Emirates spearheads airline industry attack on credit card fees

Emirates is leading a charge by airlines to escape the hefty payment processing fees levied by the credit card industry, after the carrier became the first to adopt a rival system developed by Deutsche Bank. The carrier has implemented a long-delayed scheme for electronic real-time payments for tickets devised by the German lender on behalf of the IATA, the airline industry’s trade body. The scheme enables real-time payments from customers who book tickets on the Emirates website, with the money transferred directly to the carrier without the involvement of third-parties. The aim for Emirates and other airlines is that customers opt to use it rather than pay with credit cards such as Visa and Mastercard. Emirates does not disclose the share of payments it hopes to process via the new system. Between 60 and 70% of all tickets sold by the Middle East carrier are paid with credit cards, while the remainder is cleared via country-specific payments options. Airlines have to pay credit card companies between 1 and 3% of the ticket price, with larger carriers closer to the lower end of that range, according to industry executives. By contrast, the system adopted by Emirates known as Iata Pay charges a fixed fee of just a few euro cents per transaction irrespective of the ticket price. “For us, this is a huge difference,” Emirates CFO Michael Doersam said, adding that fees to payment providers were one of the biggest components of its cost of sales. Iata estimates that prior to the pandemic, airlines globally stumped up $8bn a year for the procession of payments to credit card firms and other external payments service providers. <br/>