Passengers travelling in and out of the country will soon benefit from a new payment method for air tickets introduced by the International Air Transport Association (IATA) that offers access to a new, simpler method of payment that is highly secured.
And for airlines, the advantages of IATA Pay include cheaper payment option compared to other alternatives, highly secure, faster cash flow with instant/near instant payment to the merchant and simpler payment process resulting in fewer lost sales, the organisation said yesterday in a statement.
IATA announced the successful completion of 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.
This is as airlines globally spend nothing less than $8bn on card payment cost annually.
IATA Pay is an industry-supported initiative to develop a new payment option for consumers when purchasing a ticket directly from an airline website.It is made possible by the European Commission’s second Payment Services Directive (PSD2), and the UK’s Open Banking regulation. These regulations encourage use of so-called direct debit transactions in which payments are made from the customer’s bank account directly into the bank account of the merchant.
IATA assured that this method offers an extremely high level of security to both user and recipient and can be instantaneous.
However, a travel agent who craved anonymity told BuisnessDay that this payment option would not benefit travel agencies in Nigeria, as it encourages travellers to bypass them by buying tickets directly from airline websites.
“IATA wants the local airlines to consider this option and go with it. What is the benefit of this for travel agents from whom IATA collects annual dues? What they are saying is that people should go to website and book their tickets.
“IATA collects money from us to renew our licence, to use their platforms and other commissions, yet they want people to go and buy tickets directly from the website. This cannot benefit travel agents in anyway,” the travel agent said.
IATA said its role in the new payment system is to develop an industry solution enabling airlines to make this payment option available on their websites. 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.
“Today’s consumers, and especially millennials, have expectations of multiple payment options including mobile and peer-to-peer,” Aleksander Popovich, IATA’s senior vice president of Financial and Distribution Services said.
“IATA Pay responds to these expectations. At the same time, airlines are trying to manage significant card payment costs 8 billion dollars 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,” he said.
Carlos Sanchez, CEO, ipagoo, expressed delight at the completion of the first Open Banking live transaction for the airline industry, and for assisting “IATA and its member airlines to attain their goals of operational and financial efficiency. ipagoo’s technology provides a secure, multi-country banking service for IATA.”
“We are at the forefront of development and innovation within the financial industry and committed to helping businesses and their clients take advantage of the opportunities provided by Open Banking,” he said
