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01 August 2012

WorldPay: 1.5% of Airline Online Booking Revenue Lost to Fraud

Globally, 66% of airline merchants are seeing fraud levels stay the same or increase as they lose 1.5% of booking revenue to fraudulent transactions, according to the global Perfect Passenger Payment insights report, commissioned by WorldPay. Worryingly, this could be set to increase, with 29% of airlines reporting that incidents of fraud have risen in the past year.

The good news for airlines is that customers are happy to accept a robust screening process when buying tickets online. 71% of consumers would prefer a slower payment process with more rigorous security checks than a faster process with fewer checks.

The global study surveyed 51 airline merchants including low cost, regional and global airlines and 4,500 consumers from the US, UK, China, Japan, Brazil, Finland, Spain, Germany and France to explore views on the online booking process for buying airline tickets.

Phil McGriskin, chief product officer, WorldPay commented: «Airline merchant’s profit margins continue to be squeezed by rising fuel costs and environmental restrictions yet they are continuing to lose a significant proportion of booking revenue to fraud. Consumers, however, are accepting of more rigorous security checks so airlines have the opportunity to be more vigilant over fraud management without running the risk of losing customers.»

Key findings from the Perfect Passenger Payment Report:

• Transparent pricing — Clear, upfront pricing is the most important aspect of the online ticket experience for consumers in the US (93%). 29% of US consumers were presented with surcharges that were not made clear from the outset, and 53% of US consumers think airlines are not clear enough about surcharges.

• Surcharge tolerance — On average, consumers are prepared to pay 3.81% of their total flight towards surcharges, and those countries that feel surcharges are not transparent enough are still prepared to pay over the global average towards additional costs (US, 4.70%).

• Alternative payments — 84% of airline merchants plan to offer more choice in payment types in the next two years. 38% of consumers would use a different airline and 48% would consider doing so if their preferred airline no longer accepted the payment method they wanted to use.

• Mobile payments — 58% of consumers would like to use their mobile device to pay for a flight in the future.

• Accommodating foreign customers — Only 22% of airline merchants give customers the option to pay using the currency of their choice if they are purchasing from a foreign country.

• Optional ‘extras’ — 50% of consumers are more likely to make additional purchases such as hotels, travel insurance and baggage allowance in one transaction combined with their flight cost so they can reduce payment surcharges.

The report also found that shopping cart abandonment is a big issue for airlines, with almost a quarter of online shoppers confessing to dropping out before completing the payment process. A gap however exists between airline’s understanding of why people drop out and the reason given by consumers. Over half of airlines think consumers abandon their purchase because their payment was declined but only 7% of consumers claim this caused them to abandon a purchase. In fact, 36% of respondents reported that it was due to being presented with hidden surcharges, whereas only 6% of airlines highlighted surcharges as a factor.

McGriskin concludes: «In terms of minimizing purchase abandonment, airlines are fuelling customer frustrations by not clearly stating surcharge costs. On average, consumers recognize that a proportion of their airline cost will include a surcharge percentage but consumers feel they are being misled right up until the point at which they need to pay. If airlines are prepared to be more transparent about additional costs they could actually see an upturn in the number of customers that complete the payment process.»

Source: BusinessWire



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