Nium, the global platform for Modern Money Movement, has published a report revealing how new ‘closed-loop’ B2B payment solutions to share payment costs between airlines and travel sellers more equitably could provide a much-needed economic boost for the industry.
The free-to-download 14-page report – titled Closing the loop for air travel: A new payments model for airlines and online travel agencies – reveals that in 2019 airlines spent $20.3 billion in payment costs, equivalent to approximately 78% of the industry’s net profit.
A significant part of that sum comes about as a result of costly, old-fashioned and very slow ‘double-loop’ payment ecosystems fraught with surcharges, acceptance issues, fines, and declined payments.
Read more: Nium unveils ‘closed loop’ payments alternative for airlines and OTAs
However, by embracing new ‘closed-loop’ payments technology – a sustainable and equitable payment model that closes the door on damaging surcharges and business restricting non-acceptance policies – airlines could potentially save as much as $2 billion dollars annually.
“One of the biggest airline distribution conundrums of the internet era has long-since been: do I increase my distribution at the price of accepting high payment fees, or limit distribution to those with low payment costs but reduce overall sales opportunities? This problem goes away with the development of closed loop payment solutions, allowing airlines and travel sellers to collaborate in a sustainable and more equitable fashion – and save airlines up to $2 billion a year at a time when returning to profitability is more important than ever before” Spencer Hanlon, Head of Travel at Nium, stated.
Closing the loop for air travel: A new payments model for airlines and online travel agencies is available for free download here. The report follows the recent launch of Nium Airline Payments (NAP), a closed-loop payments solution powered by Universal Air Travel Plan (UATP).
Among the first to contract with Nium for the solution include Air Europa, which has tapped the global payments company to solve some of the inequities associated with traditional card payment models.
