PayNode, the wholly owned online payments subsidiary of Sweden’s Avinode (Booth C10018), has partnered with UK company WorldFirst to develop wire payments for its customers, something it has been promising to develop for some time. It hopes to start beta testing in this year's fourth quarter and make wire payments available generally in next year's second quarter. Avinode launched PayNode at NBAA 2016 in Orlando, and since then it has gained more than 100 customers. At present they are only able to pay using their American Express card or Avcard, but this is still a significant advance on manual processes, the company points out.
Avinode launched its Marketplace product 14 years ago and has since become the dominant platform in the business aviation charter market, connecting those wishing to charter business aircraft with available operators. Its foray into 21st century payment systems started in 2014 when World Fuel bought a majority share of Avinode, and thus Avinode became the sister company of MultiService, a specialist in electronic payment technology.
The plan was to integrate PayNode into the Avinode Marketplace workflow to add fast, secure payments, using the PCI-DSS (Payment Card Industry Data Security Standard), and later wire payments.
Magnus Henriksson, PayNode global business director, told AIN, “We launched PayNode as a way for charter brokers to take charge of the payment process. Brokers and operators were looking to get paid quicker, and there is lots of risk in the payment chain. We’ve had more than 100 customers sign up for Amex and Avcard payments [since NBAA 2016] but we’ve been talking about wire payments since day one.”
The card payments started with the U.S. after EBACE this year and expanded to the European Economic Area (EEA) and Mexico later, with Canada due to be added soon.
WorldFirst is a fast-growing financial technology firm that started in 2004, since then it has transferred more than $67 billion, according to Henriksson. “They have the right footprint for us,” he added, “and they have seven offices around the world which gives true 24/7 coverage, so if there are any issues with payment there are always people on call.”
The wire transfers will have several advantages, according to PayNode, including speeding up payment dramatically—operators and brokers can be paid the next day rather than waiting “several days or weeks"—and it will mitigate foreign exchange risk and help with reconciliation of payments, with automatic notification. “So it says the payment is now guaranteed and the flight is good to go.”
Simplified International Transactions
Most of the transactions are expected to be U.S. to Europe or vice versa, said Henriksson; the previous three-to-five-day processing time will be a thing of the past for those signing up to use wire transfers. In addition, for a flight conducted by a European operator a customer will be able to pay in dollars and WorldFirst will pay the operator and broker (the “beneficiaries”) in their own currencies, avoiding punitive exchange rates. This also “speeds up the payment chain; as soon as the U.S. payer pays, WorldFirst can pay both beneficiaries.”
Henriksson said PayNode is different than card payments. “Wire is a straight-through process, with no holding of funds to the day of flight. We can do this as you don't have the risk of chargebacks.” Then if there is “an issue down the line, you have to do that arbitration outside [the system].”
“We’ll roll this out into the beta phase with a small group of clients in the U.S. and Europe. They will try out the first iteration of the product and give us feedback. Fairly quickly we’ll find common themes for improvements,” said Henriksson. “We’re looking at going with this as a full-blown product in the second quarter of 2018, after a beta of three to four months. We’ll add a few clients during the beta phase, then implement the changes.”
Clients that sign up for the beta phase must go through WorldFirst’s compliance-checking process, but with the full release of the process it will be through the PayNode package, and compliance checks will be done by all parties at that time.
“The main challenges people have is reconciliation, lack of transparency on the cost of the transaction, even if not much. International payments across currencies is a huge headache” with current processes, he said. “Our estimate is for U.S. customers 15 to 20 percent of payments are cross-country, cross-currency, and 25 percent in Europe. But we want customers to use it for domestic, same-currency transactions too.”
Henriksson noted that “where business aviation is special is in dealing with high-value transactions, not consumer transactions of less than $1,000. Industry transactions are an average of $20,000 .
“WorldFirst will be able to go live with EEA and North America, the two main bizav markets in the world-although the payer can still be located, for example, in the Middle East. It’s the merchant that is based in North America or Europe.”
Will PayNode go global afterwards? Henriksson said, “It comes down to priorities. We want to get the wire product out and to market, and that will be our focus for the first half of 2018. At NBAA we want people to understand the improvements we’re making to the platform, and we still have a lot of clients to sign up [to PayNode]. We have 75 in the U.S now and 25 or 26 in Europe. But we have a long list of potential beta customers [for the wire transactions]."
Along with Avinode and PayNode, the Avinode Group also has a third company, SchedAero, and Henriksson said that all were available to customers and linked to use the new electronic payment features should clients choose to subscribe to them.
Asked about cryptocurrencies, Henriksson reiterated that it is something PayNode is “watching” diligently. “We won’t see it in the next couple of years. People don’t understand the technology yet, so that will take time. It’s like the Internet in the 1980s. But we still don’t know if it’s the future or not.”