The onboard payments opportunity in Latin America and the Caribbean


The very things that make Latin America and the Caribbean so compelling – their diversity and dynamism – also make them challenging for airlines doing business in the region. When it comes to airlines’ foundational business needs, including generating new revenues and delivering a good customer experience, key challenges revolve not only around the sheer number of regional English, Spanish and Portuguese dialects, but also around the number of financial systems and payments methods in each market. Ask any merchant already doing business across these borders and islands: it’s complex and requires the right partnerships and technology infrastructure to be successful.

A late 2018 report we developed specifically for the Latin American and Caribbean Travel sectors looked at a number of key trends impacting airlines and travel merchants doing business in the region, including bookings, payments and mobile campaign management across different markets, devices and channels.

The following is what we uncovered.

Skyrocketing passenger volumes highlight ecommerce issues

Let’s start with volumes: IATA expects Latin American air travel to grow 3.8% annually, serving a total of 658 million passengers each year by 2035, versus 313 million today. That increase, combined with the unique cultural and economic characteristics of the region, means that airlines and travel merchants must address specific challenges in how they offer payment methods that travelers will expect as they go from country to country.

To thrive in these markets requires strong local partnerships, proficiency with local and regional payment methods, and direct connections to local acquirers. With deeper mobile penetration across the continent, more Latin Americans can now search, book, plan and pay for products and services directly from their smartphones. And they’re increasingly using alternative methods including installment payments, local card schemes, digital wallets, and “true” mobile payments like Apple Pay.

Fragmented infrastructure, scarcity of credit add to challenges

In such a large and diverse region, with an underdeveloped payments infrastructure and unpredictable regulation, airlines and travel merchants should focus on solving the problems they can control – like user experience (UX) in the booking and payment process – and not be overwhelmed by the complex landscape that currently exists.

Today more airlines, hotels and hospitality venues are upgrading their digital and mobile offerings for booking, payments and ecommerce to reduce fragmentation and optimize conversions. Despite that fact, the payment experience in Latin America can come as an unpleasant shock to people accustomed to seamless payments in other parts of the world. The idea of installments is commonplace in many Latam markets, but unfamiliar in other regions, where consumer credit is easy to access and popularly attached to frequent flyer programs.

In fact, fewer consumers in Latin America (compared with the USA, per capita) have credit, and if they do it will likely be a domestic or regional card with no support for cross-border payments. Latin Americans who do own credit cards tend to be more affluent, but even they prefer to use credit cards for larger purchases as cash still rules in many parts of the continent.

And this lack of traditional credit creates many other commercial considerations for airlines and travel merchants:

  • Cash is still king, but that hasn’t slowed the pace of growth in mobile ecommerce. In Latin America’s largest markets, mobile adoption has grown quickly. Since early 2016, almost 85 million new smartphones are in use in the region, with Brazil adding more than 20 million and seeing a strong 4G growth rate. By 2020, Latin America will have a smartphone adoption rate of 71%, ahead of the global average of 66%.


  • APMs are necessary to bridge the cash-digital divide. APMs in the region range from bank transfers and cash vouchers to installments, local/regional credit cards and full-functioning mobile wallets such as Apple Pay (which expanded to Brazil in 2018). Once airlines and travel merchants are familiar with the different APMs in Latin America, they’ll need to rethink their payment strategies in the region. It’s undeniable that support for APMs in Latin America is an urgent business case, but transaction fees, implementation costs and integration lead times must be considered in any strategy.


  • Mobile booking and seamless payments are table stakes for airlines to grow ancillary revenues and improve margins. Ancillary revenue for Latin American airlines are predicted to grow US$49 million in 2018 to US$1.9 billion by 2035. As mobile penetration expands throughout the regions, more users will go from interaction to transaction, progressing from search to purchase entirely via their mobile device. For these users, any disconnects or friction in the mobile booking process, whether due to poor UI/UX or issues such as payment page re-directs, will result in abandoned carts, transaction drop-outs, and loss of revenue to the airline.


  • Airlines, cruise lines and other travel providers in the region are only just beginning to approach the mobile channel through the lens of campaign management – i.e., orchestrating and connecting all mobile capabilities to create a more seamless and frictionless experience for their passengers and guests. More airlines, hotels and hospitality venues are upgrading their digital and mobile offerings for booking, payments and ecommerce to help reduce fragmentation and optimize conversions.


  • Fraud and security are major challenges to ecommerce and mobile commerce, especially across borders. In Q1 2018, Latin American ecommerce sites saw an 88% increase in fraud attacks over the previous year, 820 million bot attacks and 150 million rejected transactions. Attack rates for ecommerce sites in the region were 10 times higher than financial services transactions, illustrating the importance of PCI-DSS compliance and other security features for any payment solution.


To be successful with their ancillary revenue and payments strategies, airlines and travel merchants in Latin America will need to continue prioritizing their direct booking channels (where they can control ancillary offers) and take a mobile-first approach to passenger transactions, interactions and communications (to be able to offer them ancillaries at more touch-points throughout their journey).

Having a well-designed platform could provide sophisticated, localized, personalized and targeted campaigns and promotions directly in the mobile channel, reduce the costs of payment processing and connect to a global network of acquirers and APMs. The key here is orchestrating the best mix of partners, opportunities and payment methods to solutions that are flexible across markets, devices and channels.

These may not be the kinds of issues that always make the top of airlines’ priority list – they have their hands full with operations. But now is the time for Latin American and Caribbean airlines, if they haven’t already, to start integrating ancillaries and payments into a more holistic, seamless mobile experience and path to purchase where they can better engage growing volumes of passengers and capture more of their travel dollars… or pesos, or reals.


About the author

James Schildknecht, Cellpoint Mobile

James Schildknecht is the senior director of business development at CellPoint Mobile. He is responsible for identifying business opportunities in the airline and hospitality sectors, and supporting the execution and delivery of CellPoint Mobile’s payment and digital commerce solutions to its clients around the globe.  James has nearly two decades of experience in the payments, VAS, digital media and mobile industries, and is based in Miami, FL.

CellPoint Mobile provides airlines, ground and sea transportation providers, and hospitality firms across the globe with digital commerce and payment solutions to optimize the entire sales cycle.

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