IATA Pay responds to rapid changes in the payments landscape.

• Consumers needs are evolving, for instance with millennials’ expectations for  mobile and peer-to-peer instant payment.
  
• New banking regulations in many countries encourage the use of bank account-to-bank account direct payments. Examples of these regulations the EU’s Payment Services Directive 2 (PSD2) and the UK’s Open Banking regulations, 
  

Program Status

IATA completed 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 under the UK’s Open Banking framework. 

IATA is also working with Deutsche Bank on a prototype for Europe (excluding the UK) under PSD2, starting with the German market, which is expected to undergo testing in early 2019.

IATA expects to conduct similar prototype/pilots in other jurisdictions in 2019.

Payment costs in the airline industry are significant; credit card interchange fees alone are averaging around US $8 billion per year (Source: Phocuswright) and this is not including charge backs and fraud-related costs. These costs are forecast to increase significantly in the coming years. 

The current range of payment methods also has a significant impact on the airlines’ working capital due to the time it takes to settle a payment after it is made. 

IATA Pay addresses these issues and aims to create an alternative solution that is cost-effective, highly secure, and improves working capital.

For airlines, the advantages of IATA Pay are: 

• Cheaper payment option compared to other alternatives 
  
• Highly secure
  
• Faster cashflow to the merchant
  
• Simpler payment process resulting in fewer lost sales. 
  
• Optional white-labeled payment method.
  

For consumers the benefits include:

• Highly secure 
  
• Enhanced consumer experience 
  
• Seamless user experience 
  
• Potential capability for real time refunds
  

IATA Pay is a form of payment with two options:

• Option 1: The funds are debited from the customer's account and credited to IATA's account and settled to the airline 24 hours later. This option offers the added value of reconciliation, exceptions handling, refund management and an administrator portal. With other services under consideration including installments and insurance.
• Option 2: The funds are debited from the customer's account to and credited to the airline's account directly and instantly.
  

Find out more about the high level transaction flow for Airline web ticket purchase (pdf).