Emirates Airline Pushes ePayments To Avoid Interchange Fees

Emirates airline is at the forefront of an industry effort to encourage customers to pay carriers directly from bank accounts without involving third parties and their processing fees, the Financial Times reported Monday (July 5).

The system to allow electronic payments that don’t involve card companies was created by Deutsche Bank, the FT reported. Deutsche Bank developed the system called IATA Pay at the request of the International Air Transport Association, an industry trade group, according to the paper.

Card companies charge processing fees of anywhere from 1 percent to 3 percent of ticket prices, but the Emirates version of the Deutsche Bank system will only cost the airline a fixed price of several euro cents per transaction.

“For us, this is a huge difference,” Emirates Chief Financial Officer Michael Doersam told the Financial Times.

IATA estimates the fees industry-wide total about $8 billion annually, according to the FT. About 60 percent of purchases of Emirates tickets are purchased with credit or debit cards.

Emirates is calling its version of IATA Pay “Emirates Pay,” the Financial Times reported, and Doersam said, “We are already seeing the first transactions with Emirates Pay and are very satisfied.”

In a 2019 announcement regarding IATA Pay, the trade group stated it was “made possible by the European Commission’s second Payment Services Directive (PSD2), and the UK’s open banking regulation. These regulations encourage use of so-called direct debit transactions in which payments are made from the customer’s bank account directly into the bank account of the merchant. This method offers an extremely high level of security to both user and recipient and can be instantaneous.”