Airlines to take back control of payment

The IFSS are continually enhanced. Much was learned from reversing the flow of money to pay refunds during the pandemic, for example, and this has led to improved resilience. Areas currently under the microscope include changing customer behavior, new business models and accommodating the multitude of new entrants.

“We want to know where we need to move to in the next three-to-five years,” says Muhammad Albakri, IATA’s SVP for Financial Settlement and Distribution Services. “Where is the value in the IFSS and how should the scope be improved? It must continue to be aligned with airline needs.”

BSP for airline sales collection

One obvious answer is accepting new forms of digital payment. The Billing and Settlement Plan (BSP), one of the IFSS services, is based on a “collect on behalf” model from the travel agencies and also processes debit and credit cards.

But airlines—responding to customer requirements—must be ready to accept many different forms of payment.

The pandemic was an accelerator in the use of different payment instruments, a trend that Albakri believes is here to stay. In fact, there are estimated to be close to 200 forms of payments around the world, many of which are unique to a region or even a country. As many airlines are global entities, they need to assess which forms are the most relevant for their markets and their customer base. Studies have shown that sales can be lost if a customer’s preferred method of payment is not available.

But being all things to all customers is easier said than done. Airlines have a multitude of costly back-office processes to integrate for every payment method, including reconciliation and reporting.

“As indicated by participants in the IFSS, potential opportunities could bring the value the IFSS offers to these other forms of payment as it does for BSP sales,” says Albakri. “In BSP sales, there are strong standards. But the same cannot be said about new digital processes. How is the payment…