Virgin Atlantic's Contactless Payment Upgrade

Introduction

Virgin Atlantic Airways is an airline that is based in Britain. Its headquarters is found in Crawley, UK. Since its establishment, the airline has undergone several changes to reach its level of prosperity. The changes can be observed in its performance over its years of operation. For instance, in 2012, the airline had transported over 5 million passengers, a passenger volume which thrusted the organization into being the seventh biggest airline in UK. The airline has had its share of losses where, in 2013, it incurred a loss of nearly $87 million before tax. This financial result, on the account of significant changes in operations, was reciprocated in 2014 by reaching a profit of 14.4 million before tax.

This essay looks into a change in the form of an upgrade of the means of payment used by Virgin Atlantic Airways customers in different retail outlets into using contactless cards. Contactless cards are used for contactless payments which are completed by tapping onto or waving the card over the contactless device. This change in payment depends on technology known as the radio frequency identification (RFID). For example, when an individual wants to make a payment at a petrol station and would prefer to make their payment electronically, they will be presented with an option of using contactless cards which are linked with their Virgin Money accounts (Virgin Money, 2019). This contactless card payment will be exclusive to customers who are part of the Virgin Money banking service.

Key Drivers of Change

Internal Drivers

Expansion of Banking Technology

By 2017, contactless payment had bloomed as a new kind of payment technology being adopted by banks across the world. The UK Finance released statistics on the same year to show how contactless transactions had grown by 97% (Paymentsense Ltd, 2018). Technology expansion can be attested as Virgin Atlantic’s internal driver for change because the old way of swiping cards and inserting PIN codes proved to be slower. There is need for faster ways of making payment and contactless payment is the most suitable and appropriate technical improvement that could be undertaken by the bank.

Need for Security

The contactless cards that are to be used in this new payment procedure contain the global standard Europay, Mastercard and Visa (EMV) which are used in the authentication of transactions that involve such cards. The cards contain smart microprocessor computer chips which have the capability of securing the credentials of the holder and performs computations which are cryptographic which protect the communication between the card and the terminal Point-of-sale (POS) as well as the network for processing (Gemalto, 2018).

External Drivers

Convenient user experience

In the present generation, people find a certain technology to be very useful if it can be used in different ways. The contactless payments cannot only be used using the dedicated credit or debit cards and the smart phones, but also other kinds of items like wristbands, stickers, key fobs, fitness trackers and watches. The contactless cards contain computer chips which can be used in opening doors and as security passes in different places (Carr, 2019). All these possibilities arising with the RFID-based technology result in a more convenient experience for Virgin Money users.

Recommendations for Implementing change

Various change management models can be adopted by Virgin Atlantic to counter the potential barriers to its adoption of contactless cards under its wing, Virgin Money. The change model that can be adopted is discussed as follows.

Lewin’s Model of Change Management

This model of implementing change is one of the most popular in the business world. The process of change is split into three stages; unfreeze, making changes, and refreeze. Each of the stages can prove to be quite a load to carry as they require a more in-depth approach to change (Calder, 2013).

The first stage, unfreeze, involves the realization that Virgin Atlantic requires a change and this is initiated by freezing the existing payment processes. Every level of unfreezing is analyzed and human interaction is observed. For instance, unfreezing can be done by introducing the contactless card payments in a certain department of the organization, say the procurement department. The change in this particular department would involve making all face to face transactions using contactless cards and observe how the department reacts to it and how other departments respond to this change. Unfreezing will be useful in the elimination of biases that will come up and eradicate the mistakes that will be done commonly. It will change Virgin Atlantic’s staff and customer’s perception regarding the change that is coming up and their natural likelihood of resistance. For effective unfreezing, contactless payments can be introduced in one department after another.

The second stage will involve making the changes. After all the departments have been unfreezed, the changes will have been deployed. Every department of Virgin Money will receive guidance as they adapt to the changes. To facilitate these changes, the employees in departments associated with Virgin Money will receive training and extra education which will be deemed necessary. In addition, it is imperative that every staff member has sufficient knowledge of the use of contactless cards in making payment. For every department, Virgin Atlantic needs to have a dedicated expert to whom other staff members can approach when they encounter problems concerning contactless payments. To effectively cement the changes, Virgin Atlantic ought to ensure that there is free flow of communication with every associated staff member for the collection of feedback and suggestions of ways of making further improvements.

