Read our series of interviews with the people who are making the Yocova platform come alive. Here we speak to Damien Cramer, Global Head of Travel & Airlines at Worldline about some of the complexities and challenges faced by airlines in receiving global and cross-border payments, how Worldline helps to navigate that, new and emerging payment methods, the importance of providing the right payment option to consumers, and some of the lessons learned from the pandemic.
Tell us about Worldline – what does the company do?
“Worldline is a global payment service provider based out of Europe, with a team of around 15,000 operating in 50 countries. We support around 1.5 million merchants ranging from small businesses requiring payment terminals and online e-commerce, right through to large enterprise entities that are global cross-border businesses. When it comes to cross-border, many of the organisations that we deal with are airlines or travel businesses, and that’s where my role comes in.”
What role do payment service providers play within the aviation industry?
“The ability to pay and get paid is critical to any business but the thing about travel businesses and airlines is that they’re almost totally reliant on digital payments, so they’re distinct from other retail environments in that way. As global businesses need to receive digital payments from multiple jurisdictions and via different payment methods, the reliability of payment service providers like us, is a critical part of an airline’s infrastructure. For card payments, we facilitate the links between the merchant, the airline and ultimately the card issuer, whether that’s your card issued by Chase in the US, Barclays in the UK or DBS in Singapore, or a small regional bank in Australia for example, the network of card processing is quite incredible these days. Another important thing is gaining oversight of how money is transferred and processed. When a booking is made, airlines need to know funds have been received and what they represent, so that they can issue tickets and provide services to customers, and we’re one of the critical cogs in that process. Another thing we do is to help our merchants to navigate the complex landscape of global, regional and local regulations, technology and security requirements.”
Who are the adjacent players in the aviation industry?
“We perform the function of the payment service provider, but also act as an acquirer in our own right and connect with other acquirers on the market. What that means is that there are different ways you play out this capability, whether you’re a gateway provider, or are handling the money, or not. In our case, we handle money and perform a kind of treasury FX function as well. We’re connected and integrated with other platforms such as GDS, Amadeus or Navigators, to name some examples, and for airlines, this capability helps us to facilitate bookings and ultimately keep their business alive. The relationship that we have with the airlines is paramount, but the relationships that we have with those other partners around the ecosystem are also crucial.”
What are some of the complexities and challenges?
“I think three things spring to mind. The first is meeting the demand for the way passengers want to pay and the differences in preferences depending on the market you’re in. If you look at the way customers prefer to pay in Southeast Asia, it’s a very different proposition to the US or Europe, for example. There’s an enormous complexity around the expansion of payment options from the traditional Mastercard, Visa or American Express method to alternative forms of payment such as digital wallets. A key challenge, therefore, is being in a position where you can manage and support this expanding range of global payment capabilities.
The second thing is how you can integrate and offer those payment options and manage them in an efficient way, which is a big consideration for an airline. I think there are very few airlines with the capacity to manage and orchestrate so many different payment options when you’re flying to 50 different countries around the world. Managing the complexity of that from both the front end and back end is a really critical point.
The third thing is how you deal with regulation, compliance and data security and privacy. There are huge ramifications in terms of money laundering and Know Your Customer and when you’re handling money from multiple countries in different currencies and varying payment methods, there are massive risks for cross-border businesses like airlines, that need to be mitigated. We help to navigate this changing landscape of digital payments and help our merchants to be across that.”
What are some of the choices airlines and their financial partners make to deal with complexities around regulation and anti-money laundering?
“It’s really about understanding and engaging payment partners that help take away the complexity. As an organisation, we’re regulated in many markets, licensed in some of the countries we operate in, and take all the steps necessary to ensure compliance. I think in terms of choosing a payment partner then you must look at the countries or regions you want to operate in and suit the partner best qualified to navigate the regulatory environment there and any changes being introduced there. India for example, has regulations on currency and data, but these are changing and evolving. If you’re an airline in the UK it’s likely to be flying a lot of goods in and out of India as it’s a busy corridor, so you need to choose a payment partner with the right capacity to ensure you don’t run afoul of India’s regulation and compliance requirements.”
Are there any other geographies that are of particular interest that you expect to be talked about more in the future?
“I’m based in Asia and I think South Korea is a fascinating market. It’s highly developed with a significant amount of wealth and a huge drive of consumers in the market who want to travel abroad, but it’s also a mobile-first environment. Consumers do everything through their mobile phone and while credit cards do exist, the payment experience is very different to other parts of the world. When you operate in South Korea then, it’s not enough to simply translate your website into the Korean language, it’s about understanding their propensity to spend and travel, but also knowing how they want to pay for things, and crucially making the preferred payment method available.
In terms of financial services, some markets are walled gardens. Take the Netherlands for example, where a bank-to-bank transfer product called iDeal is huge. Few people in the world will have heard of it, but for Dutch people that’s the payment method of choice. In Brazil, a solution was developed supported by the Brazilian Government called Pix, which went from being nothing to the absolute dominant payment system in Brazil. For Brazilian customers, if you’re not offering Pix as a payment option, they’ll go somewhere else that does. Then of course there’s China where payments are predominantly now made via the mobile apps WeChat or Alipay.”
What effect does modern fintech have?
“Fintech is having a massive effect and AirAsia’s Super App is a great example. What’s particularly interesting about this app is that it was built on the back of airline engagement, whereas when you look at other super apps, such as AliPay or Grab, they’re built on groceries or transportation. It’s important to remember that airlines were the first to champion and create loyalty programmes, not necessarily digitally, but such schemes have been embedded for many years. The AirAsia model is interesting because it has taken that into a digital environment to create an app that can be used day-to-day to gain rewards. That drives loyalty to the airline, which is a huge proposition and in Malaysia, has resulted in a significant number of booking purchases made with local wallet payment methods. Particularly in Asia, we’re starting to see some of the full-service carriers work out which way they’re heading such as ANA in Japan launching ANA Pay, which has also done really well.”
What did the situation around pandemic shutdown refunds teach the industry? Is there more that we still need to learn?
“I think that prior to the pandemic, when it came to travel and risk, it was always understood by experienced payment providers and the airlines themselves because there had been enough examples of the complexities around it and the financial failures of airlines. When the pandemic arrived, we had this industry-wide position of everything grounded and cash flow stopping, which created a significant amount of risk, and then a reverse financial flow brought about by refunds. With regulatory compliance having a huge impact as well, the whole process was an enormous shift of suddenly moving money from left to right and right to left and the infrastructure wasn’t in place to do that. One of the key things this highlighted was that payments are embedded not just in the financial flow, but also in the financial strength of an organisation and this really underlined the power of data. Having the data available to understand your financial position is so important. Even if things look awful, at least you’ve got a line of sight and therefore a better idea what can be done and how you can make that happen.
I think airlines now also realise that being fully reliant on one payment provider is not always a good risk management strategy. While it might add more complexity to partner with more than one, I think it’s a good risk management for airlines to have a couple in their infrastructure and the airlines we work with also contract and engage with our competitors.”
Watch the Yocova on Air video episode featuring Damien Cramer
To find out more about Worldline visit their Yocova storefront >
Contact Damien Cramer directly via his personal profile >
Author: Team Yocova
Published 13 February 2024
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