Airlines to Test Consumer Payments That Bypass Credit Cards

Airlines to Test Consumer Payments That Bypass Credit Cards

Airlines to Test Consumer Payments That Bypass Credit Cards for Direct Sales.

Some airlines will test letting ticket buyers on their websites have an optional new way of paying that avoids the need for credit and debit cards.

The world’s top airline lobbying group, the International Air Transport Association (IATA), has decided to launch a pilot helping consumers make purchases or airline tickets and other content via a payment platform run on the airline’s direct websites.

Details remain vague. But the intent for the program directed at individual passengers appears not to be about getting travelers to bypass travel agencies. The new payment method instead appears like it will be piloted with customers who are comfortable making their bookings directly with an airline via website purchases, drawing directly from their bank accounts.

“We expect that this option will be available for testing by customers in real transactions with airlines participating in the pilot project by year-end,” said Perry Flint, a spokesperson for IATA.

For airlines, direct payment could offer a cost-competitive solution by both avoiding the high fees of credit card-issuing banks. The move could also help to avoid the losses associated with occasional fraudulent credit card transactions. The association estimates that payment processing expenses and fraudulent activity costs airlines about $8 billion a year.

The association is partnering with Deutsche Bank to create a technical pilot program by year-end. Together, airlines and Deutsche Bank’s commercial arm will develop and test a payment option on websites of participating airlines, using the capabilities of real-time, or near real-time, direct bank transfer.

“Similar payment methods are already offered by some airlines around the world,” said Flint. “But each is a proprietary solution, whereas the IATA-Deutsche Bank pilot will test a solution that is applicable to many air passenger transactions.”

There was no word on how difficult it might be to put an actual product out in markets worldwide.

Details on where the test might occur were also scant. But given that Deutsche Bank’s Germany-based team, led by Shahrokh Moinian, global head of cash products, is involved and that Lufthansa is apparently one of the airlines that had voiced interest, the first test may be in Germany.

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