The International Air Transport Association (IATA) is encouraging airlines to take a more strategic approach to payment management as changing customer expectations, expanding payment options, and the growth of modern airline retailing reshape the industry.

In a recent industry commentary, IATA Senior Vice President for Operations, Safety & Security Nick Careen highlighted the growing importance of payment systems in completing airline transactions, managing operational costs, improving cash flow, and reducing exposure to fraud and failed payments.

Careen said the final stage of the booking process has become increasingly important, as customers expect payment experiences to be fast, secure, and compatible with their preferred payment methods. When payment options are limited or transactions fail, airlines risk losing both ticket and ancillary revenue opportunities.

The association’s 2025 Global Passenger Survey found that 17% of travellers who attempted to purchase ancillary services, including additional baggage, seat assignments, or upgrades, were unable to complete their purchase because their initial payment attempt failed and no alternative payment option was available.

The financial impact of payment management is significant across the airline sector.

IATA and Edgar Dunn & Company estimated that airlines processed approximately $977 billion in payments in 2024, with payment-related costs reaching about $22.2 billion.

IATA noted that airlines are managing a more complex payment landscape as passengers increasingly use different payment methods, including digital wallets and instant payment solutions in addition to traditional cards.

The association said airlines that fail to support customers’ preferred payment methods may risk losing sales.

At the same time, expanding payment choices can create additional operational challenges.

Without effective payment management and orchestration, airlines may face higher settlement costs, slower processing times, and increased complexity in areas such as refunds, chargebacks, and fraud prevention.

To support airlines in addressing these challenges, IATA has introduced the Airline Payment Framework – Management Foundation.

The framework provides a structured approach for airline management teams to evaluate payment strategies by considering factors beyond cost, including customer experience, operational efficiency, risk management, and financial performance.

IATA said the framework is designed to help commercial, finance, treasury, digital, and technology teams make coordinated decisions on payment options and establish clearer ownership of payment-related strategies.

The initiative comes as airlines accelerate the transition toward Modern Airline Retailing, which focuses on more personalized offers, expanded service options, and dynamic customer journeys.

As this transformation continues, IATA said payment capabilities are becoming an increasingly important strategic function for airlines, influencing revenue conversion, customer satisfaction, and long-term competitiveness. -TradeArabia News Service