The International Air Transport Association has announced the successful completion of the first “IATA Pay” ticket purchase transaction in a live test environment.
The transaction was conducted in partnership with ipagoo, a UK-based fintech company.
IATA Pay is an industry-supported initiative to develop a new payment option for consumers when purchasing a ticket directly from an airline website.
It is made possible by the European Commission’s second Payment Services Directive and the UK’s Open Banking regulation.
These regulations encourage use of so-called direct debit transactions in which payments are made from the customer’s bank account directly into the bank account of the merchant.
This method offers an extremely high level of security to both user and recipient and can be instantaneous.
For airlines, the advantages of IATA Pay include cheaper payment options compared to other alternatives, high security, faster cash flow with instant/near instant payment to the merchant, and a simpler payment process resulting in fewer lost sales.
For consumers the benefits include access to a new, simpler method of payment that is highly secure.
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 soon.
Following this, IATA will validate the concept with the intention to expand it to other regions.