Earlier this week, the International Air Transport Association (IATA) announced plans to integrate digital currencies with its settlement system, starting with the digital renminbi, China’s central bank digital currency (CBDC). IATA is the global airline trade association representing 330 airlines.
“China is one of the most advanced countries in the world in the adoption of digital currency. Recognizing the trend, IATA’s China Airline Committee requested for the digital Renminbi to be included in the BSP,” said Muhammad Albakri, IATA’s SVP for Financial Settlement and Distribution Services. “This is an important development and IATA will accommodate the digital Renminbi by year-end.”
The BSP refers to the Billing and Settlement Plan (BSP), the settlement system for transactions between travel agents and airlines. In 2023 it processed $240 billion in payments.
“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 behavioral changes in payment methods,” said Mr Albakri. “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.”
While one in eight Chinese people have a digital RMB wallet, indications are that it’s not hugely popular on the retail front. The volumes processed continue to grow significantly at around RMB 300 billion ($42 billion) for the month of July. However, a significant proportion of transactions are business payments, which can quickly add up in a large economy such as China’s.
