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In recent years, digital in-flight concessions have become a key part of the inflight experience as well as a promising ROI lever from an IFEC platform. A digital concession is a digital store owned by a brand, hosted into an IFE platform, enabling passengers to buy onboard and get delivered at home. However, there are still some issues that need to be addressed before they can be fully implemented and used by airlines.
To enable digital payments, the airline needs to be able to identify a single entity that will be responsible for all transactions. This entity is called the MoR and it becomes the point of contact between passengers, airlines, and banks. It also has access to all relevant data about passengers and their transactions. Issues arise when trying to determine who should be responsible for collecting this information from different parties involved in the process of making an in-flight purchase: airlines, banks, etc… Should there be different MoRs for each airline? Or maybe just one for all airlines? These questions need answers in order for digital in-flight concessions to really take off! As the aviation industry continues to innovate, it's also facing a challenge that has become more and more common: how does an airline manage its in-flight concessions?
Digital Inflight Concessions have been a hot topic in the payments industry over the past few months. The idea is to provide onboard purchasing capabilities to airlines, allowing them to offer digital services to their customers while they’re in flight.
For this new technology to take off, we need to figure out who will be responsible for handling any issues arising from purchases made on board. The merchant of record needs to be able to receive these complaints and act on them appropriately.
The Merchant of Record (MoR) is a digital solution that provides airlines with an easy way to accept payments from customers. It is the entity that is responsible for processing your credit card transaction, making sure that it’s a legal and valid transaction, and then paying you after the sale.
It offers businesses an alternative to building your own payment stack, allowing you to focus on making your product and attracting customers, rather than the mechanics of how you get paid.
A MoR is the term used to describe a legal entity that sells goods or services to end customers. The end customer owes MoR for purchases, and he handles all payments and assumes responsibility related to each transaction. This includes collecting sales tax, ensuring PCI (Payment Card Industry) compliance, and accepting chargebacks and chargebacks. Businesses can choose to become their own registered merchant and set up the infrastructure and processes needed to manage payments and related liabilities. Or, MOR service providers exist to ease the burden of payment processing and compliance for those willing to focus internal resources on the more exciting parts of business growth, such as advancing their product or attracting more customers.
In aviation, there are two types of merchants: the merchant of record, and the actual online store.
The merchant of record is the company that processes the payment—for example, if you were to buy a plane ticket through Expedia, it’s Expedia who would process your payment. That means they would be your merchant of record.
The problem with this scenario is that airlines have been slow to adopt new technology; some still use paper tickets and don’t even have Wi-Fi on their planes. That’s why we’ve seen so many issues with digital in-flight concessions—the airline might provide an option for passengers to purchase food from a third-party company, but if the airline doesn’t know about it or hasn’t been properly trained on how to deal with it (for example, if there aren’t any menu options on board), then there’s nothing stopping them from charging you for food when you didn’t order any!
With digital in-flight concessions, this needs to change. We need airlines to take ownership of their own eCommerce platform and make sure they’re able to integrate seamlessly with third parties so that passengers can enjoy a seamless marketplace on board.
When it comes to making sure your passengers are satisfied, the merchant of record (MoR) plays a huge role in how much control you have over their experience. The MoR is essentially the entity that will be held responsible for any issues that arise during their trip.
If something goes wrong with the flight, or if there are any problems with their booking, the airline or travel agency who issued the ticket will be held accountable. They’ll have to deal with your customers’ complaints and try to resolve them fairly and quickly. In some cases, this can lead to refunds or even lawsuits against companies that aren’t holding up their end of the bargain when it comes to customer service.
The Merchant of Record issues is one of the most important aspects to consider when talking about digital in-flight concessions.
Airlines and travel agencies have always had to deal with this issue because they have to make sure that each transaction complies with all the rules and regulations set by Visa, MasterCard, Discover, and other payment processors.
In order to avoid any penalties or fines from their payment processor or financial institution like Visa/MasterCard, airlines need to ensure that they have a legal merchant account with an approved payment processor before they start selling products inflight. This makes sense since airlines are not allowed to process credit card payments directly on behalf of customers; this would be considered as an unauthorized merchant account which could lead to severe penalties such as fines up $100k per incident!
In general, there’s a lot more flexibility when it comes to digital in-flight concessions than there is when it comes to traditional travel-fare distribution models. There are fewer regulations and no hard-and-fast rules when it comes to this topic, which means that merchants can experiment with different technologies more easily than they could have in the past.
Inflight commerce has been around for decades, but it’s only in the last few years that merchants have really started taking advantage of the opportunities presented by digital inflight commerce. While there are many reasons why this is happening now, we’ll focus on some of them:
• The first issue is that airlines aren’t ready to accept digital payments. This is due, in part, to concerns over liability and fraud prevention. Airlines want to know that they’re not liable for any fraudulent transactions or other issues that arise from accepting digital payments—and they also want to make sure they’re able to process claims if something goes wrong with one of their merchants’ systems.
• Airlines don’t want their passengers’ personal information stored on their own servers—they’d rather keep it somewhere else so that it’s not accessible by hackers or other malicious actors. And since most airlines have their own merchant accounts where they store customer information, this makes sense. But in order to accept digital payments through a third party, airlines have had no choice but to share their customer data.
• Another issue is that airlines don’t want to give up control over their customer data. They prefer using their own systems instead of relying on third-party providers like PayPal or Google Wallet. By using their own systems, airlines can control their customer data without having to share it with third parties who may not have security practices as strong as theirs.
The MoR issues are common in the aviation industry, but there are several ways to solve them. For example, airlines may choose not to accept payment with a credit card because they don’t want to pay fees associated with processing credit card payments. However, accepting credit cards can increase revenue for airlines because it’s easier for passengers to pay using plastic than cash or checks.
These kind of issues in aviation are many, and they can range from simple to complex. But all of them require the same kind of attention to detail: a thorough understanding of the customer experience and what it takes to make sure customers have a wonderful flight.
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