Money in motion: The future of delay reimbursements is digital

As 2024 draws to a close, it’s clear that travel is back in a big way. This is the first year travel is expected to hit pre-pandemic levels. Closer to home, commuters are returning to trains and busses. In Paris, workers are back in the office an average of 3.5 days per week while in London, they’re averaging 2.7 days per week, according to research from the CentreforCities.

But along with that resurgence come additional headaches for transportation companies in some countries: specifically, the need to provide travelers with quick and simple ways to claim money back when their train or flight is delayed.

In the U.K., for example, through the nationwide program Delay Repay, commuters have a right to compensation if their trains are delayed by 15 to 30 minutes or more. In the year 2022-2023, alone, U.K. train operators reimbursed a total of more than GBP 101 million to customers.

Entrepreneur Rupert McKillop is one of those commuters. Last month, he left his home in Oxfordshire for an important meeting with plenty of time to arrive at his London office by train, only to learn that all rail services had been suspended because of a disruption.

Rupert was able to reschedule the meeting and request a refund for the cost of the ticket. “I opened my Trainline app, clicked refund ticket and had the money sent to my account within minutes,” he says.

While Rupert’s interaction was easy, receiving delay repayments isn’t always so smooth. Behind the scenes, what made Rupert’s seamless experience possible was technology that’s transforming how financial institutions and payment providers can help transportation companies compensate customers who have experienced travel delays. As more companies shift away from hybrid workplace rules and travel firms compete for customers, simpler and more efficient ways to process customer refunds are increasingly important.

Expect more repayments going forward

In the EU, air passengers are already entitled to compensation if their flights are delayed or canceled for reasons besides “extraordinary circumstances” like weather, security risks or political instability. And in the U.S., a new rule issued by the Department of Transportation requires airlines to promptly provide passengers with automatic refunds when flights are delayed or canceled.

Customers today expect the compensation process to be as easy as paying for the ticket. That means transportation companies need to focus on technology as they compete for customers who will gravitate toward those with the easiest, fastest repayment services. More efficient repayments can also help transportation companies cut down on customer service time and costs they currently incur when dealing with frustrated passengers struggling to obtain refunds.

Delay repayments can be complicated

Transportation companies will need to find the right partners to make this process fast and easy because the truth is that making these repayments can be incredibly complicated behind the scenes.

“Passengers may have purchased their ticket from a third-party seller. They may have paid in cash at the station. In the time between when they bought the ticket and asked for a refund their card may have expired,” says Alan Irwin, Vice President of International Product & Solutions, at Global Payments, which manages repayments for 14 of the 28 train companies in the U.K. “And if the traveler is a tourist or someone traveling for business, their card may have been issued in another country which can make managing refunds particularly tricky.”

Moving towards digital and integrated solutions

“That means making repayments near real-time, giving passengers a choice in how they receive their repayment regardless of how they paid, and having the ability to make repayments across country lines.”

For travelers, this means they can request a repayment with the click of a button, instead of having to go to a website, search for how to ask for compensation and then complete lengthy, complicated forms. For transportation companies, this means happier customers and reduced costs. For payment providers, repayments present a unique opportunity to provide a valuable new service to clients.

“As global standardization efforts continue, and people increasingly turn to digital payments, travelers can expect a more interconnected and user-friendly repayment experience, regardless of where they are in the world,” says innovation futurist Shivvy Jervis. “This future promises not only convenience but also a more efficient and equitable transportation system, even across borders.”

With its expertise managing these types of complex processes, along with a deep understanding of local market dynamics, Mastercard is facilitating a seamless repayment process through its Mastercard Move money movement capabilities. With Mastercard Move, financial institutions and payment service providers searching for greater efficiencies are able to provide fast and secure payments to their customers’ preferred end points. These include billions of cards, as well as bank accounts and digital wallets in over 180 countries.

Mastercard Move is Mastercard’s comprehensive portfolio of money transfer solutions that help people and organizations move money quickly and safely, both domestically and internationally, across more than 180 countries in over 150 currencies.

Narayan and Irwin anticipate transparent and efficient digital reimbursements becoming an integral part of the business operations of transportation companies in the years ahead. These companies will look to payment providers they work with to support them with a seamless reimbursement process.

Shifting to a more efficient payment system “directly influences how companies attract and keep customers, streamline operations, and stay ahead in a competitive market,” Narayan says. “As payment methods become integrated and digital, companies that embrace these changes can offer a smoother and more efficient experience for users, which is a big draw.” Payment providers that can help the companies modernize both their payment and their repayment systems will benefit too by forging stronger and more lasting relationships with their transportation clients.

For further information about Mastercard’s money movement solutions, visit the Mastercard Move website.