Jetstar’s online payments chief explains why POLi, but no PayPal or Bpay.

Jetstar image by chalky lives cc 2.0

Jetstar is one of Australia’s biggest ecommerce businesses. Of the almost one million bookings it handles each month, some seventy per cent, worth hundreds of millions of dollars, are processed online.
So when Jetstar recently announced it now offers POLi to its customers as a payment option, other Australian ecommerce businesses naturally asked whether they should be following Jetstar’s lead.
Why, they asked, had Jetstar decided to offer POLi, before it began offering better-known online payment methods such as BPay or PayPal?
Jamie Perry, the Melbourne-based head of distribution & commercial systems at Jetstar, is the man who knows the answers.
But, as he made clear from the outset of our interview, it is important to appreciate that Jetstar isn’t just an Australian or a wholly Qantas owned operation.
“There are four airlines in the Jetstar group, not all of which are 100% owned by Qantas” he said. “That’s Jetstar here in Australia, Jetstar Asia and Valuair headquartered in Singapore and Jetstar Pacific which is run out of Ho Chi Minh City in Vietnam.”
They all have different approaches to payments, but at the same time, all have their payments managed by Perry and his team in Melbourne
“We manage the payments for all Jetstar carriers from our Melbourne headquarters.”
Asked about the company’s recent adoption of POLi , which lets customers pay using internet banking and their debit-card/savings accounts rather than a credit-card, Perry said it was important to get some context.
“There’s still no EFTPOS online payments solution in Australia and, when we launched (back in 2004) there was virtually no scheme (i.e. Visa and MasterCard) debit here in Australia.”
“So we had a payments option we’d built ourselves called Bank Direct.”
“When you did your on line booking, the Bank Direct payment option gave you our BSB number and account number. And it allowed you 48 hours to make the payment. That could be either by going to your bank branch, or online via internet banking.”
“But there were issues with that. Not least of these was the psychological flexibility it gave people, almost encouraging them to consider not completing the booking. “
“There were also numerous errors where people paid the wrong amount.”
“We called it the ‘fat finger’ syndrome. It meant we had to have a team of people working on payments reconciliation, fixing things up where people had either over-paid or underpaid.”
“ That’s the beauty of having POLi instead. It automatically pre-populates both the correct amount and the other payment details into the Internet banking screen without customers having to type in anything. And it solves the psychological problems with delayed payment because the payment is completed at the same time as the booking process.”
On the question of other possible payments options, Perry said that Jetstar is in negotiation with PayPal and hopes to announce something soon. And he said Jetstar has never felt the need to offer Bpay because it has essentially the same functionality as Jetstar’s own Bank Direct System.
“BPay offers less functionality than we now have with POLi,” he said.
Perry said that airlines were definitely ecommerce pioneers in Australia. And these days, the company sells around 70% of its seats online, (although the percentage is variable depending on the market and the routes).
That makes for a huge number of online bookings, and almost 1 million every month, he said.
Customers preferred payment methods are, however, different from country to country.
“In Southeast Asia a lot of people have Internet access but there aren’t so many people with credit-cards, and there still seems to be concerns about using a credit card to pay online.”
“So in Vietnam, we see a large number of customers who want to pay in cash, even though they’re booked online. To facilitate this we have a range of retail outlets capable of receiving cash payments.”
Indeed Perry said payments was one of the biggest, if not the biggest challenge to taking the Jetstar business model international.
“When we opened in Singapore we had a lot of unusual fraud attempts, even though our actual losses were very low. People were using scripts to generate credit-card numbers and testing them on our booking engine to try and find valid ones, for example. And we had a lot of phoney bookings close to the flight time, and guys outside the airport selling the emailed itinerary, pretending it was an actual ticket.”
“Of course, if you want to travel you’ve got to present yourself in front of us with some ID. So card fraud on us is quite hard to get away with and we certainly see very little of it here in Australia.”
Perry also said that Jetstar hadn’t seen any noticeable increase in fraud since the new customer-printed and kiosk printed boarding pass systems had been introduced.
On the question of Jetstar’s actual rate of card fraud, Perry said he wasn’t sure if it is, in fact, the same as the average 0.05% on Australian transactions, as suggested by the recent official APCA figures.
“ I don’t have the exact figure. It’s just that its so low it isn’t a pressing issue for us in Australia.”
“We also have the advantage that people book and pay for their flights up to 11 months in advance so if someone else’s card has been used there’s plenty of time for the customer to notice the transaction on their account and to ask for a charge-back.”
“We’re a low cost ticketless carrier, and because much of the fraud around airlines is associated with the ticket, that makes it a little bit harder.”
Perry said that Jetstar had recently added Visa’s 3D Secure and MasterCard Securecode protections to its online payments, but had decided not to turn it on yet in Australia.
“We’re turning it on in our South East Asian markets soon, mostly to take advantage of the liability shift it gives us with charge-backs. But here in Australia not many people have got the extra card PIN number they need to take advantage of 3Dsecure.”
For more information go to
www.jetstar.com
www.getpoli.com