Deutsche Bank and major airlines in “game-changing” paytech pilot
Deutsche Bank has teamed up with the International Air Transport Association (IATA), the trade association for the world’s airlines, to test “a disruptive new payment model”, according to the bank.
The pilot project seeks to reduce costs for processing payments between airline clients and airlines, with the payments solution described as “game-changing” by the participants.
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.
“The new payments scheme will offer improved speed, security and transparency,” Deutsche Bank states.
Direct payments will be processed and received in near-real time, generating significant working capital and liquidity benefits while reducing days sales outstanding and the cost of funding for the IATA members.
Combined, these benefits stand to reduce the estimated $8 billion that these airlines currently incur from payment processing costs and fraudulent activity.
“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.”
There will be benefits for travellers too, Deutsche Bank adds, such as “more choice, a smoother and less complex payments process and ultimately more convenience when paying for airline travel”.