How prepared is the travel industry for digital wallets?

Digital wallets are fast becoming an integral part of our everyday lives, from making quick payments to storing tickets and boarding passes.

According to PYMNTS, 74% of travelers consider digital wallets essential for the journey. Wealthy travelers have an 83% preference for transactions using digital wallets, and millennials have an 82% preference. In travel, the benefits and convenience of digital wallets go beyond direct spending.

The convenience of digital wallet platforms, offered by Apple and Google, have made consumers more at ease with the technology. As digital wallet adoption grows, they should make travel smoother.

“International standards bodies have been able to help the travel industry with digital identity standards to help provide travelers a faster, more secure, and friction-free travel experience. Instead of having to present physical documents like passports or boarding passes, your digital ID and biometrics enable faster processing at every touchpoint, from check-in to border control,” said Jeremy Springall, senior vice president at SITA at Borders.

Darrell O’Donnell, executive director of the Global Acceptance Network (GAN) believes digital wallets would be most useful once the sector integrates different travel systems. “It would make my life a lot easier if I could just say, ‘Hi, I’m checking in, here’s my reward number,’ and have everything seamlessly connected,” he said.

While the prospect is attractive, there is still a need to verify membership credentials. O’Donnell explained that GAN is working to “set the conditions” for data exchange, ensuring that “different wallets work together,” simplifying processes for users and businesses.

Standards and interoperability

Travel services providers will want to ensure they are communicating with a legitimate customer, and the customer will need to know they are sharing data with a reliable provider. This two-way security is essential given the number of fake travel sites that pop up online, especially during travel disruptions.

O’Donnell said the plan for GAN is to offer a reliable exchange to verify user identity and the user to verify the vendor, bringing together multiple ecosystems in travel, including airlines, hotels, tour operators and loyalty programs, while ensuring privacy and security of data exchange.

Without a common framework, travelers could face a fragmented system where their digital wallet works in one country but not another. GAN hopes to address this gap by creating a new digital layer to become a “DNS for Trust.” It’s a concept similar to the Domain Name System (DNS) on the web, which connects domain names to IP addresses to confirm that the site is whatever it claims to be. GAN would connect digital identities and data, but it would require the opening of data silos among travel services providers who might hesitate to share the customer information they possess.

At this stage, the focus is on establishing standards and ensuring interoperability of multiple travel systems and digital wallets. As SITA’s Springall said: “Ensuring digital ID solutions work across airlines, airports, and border agencies globally is critical. Standardization efforts will help create a consistent experience for travelers.”

Digital identity 

Gartner expects at least 500 million smartphone users to regularly make verifiable claims using a digital identity wallet by 2026. SITA’s recent passenger IT survey shows that 44% of travelers feel very comfortable with having a digital passport on their phone stored in a secure digital wallet. That is slightly more than the 39% who are very comfortable with sharing digital identity and biometrics ahead of travel to simplify the journey.

Identity verification required for travel poses challenges European Union regulation aims to address. For example, travelers may not want everyone along the travel services chain to access their passports. The EU’s digital wallet system incorporates digital identity features, allowing users to share only the necessary data for a particular service.

Annet Steenbergen, advisor to the EU’s Digital Wallet Consortium, said the EU’s digital wallet initiative follows the eIDAS (Electronic Identification, Authentication and Trust Services) regulation. It aims to ensure that digital wallets are interoperable across the European Economic Area. The regulation is crucial to ensuring that digital wallets are widely accepted but also secure and privacy-compliant. She said it will not rely on Apple and Google Wallets, as these are not considered adequate in ensuring that the device owner also owns the identity data. Instead, EU members will have unique digital wallets.

“The fact that your personal identity data is issued by the government means that it’s anchored with the highest level of assurance. No other authority can give it with a higher level of confidence,” said Steenbergen.

Challenges remain in making digital identity a genuinely seamless part of travel. Many countries still require physical passports for border crossings, even if a digital identity is available.

“We are coming to a point where you will be able to check into your hotel from your couch, share your check-in credentials digitally and have your room key pushed to your wallet before you arrive. But we are still a ways away from being able to travel without a physical passport,” said Steenbergen. 

Enhancing security and control 

One of the key benefits of the EU’s digital wallet is it ensures travelers maintain control over their data.

“You only share what you need to share to get a certain service. That’s called either zero-knowledge proof or selective disclosure, and it ensures that the other party only gets the information they’re allowed to have,” said Steenbergen.

While a government entity or airline may need access to passport details to confirm travel permits, other services might only receive the confirmation they need for their service.

Steenbergen also believes this wallet will impact all digital aspects of life, not just travel. 

“It’s not just to log into government services; it’s also to receive your academic credentials, health insurance card, E-prescription, train card, and driver’s license,” she said.

Collaboration between governments and the private sector, including airlines, airports and technology providers, is critical also according to Springall.  

Blockchain and digital identity path unclear

While blockchain might help establish a trusted source of information, experts disagree on the value of the technology for this purpose. O’Donnell said blockchain is only one potential tool in this process, as not all members of GAN rely on blockchain technology.

“Blockchain can be used but the key is that we know the verifiable credentials. I can issue you a credential, and later, you use it with a verifier,” he said.

Steenbergen does not see blockchain playing a role in EU digital identity and believes blockchain and identity are “sort of opposites.”

“Blockchain writes something in stone, and that contradicts privacy, particularly the right to be forgotten,” she said.

Springall, meanwhile, believes blockchain could be beneficial. 

“Blockchain has several core enablers that are of tremendous benefit for Digital Wallet and Digital Identity standards globally. No personal information is stored outside of the traveler’s mobile device. The Distributed Ledger Technology (DLT) and governance provide the secure controls to ensure that sharing of personal information is a proven platform. At SITA, we work with our partner, Indicio, to utilize the Hyperledger open-source framework, a proven, government-grade trust network. When combined with Verifiable Credentials, stakeholders can be assured of the validity and security of the digital identity at all points of the transaction.”

Digital wallets in travel now

Several airports and airlines are already successfully implementing digital identity systems. Springall cites Frankfurt Airport as a prime example, where SITA’s Smart Path facial recognition system reduced passenger processing times by 30%.

“Faced with rising passenger volumes and space limitations, Frankfurt turned to SITA’s Smart Path for a facial recognition solution at every passenger touchpoint,” he said.

In Aruba, SITA partnered with the government to develop the Aruba Happy One Pass (AHOP), which leverages the ICAO Digital Travel Credential (DTC) to enable contactless travel.

“Aruba enhanced the travel experience by enabling faster, more secure, and contactless travel, allowing travelers to receive pre-approval for border control before leaving home,” said Springall.

The EU’s digital wallets initiative is also exploring travel applications according to Steenbergen. 

“There are four consortia running large-scale pilots in the EU right now. They’re halfway through, and we’re testing travel use cases like hotel check-ins, ferry tickets, and boarding flights,” she said. 

The future of digital wallets in travel

Realizing the full potential of digital wallets in travel will require continued collaboration between public and private stakeholders.

“Authenticity is right in the beginning, and everything is based on me knowing exactly that I’m talking with you, not someone who pretends to be you,” said O’Donnell.

This level of trust will be essential to driving widespread adoption. Legislation must also keep up.

“Technically, we can do all of this, but legally, it must be verified. The problem is that current legislation often still says a travel document must be physically checked,” said Steenbergen.

How soon can we expect to travel without a passport? She suggests it might still be a while. “The EU is the first regional intergovernmental body to develop this law, but will we at some point be able to use it when we travel to Brazil or Japan? We don’t know yet.”