0 £0.00
This item was added to your basket

Dear visitor,
You are viewing 1 of your 2 free articles

We’ve made wider, important changes to our print and online content to enhance the value of exclusive, insightful, discerning content we create every day. Support valuable editorial content by becoming a member of our Credit Club - register for free or choose a paid plan.

Register now or Login

Airlines reveal payment system plans to rival credit card groups

A deal between airlines and Deutsche Bank aims to save billions in transaction costs through Open Banking technology.

Calum   Fuller

Share on LinkedInShare on Twitter
Calum   Fuller
Share on LinkedInShare on Twitter

The International Air Transport Association (IATA) and the investment bank are piloting a payment model in a bid to reduce costs for processing payments between airline passengers and airlines.


Under the system, Deutsche Bank will collect customer payments directly from consumer accounts in line with the newly revised EU Payments Services Directive (PSD2). Currently, payments are mainly processed via credit and debit transactions. It is scheduled to begin its European rollout from the end of the year, with Germany being its first market.


“The direct payment model promises significant cost savings and efficiency gains for our members,” says Javier Orejas, head of banking EMEA and the Americas at IATA. “With airlines paying huge amounts for transaction fees and compliance – in addition to losses sustained due to fraud – this is a highly valuable innovation for the industry.”


IATA estimates its members currently incur $8bn (£5.9bn) from payment processing costs and fraudulent activity annually. Credit card providers such as Visa and Mastercard typically charge between one and three percent in fees, while Orejas said the system developed by IATA and Deutsche Bank will charge a fixed fee which will be “a matter of cents”.


It argues its system will result in more choice for travellers, along with a “smoother and less complex payments process and ultimately more convenience when paying for airline travel”.


PSD2 and Open Banking are designed to promote competition within the finance industry and encourage innovation from technology companies. Consenting customers may give permission for their data to be shared with other financial institutions, which can then offer them potentially better deals for lending or accounts.


Customers using the system would enter their bank account information and Deutsche would check in real time if the customer has sufficient funds, collect the fares and transfer the cash to the airline.


As far as security is concerned, Deutsche will use two-factor authentication for IATA and its member airlines. With direct payments being processed and received in near-real time, the trade body hopes its airlines will benefit from the acceleration of their funds.



What role for humans in the future of collections?

As artificial intelligence (AI) matures and becomes more commonplace, panellists at Digital Banking Club for Collections Live Debate considered how roles in collections will change

Former debt management director issued ban by FCA

A former director of debt reduction services provider First Step has been banned by the Financial Conduct Authority (FCA) for misappropriating client funds

Lowell sees portfolio acquisitions double in Q1 2018

Credit management services provider Lowell has seen portfolio acquisitions grow 102 percent in the first quarter of 2018 compared to the same period last year

CSA: Customers should not pay to evidence mental health

The Credit Services Association has issued guidance to members advising them not to request a costly debt and mental heath evidence form unless it is completely necessary

The CS Interview

Anne Boden on Starling Bank's growth plans and gender diversity

Anne Boden on Starling Bank's growth plans and gender diversity


How much is a modern debt purchaser worth?

How much is a modern debt purchaser worth?


FCA aims on affordable lending nigh on impossible

FCA aims on affordable lending nigh on impossible

Credit 500 - 2018/2019

The new Credit 500 - an index of influence in commercial and consumer credit - has been unveiled
Share on LinkedInShare on Twitter

The new Credit 500 - an index of influence in commercial and consumer credit - has been unveiled

Credit Strategy
LinkedIn page

Did you find our website useful?

Thank you for your input

Thank you for your feedback

creditstrategy.co.uk – an online news and information service for the UK’s commercial and consumer credit industry. creditstrategy.co.uk is published by Shard Financial Media Limited, registered in England & Wales as 5481132, Axe & Bottle Court, 70 Newcomen St, London, SE1 1YT. All rights reserved. Credit Strategy is committed to diversity in the workplace.
@ Copyright Shard Media Group