NDC, ONE Order, Mobile Payment and More: ARC Connects the Future of Air Travel Payment

Recently, the fourth annual ARC Payments Forum took place in Washington, D.C. During this two day meeting, 67 representatives from airlines, GDSs, credit card brands, acquirers/processors, ARC and IATA discussed the latest trends that are shaping the future of payment acceptance in the global travel marketplace. New to the Forum in 2018 were participants from leading travel agencies, including Expedia, Inc. and LBF Travel.

The Forum’s objective is to connect leading travel industry payment experts to identify and encourage best practices that will provide positive customer experiences, mitigate risk, prevent losses and ensure the lowest cost to process payments.

NDC: Creating A Personalized Customer Experience

Chuck Fischer, ARC’s managing director of airline and account management kicked off the Forum with a high-level overview of New Distribution Capability (NDC) and ONE Order, their impact on the travel payment ecosystem and how ARC is providing flexible, secure and cost-effective solutions to support the full spectrum of airline distribution strategies in today’s rapidly evolving landscape.

Fischer also shared some insight into what many see as “the airline distribution of tomorrow” — a personalized and seamless shopping experience across all channels, better known as omni-channel. “[Whether] it is a .com site, mobile, call center, etc.; doesn’t matter how the customers engages, [airlines] are looking to create the same experience across the board,” he said.

The industry is changing and airline distribution is no longer a one-size-fits-all approach. By promoting a more transparent shopping experience, NDC has been the impetus to an industry-wide call to action for key players to reimagine how they do business—ARC has been proactive in answering that call.

Last year, ARC announced being “NDC-ready” to airlines and agencies—offering secure, flexible and cost-effective NDC-driven settlement solutions. More recently, ARC partnered with British Airways to test and implement ARC’s enhanced settlement system. Through this collaboration, airlines and travel agencies now have the ability to tailor the process for reporting and settlement based on bilateral agreements within the ARC platform.

ARC closely works with airlines and agencies to support their unique distribution needs. “Airline customers will be all over the [distribution] spectrum; some will distribute products the traditional way, some may ‘cherry-pick’ or have bilateral agreements,” Fischer said. ARC’s objective is to create products and processes that efficiently and cost effectively operate within that disparate landscape.

To learn more about how ARC can help you implement your NDC strategy, click here.

ONE Order: Becoming the “Single-Source of Truth”

Another topic generating a lot of industry buzz is ONE Order. Fischer gave a quick overview of this IATA-led initiative that could potentially transform not just the air travel industry, but travel distribution as a whole. “[The industry is] moving away from legacy systems and paper-based backend processes to [adopting] a single record or ‘single-source of truth’ that will carry through the entire order managed through the [customer] life cycle—[the] end goal of “ONE Order” is to simplify revenue accounting for airlines,” he said.

ONE Order aims to provide new opportunities to provide uniformity in transactions across the travel landscape while eliminating roadblocks with new digital capabilities that would otherwise be a challenge to do in current legacy systems—ultimately, this would further improve the customer experience and simplify the end-to-end travel experience by keeping information stored in one place for all parties to access as needed.

ONE Order is still a fairly new concept with many moving parts that have yet to be streamlined across the industry. “Everyone is a part of the ecosystem to make this thing work, so how do we all work together to best support it?” Fischer challenged.

ARC Remains Flexible Through Industry Transformations

As big changes are taking shape in the travel marketplace, ARC is diligently working to ensure that it transforms along with and even ahead of those transformations, from modernizing technology capabilities to enhancing payment acceptance options. “The key to it all is to remain flexible,” Fischer said.

ARC Payment Updates

Jennifer Watkins, ARC’s director of payments, shared some insights into ARC’s latest work to enhance payment acceptance procedures, including ways to simplify accounting and reconciliation for airlines. Recently, ARC took steps to update Section 6 of the Industry Agent’s Handbook, which outlines payment card acceptance procedures, risk management and chargeback management procedures to enhance industry best practices when processing various forms of payment. “[We are] seeking to make ARC credit card processing more aligned with industry best practices (for debits and credits); we want this information to align with what is really happening in the industry,” Watkins said.

