The proliferation of payment options has led to a new layer of payment processing technology that is gaining traction in the travel industry, but also has the potential to further complicate the payment process for customers.
Known as payment orchestration, this technology sits in front of an organization’s payment infrastructure and can be integrated with multiple payment channels. This is intended to reduce the complexity of directly integrating with the ever-growing number of payment providers.
A payment orchestration player, Canadian fintech Nuvei, recently published a white paper based on a survey of more than 100 international companies across multiple industries, conducted in collaboration with Edgar, Dunn & Co. The research found that more than half of online businesses use at least six payment providers for their checkout process, and about a third have direct acquiring relationships with at least five banks.
The paper also highlighted the need for payment optimization, showing that 59 percent of businesses said their customers would not come back if they thought they received an incorrect rejection of their payment option.
“Payments have become increasingly complex, especially for companies with different subsidiaries, operating in multiple regions, selling in different currencies and offering different payment methods,” said Peter Sidenius, CEO of Edgar, Dunn & Co. “Payment orchestration is being used by more and more companies viewed as a solution to stay in control of their payment stack.”
This also includes tour operators. Speaking at UATP’s Airline Distribution conference in Boston last March, Alicia Racine, merchandising and ancillary revenue manager at Copa Airlines, said that every time the airline wants to integrate a new payment option, it faces a “very lengthy process”.
“We’re looking at orchestration features and a single integration in the backend that we can leverage on good technology,” she said. “We are not designed to be technology developers and we want to have a good commercial approach to the opportunities in the market.”
While this may be a little in its infancy from a travel manager’s perspective, it’s worth pursuing as many on the travel side are still on a learning curve with the technology, said UATP President and CEO Ralph Kaiser. Some of the technology providers in the payment orchestration space aren’t travel specialists and therefore don’t understand all the nuances that travel entails, he said.
“They don’t fully understand travel yet,” Kaiser said. “So if you edit something that way and then a refund comes out, they don’t know how to do it and you have to do it as a manual process.”
In some cases, depending on an airline’s strategy, using an orchestrator can also entail higher costs than connecting directly to payment systems. Therefore, providers should carefully consider what additional services they get, he added.
Some players are now appearing directly in the travel sector. In March, Hahn Air’s founders launched FinMont, a travel merchant payment orchestration platform that integrates acquiring banks, payment, fraud prevention, foreign exchange and chargeback providers for airlines and travel agencies.
According to Suby Valluri, CEO of FinMont, the idea is to give agents more freedom of choice in payment partners.
“To date, many companies have used virtual cards to pay suppliers; however, connecting multiple virtual card issuers with a single integration and automatically issuing the virtual cards has proven difficult to manage,” Valluri said. “Also, many companies are still struggling with automation [chargeback] Claims, making them time-consuming and difficult to track.
Overall, the focus on payment orchestration is another indication that suppliers and agents are taking a closer look at the costs associated with payment and that traditional actors are taking a stronger role. The International Air Transport Association, for example, launched its own payment solution in 2022, and Amadeus will be there this year Established his own payments-oriented business, Outpayce.
“Long-term players perform better up front, and that’s a good thing,” said Kaiser. The idea is to offer a better service at a lower cost and I think we are all motivated to go in the right direction.”