The third stage is refreezing. As soon as the contactless payment systems have been deployed in the right departments, a measurement criterion can be done for the progress or performance and relevant tweaks can be made according to the feedback that is provided from communication. Reviews ought to be done on a regular basis to ensure that the correct ways of handling contactless card payments are being done. The staff members will have gotten used to the changes only if feedback is collected and worked on (Teczke, et al., 2017).

The Lewin’s Model of change management is efficient for the drastic kind of change, such as the introduction of contactless cards as a means of payment so as to catch up with business technology for the prosperity of Virgin Atlantic.

Barriers to Implementing Change and How the can be Overcome

Skepticism towards new technology

Contactless payment is a fairly new technology in business. With little knowledge about it, the public is likely to become skeptical about its use. For instance, elderly users of Virgin Money contactless cards are likely to develop fear of losing them without knowledge and possibly would have lost a significant amount of money before contacting Virgin Money to place the card on hold (Collinson, 2015). In addition, there is fear that, even though PIN-less transactions are limited to payments below £30, an incident of fraud can result in a lot of money being lost when such payments are made consecutively. To overcome skepticism, Virgin Atlantic can issue an informative advertisement which will educate the public, and specifically its clients, on the safety standards being used by the contactless cards (Virgin Money, 2019).

Financial Exclusion

This barrier is linked with social exclusion and poverty which has significant expenses on people. Financial exclusion basically refers to people paying more money to complete simple money transactions. For example, if a person does not have a bank account, particularly a Virgin Money Bank account, they can incur more fees in various payment terminals. The ongoing international drive towards cashless transactions will result in people, including those without contactless cards, paying up to 10% more than they would by using other physical financial instruments such as cash cheques (Resolution Foundation, 2007).

Put differently, financial exclusion as a result of the move towards adopting contactless cards by Virgin Atlantic will further affect close to 2 million people whom already do not have bank accounts in the UK. Furthermore, another 40% of the people who are at the working age and having savings than £100 in their accounts will be affected by this change (Achord, et al., 2017). As a result, financial exclusion is a possible barrier for effective implementation of contactless card payment by Virgin Atlantic’s Virgin Money. To overcome this barrier, Virgin Money can make available alternative means of payment which do not rely on contactless cards alone. For example, pay cheques and cash in hand can be accepted means of payment in various Virgin Atlantic outlets.

Managing the Impact of Change

Expected Positive Impacts from Change on Virgin Atlantic Airways

Increased Competence of Employees

The introduction of contactless payment will require effective training and development processes being conducted on staff members. This training and development practices will enhance technical skills of the staff working in Virgin Money (Teczke, et al., 2017). This increases their competence in the corporate environment, rendering them as valuable employees from the perspective of competing organizations who seek to improve their productivity against Virgin Atlantic.

Higher returns

A study carried out by James (2017) shows that as soon as users of contactless cards for payments accept the technology as a means of payment, they will experience less guilt or pain in making payments. This behavioral change can be seen where people’s spending habits change to the turn of showing less hesitation of making many payments which involve little money (James, 2017). This reflects that they worry less about spending little amount of money repeatedly. This change in spending habits results in more Virgin Money clients being drawn towards the technology and frequent use results in higher returns to Virgin Atlantic in the form of transaction fees and costs incurred to buy contactless cards from Virgin Money.

Mitigating the Risks from Change to the Organization

One of the risks that will be encountered in adopting the change in Virgin Atlantic is difficulty among employees in understanding the use of contactless card technology in payment systems. This risk can be mitigated through training of every employee (Teczke, et al., 2017). Then, an expert can be placed in every department where change is being implemented to ensure that feedback is collected and recommendations for further changes, tweaks and improvements are made according to their expertise.

Conclusion

Virgin Atlantic Airways will benefit highly from the implementation of new business technology of contactless cards in its payment system. This will represent a step forward in financial institutions and customized upgrades in organizations into becoming a full-house enterprise where all functions are facilitated within the organization. Virgin Atlantic Airways will become more competitive and productive due to its flexibility which attracts customers who are appealed by fast payments.

References

Achord, S. et al., 2017. A Cashless Society. Benefits, Risks and Issues (Interim Paper).

Calder, A. M., 2013. Organizational Change: Models for Successfully Implementing Change. Undergraduate Honors Capstone Projects.

James, B., 2017. How has the Adoption of Contactless Payment Affected UK Students' Spending Habits?, s.l.: Cardiff Metropolitan University.

Teczke, M., Sansyzbayevna, R. & Olzhabayevna, R., 2017. Approaches and Models for Change Management. Jagiellonian Journal of Management, 3(3), pp. 195-208.