I ‘ve been to Latin Amercia for work maybe five times in the past year and a half, so I’m aware of some of the unique characteristics of the online payments market in various countries there – what I wasn’t aware of was the existence of four year installment plans!  

TAM announced agreements with banks Itau Unibanco and Banco do Brasil to offer payment plans on tickets. Account holders can obtain tickets by making a small down payment and then making installment payments for up to four years after flying.

Whether I was in Mexico, Colombia or wherever I went in LATAM, the need to be able to support installment payments for online and call centre purchases on credit cards was non negotiable. I have never come across this as a mandatory requirement in other parts of the world, and this is just one of the reasons why airline direct channel payments is always a more complex topic than most people first imagine. Four or six month installment plans seemed pretty common, but four years after travelling is a long time to still be paying off that ticket. Clearly consumers in that market have very different behaviour to those in other parts of the world.  

Líbano Barroso, who was recently confirmed as TAM’s chief executive officer after having served as acting CEO since October was quoted as saying that attracting first-time fliers with easy payment options is one of the keys to raising growth levels in the $6.5 billion Brazilian air travel market. Apparently Brazil’s domestic air traffic has nearly doubled since 2003. “The fact that payments for the tickets are within people’s monthly budget acts as a great stimulus,” said Mr. Barroso.

According to the article in eTurboNews,  Gol was the first to adopt the strategy of easy payments about four years ago. Its program now has 1.8 million members and its popularity has forced other airlines to follow suit.

One thing that was a big focus a few years ago, and I’m still surprised every airline doesn’t offer it, is PNR on hold. I wrote the following back in June last year when United actually dropped the feature. 

One goal of any airline website should be eliminating benefits the consumer receives from booking via a travel agent and clearly the ability to place a PNR on hold is one such benefit.

The reason why this ties into payment is because of the strong value an airline gets in taking a small deposit for placing a PNR on hold (or pay later as it is sometimes called). It aids conversion, but as with just about anything payments related, how you do it, and then how you apply the deposit to the balance payment to ensure correct sales reporting into your revenue accounting system can mean the difference between a good online initative and a back office reconciliation nightmare.

And who would have guessed Kenya as a market leader in payments innovation. Admittedly, the newest FOP from KQ still needs a smart phone in order to pay for the tickets from your mobile, so it won’t change the market overnight; unless I suppose if people without credit cards use the Safaricom M-Pesa service from an internet cafe or whereever they have a connection. Maybe Plato had a point when he said necessity was the mother of all invention.

Advertisements