New Payment Method for Air Tickets – IATA Pay

 Wednesday, January 9, 2019 

IATA Pay is an industry-supported initiative to develop a new payment option for consumers who purchase a ticket directly from an airline website.

The International Air Transport Association (IATA) successfully completed the  first ‘IATA Pay’ ticket purchase transaction in a live test environment. The transaction was conducted in partnership with ipagoo, a UK-based fintech company. European Commission’s second Payment Services Directive (PSD2), and the UK’s Open Banking regulation made the transaction possible. The live test conducted with ipagoo was done under the UK’s Open Banking framework with IATA Pay pilot airlines, including Cathay Pacific Airways, Scandinavian Airlines and Emirates.

This method allows for the so-called direct debit transactions in which payments are made from the customer’s bank account directly into the bank account of the merchant. This instantaneous method offers an extremely high level of security to both the user and the recipient.

For airlines, the advantages of IATA Pay inlcude:

• High security

• Cheaper payment option compared to other alternatives

• Faster cashflow with instantaneous payment to the merchant

• Simpler payment process resulting in fewer lost sales

Aleksander Popovich, IATA’s Senior Vice President of Financial and Distribution Services says that, “Airlines are trying to manage significant card payment costs — $8 billion per year and rising. A large part of this cost is incurred in direct purchases from airline websites. One of IATA’s strategic objectives is to support airlines’ financial sustainability including controlling costs.”

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