2025 is the year many travel companies will place payments at the top of their priority list. Here are my predictions for the year.
Tokenized payment details
In a soon-to-be-published research on payment security, travelers told us that concerns around fraud and data loss were the main reasons they opt to re-key their payment details each time they shop with a travel company.
Security concerns are becoming a decision-making factor for travelers. As a result, travel companies are increasingly aware of the commercial and reputational risks posed by data breaches and the need to build confidence with their customers in their systems.
Tokenization helps to solve this challenge. When a traveler enters their payment card details, it immediately stores them in a secure vault and provides the travel company with a token that can be stored in their own systems instead.
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The token, as a proxy for the traveler’s card details, allows a travel company to initiate payment when the traveler clicks, but cannot be used by a bad actor nor be decrypted to reveal the underlying original card details.
For our airline customers, these underlying card details are stored in our secure tokenization vault – providing an innovative layer of security which reduces the risk of data breaches, lowers the cost of PCI DSS (payment card industry data security standard) compliance and can support their retailing experience – thus, removing payments friction on multiple fronts. We know there is certainly room for tokenization to catch-on across the travel industry.
Airline payment transformation
More airlines will embark on their transition to new standards and technology for offer, order, settle and deliver – also known as "modern retailing."
This major upgrade to airline IT systems is beginning to usher in a more traveler-centric air travel experience, with personalized offers presented more frequently and more intelligently across every channel. Early adopter airlines stand to gain competitive advantage.
The retailing transformation is making payments one of the key focus areas for airlines, shifting perceptions that payments are only a cost center to a more modern view that it can also be a revenue generator and a customer experience enhancer.
Many airlines, with retailing advanced capabiiities, will prioritize approaches to payments that achieve better performance (acceptance rates) to ensure high conversion rates support their broader investments in retailing. More airlines will take a full multi-channel view of payments to ensure they can facilitate smooth transactions across web, airport and travel agency channels and there by create a better customer experience.
We can also expect a greater focus on "fintech ancillaries," those fintech products that can be retailed as part of an offer, like multi-currency pricing, cancel-for-any-reason and co-branded cards.
Will account-to-account (A2A) payments catch on?
Across all industries we are beginning to see merchants offer consumers the option to make an instant payment directly from their bank account using open banking capabilities. In a complex cross-border industry like travel, this approach holds promise for travel companies and could help to reduce the cost of accepting international payments.
It will be interesting to see if travel companies will be able to incentivize travelers to make the switch away from established methods like cards, which offer points and protection. We’re likely to see the industry incentivize A2A payments with discounts and loyalty point awards.
AI will supercharge payments performance
With travel companies finding it easier to connect to a wide range of payment providers across the globe the question for many has become: 'How do I ensure maximum performance and value from my payments set-up?'
As with many other areas of technology, the answer to optimizing performance is AI. In payments we call this technique "smart orchestration," where a system crunches vast amounts of data to make real-time decisions about how each payment should be processed to achieve the highest acceptance rate at the lowest cost.
While orchestration has so far only harnessed payments data to reduce the overall cost of processing, 2025 is the year when travel data will be introduced to these orchestration models at scale. Doing so means savvy travel companies can begin to factor in the commercial importance of each transaction, and for example prioritize acceptance where appropriate, thus helping them squeeze even more performance and competitive advantage from payments.
2025 promises to be a pivotal year for payment teams across the travel industry. Commercial colleagues and senior management will look to their experts to ensure payments play an enabling role for broader retailing and customer experience objectives. While that is likely to introduce a degree of pressure, it may also unlock the sponsorship payments teams need to modernize their company’s approach.