Airline retail has transformed. Why are payments still catching up?
Over the past decade, airlines have changed significantly. What were once primarily operational businesses have increasingly become sophisticated digital retailers. Airlines have invested heavily in dynamic pricing, personalised offers, ancillary revenue, loyalty and better digital experiences. A huge amount of effort goes into making the customer journey faster, easier and more likely to convert.
Every part of the airline retail experience has evolved rapidly, except one: payments.
At the exact moment where demand becomes revenue, much of the industry is still working within an online payments framework built around a decades-old distinction: whether a card is present or not present. And for travel, that distinction creates a particular challenge.
When genuine customers look risky Travel is unusual because many of the behaviours associated with fraud are also perfectly normal customer behaviours. A traveller might make a high-value booking from a new device while overseas, using a card issued in another country. They may be booking for several people. Their location might change repeatedly. They may spend thousands of dollars months before they head off.
None of that sounds particularly unusual for travel. But through the lens of online fraud prevention, the same behaviour can start to look risky. That puts travel businesses in a difficult position; approve the wrong transaction and you risk fraud and chargebacks. Decline the wrong one and you may simply send a valuable customer somewhere else.
We call this the travel trust gap.
The hidden cost of mistrust Fraud losses are relatively easy to see. A fraudulent booking is identified, the value can be measured, and the cost of the resulting chargeback or dispute can be calculated. But the cost of declining a genuine customer is much harder to see because customers don’t always retry a failed payment. When alternative flights, accommodation or package holidays are only a few clicks away, many can simply move elsewhere.
The merchant sees a declined transaction. What it may not see is a lost customer. And in travel, the value lost can go well beyond the original booking: ancillaries, loyalty, repeat business and future customer value can all disappear with it. That’s the frustrating part. You’ve done all the hard work and spent the money to acquire and convert the customer, only to lose them at the point of payment.
How much better can we get at predicting risk? The payments industry has become extraordinarily sophisticated at fraud prevention. Machine learning, behavioural analytics, device intelligence, network data and authentication technologies can draw on an enormous range of signals to determine whether a transaction should be trusted.
These technologies play an important role. But most are ultimately helping answer a version of the same question: How likely is it that this transaction is fraudulent?
For travel, where unusual behaviour can be entirely legitimate, there may be limits to how far prediction alone can take us. But perhaps we're asking the wrong question. Perhaps it should be: Can we prove the genuine cardholder is authorising the transaction?
That changes the conversation.
Instead of continually adding more signals to predict whether a card not present transaction is likely to be genuine, what if we could change the nature of the transaction itself?
From prediction to proof This is the thinking behind Card Present over Internet (CPoI®): bringing the trust of card present payments into online channels. By completing a tap and PIN payment on their own device, a customer can prove they are genuinely authorising the payment.
Rather than simply adding another authentication layer to a card not present transaction, CPoI® enables genuine card present transactions online. That creates a different basis for trust, particularly where the value or perceived risk of a transaction means greater certainty is worthwhile. This isn't about replacing existing fraud tools. It's about having another option when greater certainty is needed. When prediction isn't enough, move to proof.
Payments are becoming strategic Travel retail transformation isn't slowing down. Offers are becoming more dynamic. Customer journeys are becoming more personalised, and travel businesses are operating across more channels, currencies, payment methods and customer touchpoints than ever before.
In that environment, payments are no longer simply a back-office function. They sit directly at the intersection of revenue, customer experience and risk. So perhaps the opportunity isn't simply to get better at predicting which transactions look genuine. It's to create ways of proving when they are. For travel, that could mean less fraud, fewer genuine customers declined and more revenue protected.
Our new white paper, The Travel Trust Gap, explores why genuine travellers can still look like fraudsters, the commercial consequences for travel businesses, and how moving from predicting risk towards proving authenticity could help reduce fraud, approve more genuine customers and protect more revenue.
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