Deutsche Bank is preparing to test a real-time electronic payment system for airline tickets with the International Air Transport Association, a move viewed as a plan to limit credit card transactions and their fees.

The German bank and the airline industry association are working on a new system for web-based ticket sales across Europe, while targeting a deployment by the end of 2018. Airlines based in Germany would be the first to use the system.

"For us, it's an opportunity for change. We have asked ourselves: Why can't we behave like a tech company?" Shahrokh Moinian, global head of cash products at Deutsche Bank, said in a Monday press release.

(Bloomberg News)
(Bloomberg News)

According to the IATA's own figures, the airline industry's costs resulting from payment processing amount to about $8 billion (6.72 billion euros) a year, as credit card companies usually charge fees of between 1% and 3% on ticket payments.

Under the new payment system, passengers would enter their bank account data and Deutsche Bank would check in real time if the passenger has sufficient funds, collect the fares and transfer the money to the airline.

The system will utilize two-factor authentication for enhanced fraud protection, improved speed and transparency. Overall, the system will result in cost savings, the partners said.

"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," Javier Orejas, head of banking EMEA and the Americas at the IATA, said in the release.

Subscribe Now

Authoritative analysis and perspective for every segment of the payments industry

14-Day Free Trial

Authoritative analysis and perspective for every segment of the industry