Airlines to launch payments system to rival credit card groups.
A challenge to credit card companies is being launched by the global airline industry and Deutsche Bank with a new electronic real-time payment system for plane tickets that seeks to save carriers billions of euros in transaction fees.
The new system for web-based ticket sales to individual passengers, which does not have a brand name yet, is scheduled to be rolled out across Europe from the end of 2018, with Germany as the first market.
“We are developing an industry-wide payment solution that is an alternative to credit cards,” said Javier Orejas of the International Air Transport Association.
Iata estimates that the global airline industry’s payment processing costs add up to $8bn a year, with credit card companies such as Visa and Mastercard usually charging between 1 and 3 per cent in fees.
In contrast, the system developed by Iata and Deutsche Bank will charge a fixed fee which will be “a matter of cents”, said Mr Orejas.
The project is made possible by a new EU’s payments regulation that is forcing banks to give third parties access to customer data and initiate payments.
Combined with a looming pan-European scheme for instant electronic payments this year, the second payment services directive (PSD2) will make possible electronic money transfers between bank accounts in a matter of seconds.
The rationale behind this so-called “open banking” idea, which is at the core of PSD2, is to promote competition within the financial industry and encourage innovation from tech companies and other non-bank rivals.
Customers using the new payments scheme would enter their bank account data and Deutsche would then check in real time if the passenger has sufficient funds, collect the fares and transfer the money to the airline.
