Why Alt Payments Give Airlines And OTAs A Boost

Universal Air Travel Plan (UATP) is the oldest payments network in the world, 83 years and counting. However, unless one happens to work in a big company and have their travel booked through a managed travel department, chances are they’ve never heard of the network.

UATP is a B2B-based payments network, its payment rails handling an estimated 15 percent of the global air travel market and 80 percent of its business coming from outside the United States mainly from Europe and, increasingly, China. Airlines issue virtual UATP payment accounts to their corporate customers, who receive favorable economics for using those rails. The savings that airlines enjoy from corporates booking via UATP’s rails are used to create tailored offers for their corporate customers.

A few years ago, UATP added new functionality to its corporate payment product offering by launching PAXVIA, a virtual card payment solution that enables corporations to pay for hotel bookings using a UATP account.

UATP is owned by more than two dozen airlines and operated on their behalf. UATP’s goal is to streamline payments made by business travelers through their corporate travel departments, and to save them money by reducing fees. It doesn’t issue cards (even though UATP’s CEO Ralph Kaiser has one), but manages the complicated payments flows that define corporate travel: last-minute changes and cancellations, add-on fees and currency exchanges, to name a few.

After 83 years in business, UATP is spreading its payment wings and leveraging its rails and connections to airlines to enable payment via a method other than its own branded service. It’s now giving travel aggregators, airlines and other stakeholders the chance to accept alternative payment methods, such as PayPal, direct debit and hundreds of domestic schemes like iDEAL.

Kaiser recently sat for a discussion with PYMNTS about this shift, the changing travel landscape and what’s next for all of it.

More Options

The interview came a few short months after UATP announced partnerships with Expedia, Orbitz and Travelocity in the U.S., which enabled those online travel platforms to use UATP’s rails to accept alternative payments methods and power business travelers who use those portals for bookings. The discussion happened as online travel platforms began doing more to appeal to business travelers. Airbnb, for instance, added a new search function that allows users to view listings designated as “business travel-ready.”

The PYMNTS discussion also happened at a time of increasing focus on the opportunities to offer local and alternative payment methods, and amid the challenges of doing so, given the sheer number of options available – particularly for a category such as travel, where global travelers may favor their own domestic payment methods.

These alternative forms of payment are important for airlines to embrace because they “drive incremental payments revenue,” Kaiser said. “Many alternative forms of payment are cheaper for the airlines than the traditional credit card networks.” Even a savings of 1 percent or 2 percent per transaction can bring significant gains to a business that spends tens of millions per year on airfare. However, Kaiser emphasized that while alternative payments are not corporate payments, they still offer substantial savings for airlines.

Background Role

UATP enables multiple alternative forms of payment to “run on the UATP network and connects them to airline merchants using their native language and processing requirements, so that airline merchants automatically adapt to each AFP’s unique integration, reconciliation and support models,” Kaiser said. “We do eWallets, prepaid, local cards, bank transfers and even alt credit, such as installments.”

He offered the example of a family of four from the Midwest planning a trip to Paris, with airline tickets costing perhaps $800 each. Instead of putting that purchase on a credit card and paying relatively high interest rates, that family could instead opt for cheaper installment payments — an option that could lead to more purchases of airline tickets. “I think installments are kind of a big new area,” he said, noting that UATP offers “unique access” for such customers and partners with these types of transactions via UpLift .

Kaiser noted that at least one low-cost carrier, Brazil’s Gol, offers an installment payment option as it tries to persuade more leisure passengers to take in-country airline flights instead of longer, more arduous bus trips. “A flight can take an hour instead of the bus taking a day and a half,” he said.

He added that the third and fourth quarters will bring “four or five” big new announcements around the services UATP offers, including news related to other parts of the travel industry, not just airline trips. That involves working with travel management companies to issue UATP accounts and working with “more groups of air carriers instead of just individually,” he said. “We want to take friction out of what they want to achieve with customers.”

Corporate travel planners might not be making a quick move toward alternative payments, but those options will continue to expand in the near term, according to most observers. No matter what, though, the long-standing UATP will continue to seek new ways to spread its payment wings.