The new ticketing payment initiative aims to offer quicker, more secure transactions for airlines and customers.

Data security

A faster ticketing payment process has completed its first successful live test, the International Air Transport Association (IATA) has announced.

According to IATA, the industry-supported “IATA Pay” initiative offers a cheaper payment option to the alternatives, increased security, instantaneous payment and a simpler all-round transaction.

IATA has been working on developing a solution for the sector that enables airlines to make the method available for use on their websites.

Today’s consumers, and especially millennials, have expectations of multiple payment options including mobile and peer-to-peer. IATA Pay responds to these expectations

Using the European Commission's second Payment Services Directive (PSD2), and the UK’s Open Banking regulation, the payment method facilitates direct debit transactions between the customer and merchant, creating a more secure and quicker process.

“Today’s consumers, and especially millennials, have expectations of multiple payment options including mobile and peer-to-peer,” said Aleks Popovich, IATA’s Senior Vice President of Financial and Distribution Services. 

“IATA Pay responds to these expectations. At the same time, 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.” 

The live test transaction was conducted in partnership with UK-based fintech company ipagoo, and pilot airlines included Cathay Pacific, Scandinavian Airlines and Emirates. The test was conducted under the UK's Open Banking framework.

Praising the initiative, ipagoo CEO Carlos Sanchez said: “We are delighted to have completed the first Open Banking live transaction for the airline industry, helping IATA and its member airlines to achieve their goals of operational and financial efficiency.”

IATA is also 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 said it will validate the concept with the intention to expand to other regions.