A cheaper, more secure payment platform for air tickets is coming
THE International Air Transport Association (IATA) has completed its first IATA Pay ticket purchase transaction.
The transaction, conducted in partnership with UK-based fintech company ipagoo, was completed in a live test environment.
IATA Pay is an industry-supported initiative to develop a new payment option for customers to purchase a ticket directly from an airline website.
This means direct debit transactions payments are made from the customer’s bank account directly into the bank account of the merchant.
IATA said this is in response to millennials who have expectations of multiple payment options, including mobile and peer-to-peer.
But how will this benefit both the customers and the merchant?
According to IATA, compared to other alternatives, IATA Pay offers an extremely high level of security for both the customers and the merchant, in this case, an airline.
More often than not, airlines manage significant card payment costs of up to US$8 billion per year and that continues to rise. As such, with IATA Pay, IATA is able to support airlines’ financial sustainability including controlling costs.
By using IATA Pay, the direct debit fund movements will allow for faster cash flow while eliminating a sizable portion of the costs. In a long run, this simpler payment process will help increase revenues for airlines.
Customers, on the other hand, can rest assured that their payment will be processed immediately.
The IATA Pay live test was done under the UK’s Open Banking framework with IATA Pay pilot airlines, including Cathay Pacific Airways, Scandinavian Airlines, and Emirates.
IATA will also be working with Deutsche Bank on a prototype for Europe (excluding the UK), starting with the German market, which is expected to undergo testing in early 2019.
Following this, IATA plans to validate the concept with the intention to expand to other regions.