airlines were asked specifically about their payment operations, "payment methods" emerged as the top challenge.
– This challenge is particularly significant for airlines serving North and Latin America, see below.
Our survey finds that the most pressing pain point for airline professionals is the slow time to market when introducing new APMs. Fortunately, airlines can overcome this challenge by working with the right payment partner, an essential consideration as they plan their future investments in APM deployments.
- Of the airlines surveyed that don’t yet support APMs, over half plan to invest in them within the next 6-12 months. This varies by region and carrier type, with ultra-low-cost carriers implementing these at a greater rate than full-service carriers.
- Airlines in Latin America prioritise APMs due to their widespread acceptance, while ULCCs focus on offering maximum payment flexibility to their cost-sensitive passengers.
- 36% of carriers plan to invest in digital wallets in the next 6-12 months
- The top 3 APMs that airlines want to add in the next 6-12 months are BNPL, online bank transfers and mobile payments
In our payments survey, airlines identified new and alternative payment methods, like open banking, digital wallets, BNPL, and cryptocurrencies, as the top emerging technology trends influencing their payment strategies over the next five years.
Recognising their importance, airlines need a comprehensive approach for effective implementation – and this is where Payment Orchestration plays a key role.
Payment Orchestration allows airlines to quickly introduce new APMs, reduce abandonment, and enhance the booking experience. It streamlines checkout processes, meets customer payment preferences, and improves efficiency, leading to cost savings and profitability. Additionally, it addresses challenges like reconciliation, reporting, and dynamic currency conversion.
According to our research, airlines support an average of 22 acceptance currencies and eight settlement currencies, making this a crucial capability for Payment Orchestration solutions.
CellPoint Digital has successfully implemented Payment Orchestration for leading international airlines such as Avianca, Cebu Pacific and Virgin Atlantic. Discover how we can help your airline integrate APMs to boost revenue and support your expansion strategies.
