The International Air Transport Association (IATA) has shared that it is integrating digital currencies into its financial settlement systems.
According to Muhammad Albakri, IATA’s Senior Vice President for Financial Settlement and Distribution Services, digitalisation necessitates the need to adapt financial settlement systems to support industry needs.
The digital Renminbi will be the first digital currency offered, available in the China Billing and Settlement Plan (BSP) by the end of 2024. China’s advanced adoption of digital currency prompted IATA’s China Airline Committee to request its inclusion.
“China is one of the most advanced countries in the world in the adoption of digital currency. Recognising the trend, IATA’s China Airline Committee requested for the digital Renminbi to be included in the BSP. This is an important development and IATA will accommodate the digital Renminbi by year-end,” said Albakri.
IATA plans to expand its digital currency offerings based on industry requirements, and the experience gained from introducing the digital Renminbi will facilitate the onboarding of other digital currencies.
In July 2024, IATA added the Renminbi Offshore (CNH) currency to its IATA Currency Clearance Service (ICCS), bringing the total currencies handled to 74. The ICCS is IATA’s global cash management system. It enables airlines’ treasurers to repatriate their sales funds worldwide to their preferred nominated currencies, which results in an accelerated and improved working capital management and reduced foreign exchange risks.
IATA’s goal is seamless payment processing, adapting to changing customer behavior.
“At the heart of the integration of the digital Renminbi and all other settlement system work is a need to serve the customer and adapt to their behavioural changes in payment methods. Payment should be seamless. A customer shouldn’t be frustrated by not having their payment method of choice available. Nor should airlines lose out on deriving the proper value from their ticket sales,” said Albakri.
