JetBlue’s Apple Pay play begs questions about live CC processing


JetBlue Airways will look at supporting real-time credit card transactions in-flight once 100% of its aircraft have been fitted with its Fly-Fi-branded inflight connectivity system. However, the adoption of more secure payment technologies, like Apple Pay, makes the need for live processing a less pressing issue.

Airlines have long grappled with some level of credit card fraud because most inflight transactions over point-of-sale (POS) devices do not happen in real time, but rather when the aircraft lands and is parked at the gate. Processing traditional credit cards in real-time over Wi-Fi was considered a sort of ‘holy grail’ for airlines once bandwidth to the aircraft was no longer a concern. But the aggressive use in recent years of ‘black list’ and ‘declined credit card’ collection and recovery services is understood to have effectively reduced onboard fraud to a fraction of 1%.

“Fraud really hasn’t been an issue for us on board,” JetBlue VP of inflight experience Rachel McCarthy tells RGN. “Right now, the way we process payments is working really well for us. We’ll wait until our fleet gets completed; right now over 50% has Fly-Fi. Once we’re at 100% we can look at going to real time.”

This would enable JetBlue to increase its revenue per transaction, as the airline could offer higher-value goods and services on board. “If you want to offer more expensive [items], then you want to move to online,” says Cenith Wheeler, director of account management support at eGate Solutions, JetBlue’s onboard retail software partner.

JetBlue’s customers will ultimately decide if pricer goods are sold, notes McCarthy.

In the near-term, however, JetBlue will have another strong line of defense against fraud when it becomes the first major domestic US carrier to accept Apple Pay in the sky, as announced today. With Apple Pay, all liability for fraudulent transactions is shifted to the issuing banks, which rely on the fact that the system is so secure. As a result, merchants are incentivized to support Apple Pay, including in an offline environment.

To enable Apple Pay in the air, JetBlue will arm its more than 3,500 cabin crewmembers with iPad mini tablets equipped with eGate Solutions’ software and NFC-enabled cases, which will also support purchases via traditional magnetic stripe credit cards.

Those passengers carrying an iPhone 6, iPhone 6 Plus and soon Apple Watch can use Apple Pay to purchase snack boxes, à la carte food options, premium beverages, onboard amenities and Even More Space seating. “This enables [crew] to be freed up to focus on the customer, and not worry about swiping the credit card,” notes McCarthy.

Though new EMV (Europay, Mastercard and Visa) standards will start to be enforced on 1 October 2015 – at which time the liability for fraudulent charges on non-EMV POS terminals will shift from the card issuer to the merchant – JetBlue opted not to roll out Chip & PIN technology for credit cards in tandem with the iPad mini and Apple Pay deployment, confirms the airline.

A recent Airline Passenger Experience Association (APEX) survey helps to explain why carriers aren’t necessarily rushing to support Chip & PIN, and why the association no longer plans to press for an extension to the EMV deadline. “APEX surveyed the major US airlines regarding their interest in and support for an extension, and we received a mixed response,” explains Lumexis chief technology officer Rich Salter, who is a member of the APEX Payment Technologies Working Group initiative.

“Although American Airlines and Virgin America enthusiastically supported getting an extension, the other majors (UA, DL, Alaska) did not. The reason cited for not supporting it was that the magnetic stripe readers are not used for high-value transactions and the cases of fraudulent magnetic card usage is very low; therefore, it was not worth the effort required to try to obtain an extension. In addition, we received word from the A4A association that they too were getting the same message from their airline members: there was no support for getting an extension.”

The working group will now focus its efforts on educating APEX membership on future payment technologies, including NFC, Apple Pay, Google Wallet and others, “and we are extremely interested in the JetBlue implementation of Apple Pay”, says Salter.

The adoption of Chip & PIN by merchants has been slow in the United States, agrees eGate’s Wheeler. But JetBlue is considering that technology as it considers its future needs, she says.

Enhancing the passenger experience (#PaxEx on Twitter) is a core driver for introducing Apple Pay functionality and the broader iPad mini platform supported by eGate software. Each tablet will be loaded with a custom-designed iOS app – The Inflight Service Assistant – which will give cabin crew access to customer manifest and flight data. Crew members will be able to easily identify TrueBlue and Mosaic loyalty members by name “for those special touches like wishing a customer a happy birthday”, and it will offer timely flight information, aircraft configuration and safety information, says JetBlue.

Asked how it feels for JetBlue to be on the bleeding edge of technological change in the sky with the Apple Pay initiative, McCarthy notes that the program simply exemplifies how the carrier has always done business. “It’s our 15th anniversary tomorrow. We were the first to bring LiveTV to the skies; now today we’re adding incredible new technologies. We want to add tech that makes sense for our customers so we’re excited about it,” she says.