ARC continues to evolve with the payment processing landscape as new technology capabilities become available. As a result, ARC is undergoing modernization transformation to create a more efficient payment processing workflow. Watkins also mentioned that ARC is planning to consolidate processing centers. Historically, ARC has operated with three processing centers but will be moving to one minimizing the quantity of credit card billing files and CAT files, simplifying those processes for airlines.

Watkins also gave an update on ARC’s industry chargeback management observations; she shared that reports show “it is still trending upward, but not huge” due to fraud chargebacks.

Kevin Haag, ARC’s manager of credit card services, gave an update on the ongoing efforts with 3-D Secure. 3-D Secure was implemented in partnership with Verified by Visa, Mastercard Identity Check and Discover ProtectBuy to help reduce chargebacks and mitigate fraud in the airline distribution channel. Earlier this year, GDSs implemented changes that caused an interruption in the data passing and mapping processes. As a result, ARC is regrouping with a taskforce of GDSs and acquirers to get input on what requirements are needed to develop a more streamlined experience.

Hagg also shared some insights on travel payment trends, one being that cash value continues to grow. He also highlighted the growing importance of data integrity to help reduce chargebacks and help settle transactions.

Day two of the forum consisted of industry-related updates from major credit card brands such as Visa, Discover and Mastercard—themes ranged from the future of payment acceptance to brand and other operational initiatives.

Alternative Forms of Payment Outside of the U.S.

Seth Friedman, head of business development, travel and entertainment of Citcon, shared high-level insights into how China has had one of the world’s fastest-growing mobile payment adoption rates. According to Citcon’s website, in North America, Citcon became the first and largest merchant acquirer for China’s most popular mobile payment platforms, Alipay and WeChat, which have more than 1 billion active consumers combined. Through Alipay and WeChat Pay, Chinese consumers have convenient payment options to purchase goods and services in Chinese Yuan, while merchants can then directly settle these same transactions in U.S. Dollars. “In China, there is plastic (credit cards), but you have to think of your phone [for] payment and [to] accept payment,” Friedman said.

Citcon projects that Chinese tourists will spend $453 billion on overseas travel over the next five years. Some of the top merchants within the Citcon transaction network include attractions, cruises, hotels and restaurants. “The way young people in China consume travel; it’s all [through the social platform, WeChat]. People in China look to WeChat [to perform payment transactions], this is a different experience than what we see in the U.S.,” he added.

While mobile payment options are available for some merchants in the U.S., American consumers still primarily use credit cards or cash. Mobile payment adoption, seen more as a tertiary form of payment and a still fairly new concept to American consumers, has had a much slower adoption process compared to China, where 93 percent of consumers prefer to only use mobile payment when traveling overseas. According to Friedman, the world of payment processing can expect to see a steady rise in cross-border transactions through the mobile. “Chinese cross-border travelers are a rapid growth area with more than 4 million visitors to the U.S. each year,” he said. Overall, alternative forms of payment are completely transforming the broader industry landscape; especially in places like China and the destinations Chinese travelers frequent.

As more alternative forms of payment enter the U.S. marketplace, the future of payment processing will continue to impact some its largest industries, including travel. ARC is exploring how alternative forms of payment will impact the transaction network in the air travel industry and how new technology developments will enhance the customer experience between travelers and merchants in the future.

ARC Exploring New Forms of Payment Acceptance

ARC has been forging connections with alternative forms of payment partners and exploring new and efficient ways to create a more seamless processing experience. Watkins reiterated that ARC has been able to process PayPal transactions for some time.

It was also announced that ARC continues to grow the number of payment partners, including leading mobile payment providers.

Next Steps for ARC Payments Forum

ARC will continue to host future Forums to connect leading payment experts and share the latest trends and developments that are transforming the travel payment landscape. If you would like to learn more about the payment initiatives that were discussed at the Forum this year, join ARC for a free webinar on Wednesday, July 18 from 2–3 p.m. Click here to register now.

Airline and travel agency payment experts interested in participating in future forums are encouraged to reach out to Jennifer Watkins at jwatkins@arccorp.com or visit the ARC website for more information.