Among a range of programmes introduced by IATA in recent months, including its own EasyPay solution, the aviation authority will be implementing the Transparency in Payments Initiative (TIP) in March, which is expected to significantly disrupt the payments process between travel agents and airlines.
TIP is part of IATA’s plans to transform airline payments which include changes to its existing Resolution 890. The move is geared to give airlines greater visibility of the costs associated with using different methods of payment and greater control over the payment methods they accept from travel agents.
Sounds fair enough. After all, what’s not to like about greater pricing transparency? But what does TIP mean in practice and what should travel agencies and payment solution providers look out for as implementation draws near?
While final details are still to be published, here’s a checklist of some of the things we might expect:
- We are likely to see more airlines refusing to accept high interchange cards, particularly wholesale travel products that have emerged in the last few years
- With B2B credit card products typically carrying high interchange costs, we can expect a reduction in the acceptance of credit card payments compared to prepaid card payments
- There will most likely be a shift toward non-card payments for spend between agencies and airlines, which will present the risk (to the payer) of losing chargeback protection
- We can also expect to see the emergence of new, low-cost, travel payment solutions such as IATA’s own Easypay payment offering
Survival of the smartest – considerations for travel agencies
How travel agencies respond to TIP could be what separates the high flyers, from the low performers in the years to come. Below are some considerations for travel agencies as they work out their own payments strategies:
- Have you taken a close look at the payment options offered by your supplier and asked whether they can support low-cost payment options? Or are they limited to legacy high-interchange card options?
- Have you partnered with a payment provider that is ready to ride this wave of disruption?
- Besides rebate, which increasingly looks under threat, are you extracting full value from the payments you are making to airlines and other travel providers?
- Look out for new, innovative payment solutions that deliver additional value on both sides of the transaction operating alongside Easypay
As a stakeholder in the global travel payments industry, we’re supportive of any initiative that seeks to promote transparency between the different participants in the travel industry. As a payment technology provider that has always offered low-cost payment options to both travel agencies and airlines, we are well positioned to support payment needs in a post-TIP environment.
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