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By Dmitrij Sheninsh, Business Development Manager at ECOMMPAY
Despite the fact that cryptocurrency payments are soaring in popularity, the truth is that most regular people still don’t understand how crypto and digital wallets work, or are wary about using the technology for making purchases — a fact that’s reinforced by bank card payments still accounting for 80% of aviation service transactions.
In this article, we’re going to analyse the advantages and disadvantages of cryptocurrency payments, focusing on their convenience when paying for jet charter flights. Let’s dive right in and explore what crypto payments have to offer for both businesses and their clients.
A Few Words About Demographics
According to statistics, more than 80% of wealthy millennials keep at least part of their savings in crypto. On the other hand, only 4% of Baby Boomers and 25% of the Generation-X demographic have ever owned a cryptocurrency. Over time, however, it appears that more and more people from Generation-X are adopting crypto for direct purchases, with Zoomers also becoming increasingly clued up about using cryptocurrencies as a payment method.
We can conclude from the above findings that as the generations born between 1963 and 1996 begin to dominate the retail markets, more and more people will choose to pay for goods and services with cryptocurrencies when given the opportunity — including the focus of this article, private jet charters.
Demand for Crypto Payments in The Aviation Industry
In order to understand the feasibility of crypto payments, as well as gain a degree of insight into the way the industry is heading, it’s worth taking a look at some of the private aviation businesses reaping huge rewards from offering cryptocurrencies as a payment method:
- PrivateFly recently stated that around one-fifth of its annual revenue now comes from digital currency payments;
- Fast Private Jet has also declared that a third of all transactions from its customers now happen through innovative crypto services;
- Mirai Flights has introduced a new instant flight booking service using cryptocurrencies, where customers can purchase a ticket for a charter flight in a single click.
Notably, these three brands all claim significant revenue growth after introducing this new payment option. According to representatives from these companies, interest in crypto is rising dramatically, with digital money holders more likely to spend large sums on expensive flights compared to those who pay using cards SWIFT or SEPA:
“We’re seeing a significant rise in the number of clients wishing to pay via this method, with the crypto landscape becoming very dynamic” — Irakli Litanishvili, CEO, Mirai Flights
The success of these three industry pioneers shows promise for cryptocurrencies as a payment method, and demonstrates that a significant number of private aviation clients are happy to use digital money to pay for jet charters when the opportunity arises.
Exploring the Pros: Why Choose Crypto Payments?
So, why should private aviation companies consider crypto as a suitable payment method in addition to the multiple options currently available? Let’s look at some of the reasons:
- We’ve already highlighted how the demand for crypto payments is growing. More and more entrepreneurs, C-level executives and other wealthy individuals want to fly on private jets, and as demographics shift in favour of Gen-X and the Millenials, this shift will continue to accelerate. Put simply, this is a trend that can only go in one direction, and according to data from ECOMMPAY, 20% of private jet users would pay using crypto if offered the opportunity.
- Crypto boasts extremely fast transaction processing times. Unlike large payments sent via traditional services that can take hours (or even days) to arrive, crypto transactions are processed quickly and, in some cases, instantly. This makes crypto a perfect fit for private aviation, where last-minute bookings are now very much the norm.
- There are no limits on transaction sizes. The absence of limits is especially important when paying for private jet services, since charters are often expensive (typically 10,000 – 100,000 Euros and sometimes even more). Traditional card operations rarely allow paying for such large value items in a single transaction, which can lead some clients to try and pay for their flight by splitting payments into several smaller amounts, a process that can trigger anti-fraud systems and result in a declined payment. Crypto, in contrast, allows large sums in a single transaction, with fast processing times and minimal fees.
- Crypto allows clients to pay for services at a minute’s notice. While card, bank and SEPA/SWIFT payments work on schedule and are not always available (for example, during bank holidays), cryptocurrency services process transactions whenever the user needs them. That means there’s no need to plan a trip and purchase a ticket for a private flight six months in advance — clients can simply make a last-minute booking whenever the need arises.
Summing up, it’s easy to appreciate the pros of cryptocurrencies in the private aviation industry, both for brokers and their clients. Booking a private jet charter using a cryptocurrency service is an opportunity to quickly, safely, and conveniently pay for a flight without worrying about limits and fees, and represents a fantastic opportunity for aviation operators to attract new clients.
What About the Cons: Are There Any Problems with Crypto?
It’s easy to talk about the advantages of cryptocurrencies and give the impression that they’re a dream come true for both clients and businesses alike. However, it’s important to strike a balance and explore some of the risks and limitations of crypto:
- It’s vital to consider the risk of devaluation. For instance, some tokens (such as the recent example of Luna) might lose 99% of their value in a single day. So, it’s important to carefully analyse which currencies to hold, as well as which ones would be most suitable to offer as payment options.
- Despite the popularity of cryptocurrencies, there is still a slight distrust and lack of knowledge surrounding the technical operations happening behind the scenes of this relatively new financial instrument. Finding and analysing information about implementing cryptocurrencies can also require a great deal of time and effort.
- The volatility of cryptocurrencies can also be a distinct disadvantage. However, this problem can largely be solved by only working with stablecoins at a rate tied to a fiat currency. On the other hand, a payment provider may offer the option of fixing the exchange rate at the time of payment (for around 20 minutes), allowing the customer to make their purchase without worrying about rate changes or constant price fluctuations during checkout.
- Lastly, one of the final unattractive points for the implementation of cryptocurrencies is the fact that some people still regard them as unregulated and prone to scammers. However, if a company processes cryptocurrencies through a reliable payment provider that works using official licences and regulation, this should largely negate any dents to a company’s reputation.
As an aside, here’s a little tip for choosing a worthy payment provider: before entering into any kind of cooperation, ensure that the company has implemented the following checks:
- KYC or Know-Your-Customer (verification of a person’s identity: full name, date of birth, and address).
- KYB or Know-Your-Business (verification of business: is the company registered with the Companies House, getting information about persons with significant control and beneficiaries).
These kinds of preventive measures will help to ensure the provider is legitimate and guarantee that their crypto service will be well-regulated.
In general, the private aviation industry is still hesitant to trust cryptocurrencies as stable and legitimate, with only a small percentage of firms offering this payment method to book their services. On the other hand, the number of millennials who fly on private flights is steadily growing — and well-heeled members of this generation increasingly prefer to pay for large purchases using digital money.
Overall, it appears that expanding the list of available payment options to include cryptocurrencies is a good prospect for most private aviation businesses, and operators who aren’t willing to adapt to modernity or take into account the needs of a new generation of fliers risk losing out on a significant percentage of their target audience.