The International Air Transport Association (IATA) concluded the first purchase transaction of airline tickets through a new payment system: “IATA Pay”. The transaction was carried out in partnership with ipagoo, a fintech company based in the United Kingdom.
IATA noted that this new payment method is an industry-backed initiative to develop a new option for passengers by purchasing a ticket directly from an airline’s website. It is possible thanks to the Second Payment Services Directive (PSD2) of the European Commission and the Open Banking regulation of the United Kingdom.
These regulations encourage the use of so-called direct debit transactions in which payments are made from the customer’s bank account directly to the merchant’s bank account. The association noted that “IATA PAY” offers an extremely high level of security for both the user and the recipient and can be instantaneous.
IATA’s role is to develop an industrial solution that allows airlines to make this payment option available on their websites, according to AeroltinNews.
Aleksander Popovich, Senior Vice President of Financial and Distribution Services at IATA, said that “today’s consumers, and especially millennials, have expectations of multiple payment options that include mobile devices and peer-to-peer.”
“IATA Pay responds to these expectations. At the same time, airlines are trying to manage the payment costs of important cards: $ 8 billion per year and increasing. A large part of this cost is incurred in direct purchases of airline websites. One of the strategic objectives of IATA is to support the financial sustainability of the airlines, including control of costs, “he added.
On his side, Carlos Sanchez, CEO of ipagoo, said he was happy to conclude the first transaction, which helps IATA and its member airlines achieve their objectives of operational and financial efficiency.
“Ipagoo’s technology provides a secure banking service in several countries for IATA. We are at the forefront of development and innovation within the financial industry and are committed to helping companies and their customers take advantage of the opportunities offered by Open Banking, “he said.
IATA is also working with Deutsche Bank on a prototype for Europe (excluding the UK), starting with the German market, which is expected to be tested in early 2019.
Also published on Medium.