An assault on credit card companies by airlines and Deutsche Bank

A frontal assault on credit card companies is being launched by the global airline industry and Deutsche Bank with a new electronic real-time payment system for plane tickets that seeks to save carriers billions of euros in transaction fees. The new system for web-based ticket sales to individual passengers… is scheduled to be rolled out across Europe from the end of 2018, with Germany as the first market… Iata estimates that the global airline industry’s payment processing costs add up to $8 billion per year, with credit card companies such as Visa and Mastercard usually charging between 1 per cent and 3 per cent in fees. In contrast, the system developed by Iata and Deutsche Bank will charge a fixed fee that will be “a matter of cents”… The project is made possible by a new EU’s payments regulation that is forcing banks to give third parties access to customer data and initiate payments… Customers using the new payment scheme would enter their bank account data and Deutsche Bank would then check in real time if the passenger has sufficient funds, collect the fares and transfer the money to the airline. Any new solution has to overcome a chicken-and-egg problem, as the acceptance of merchants depends on their customers’ willingness to use it and vice versa. Iata and Deutsche Bank said they could overcome this hurdle by convincing Europe’s large airlines to adopt the scheme.
 
Olaf Storbeck

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