Payments

Daily Review: Innovations in the Air Transportation Industry

MEDICIGlobal Head of Content

The aviation industry has been one of the curious discoveries this year as a high-potential market for technology innovation – payments, biometrics, and more. A little over a month ago, the aviation technology company SITA reported that three out of five airports and two out of five airlines are investing in innovative biometric technology to improve speed and security as passenger numbers continue to rise at a staggering rate, with the number of annual fliers set to almost double to 7.8 billion by 2036.

“Efficient identity management is essential for better security while at the same time improving the passenger experience. Biometrics is the technology that can deliver this. Moving to single-token identity management where passengers can simply use their biometric, such as their face, at every checkpoint on their journey will speed passengers securely through the airport.” – Sean Farrell, Director of Strategy & Innovation, SITA

Over half (63%) of airports and nearly half (43%) of airlines are planning to invest in biometric ID management solutions in the next three years.

Most recently, airlines have been eyeing the payments component of the whole travel experience too. Javier Orejas, Head Banking America, Europe, Middle East, and Africa (IATA), shared the prospects of the international air transportation industry launching its own, industry-wide payments scheme in close cooperation with Deutsche Bank in an effort to bring down the costs associated with having to run payments through networks. Cutting out the middlemen not only will result in significant savings but promises a better experience for travelers, who can manage their travel arrangements with banks directly.

Pick #1. Airlines to Launch Payments System to Rival Credit Card Groups

A challenge to credit card companies is being launched by the global airline industry and Deutsche Bank with a new electronic real-time payment system for plane tickets that seeks to save carriers billions of euros in transaction fees. The new system for web-based ticket sales to individual passengers is scheduled to be rolled out across Europe from the end of 2018, with Germany as the first market.

“We are developing an industry-wide payment solution that is an alternative to credit cards,” said Javier Orejas of the International Air Transport Association (IATA). Credit card companies usually charge between 1 and 3% in fees. The new system developed by IATA and Deutsche Bank will charge a fixed fee which will be ‘a matter of cents,’” said Mr. Orejas.

Customers using the new payments scheme would enter their bank account data and Deutsche would then check in real time if the passenger has sufficient funds, collect the fares, and transfer the money to the airline.

IATA and Deutsche are convincing Europe’s large airlines to adopt the scheme. “We are currently in talks with large carriers,” Mr. Orejas told the Financial Times.

Read more at FT.

Pick #2. Reveals Promising RegTech AI Results, Proceeds with Caution

The Commonwealth Bank of Australia (CBA) has revealed the results of a RegTech pilot that uses NLP and AI to convert regulatory texts into compliance obligations. Speaking on Thursday at the AI NSW Summit in Sydney, the head of CBA’s London Innovation Lab, Supun King-Jayawardana, said the technology was able to crunch regulation documents into actionable compliance with 95% accuracy.

The experiment – carried out in partnership with Dutch bank ING and overseen by the UK’s Financial Conduct Authority (FCA) – applied AI technology from Chicago FinTech firm Ascent Technologies to the 1.5 million paragraphs in a piece of banking regulation: Markets in Financial Instruments Directive II (MiFID II).

Ascent’s technology provides a 200-step AI pipeline that ingests the text and applies domain-specific AI. What took CBA’s compliance team six months, was completed by Ascent within two weeks. The obligations register created was scrutinized by legal firm Pinsent Masons and found to be 95% accurate.

The experiment raised questions for regulators to consider. In a particular section of the regulation, the AI returned an accuracy score of only 65%.

The Australian government is already backing research into improving the readability of regulation with CSIRO’s Data61 working on pilots to present text-based rules as APIs.

Read more.

Pick #3. Microsoft Pay Comes to Outlook, Integrating Stripe, Braintree, Sage, Wave, and More

Microsoft announced that it will be integrating its digital wallet service – Microsoft Pay – into Outlook. This means that, for the first time, when a company sends you an invoice in an email, and you are using Outlook to read it, you can pay that bill directly, without needing to leave Outlook and open a different app or service. Instead, a panel will open to the right of the main one by way of Microsoft’s Adaptive Cards.

The feature will come first to a limited number of Outlook.com users over the next few weeks, and then more broadly over the next few months – Stripe (using Stripe Connect) and Braintree will be among the payment processors powering the service, and Zuora, FreshBooks, Intuit, Invoice2Go, Sage, Wave, and Xero will be among the billing and invoicing services that will initially be using the feature. Businesses using a combination of these will be able to offer Outlook-using customers the ability to use the feature.

The integration of Microsoft Pay into Outlook is part of a bigger shift that Microsoft is making to try to reduce some of the friction in its services by way of Adaptive Cards and other integration-friendly developer mechanics. The company effectively has capabilities covering many different aspects of computing and what the average user might want to do on a screen or in an app, and so it is building (and promoting to developers) more connective bridges to use Microsoft services rather than someone else’s.

Read more + the official announcement.

Elena Mesropyan

MEDICIGlobal Head of Content

Global Head of Content, MEDICI

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.