Airlines Expanding Payment Options

Airlines are always looking for ways to cut costs. Distribution costs have been on the chopping block for years, but it's been only relatively recently that credit card fees have begun to move on to center stage.

Credit cards are easily the most convenient way to pay for an airline ticket, especially when that ticket is booked online. But while it's great for customers, airlines end up paying some pretty hefty fees for those transactions. With that in mind, it's no surprise that some airlines have tried to find a way around them.

Ryanair, for example, charges you a fee for using your credit card. In the US, we've seen a different approach. US airlines are offering alternatives to try and get people to ditch their cards.

Paypal has become popular with several airlines as has Western Union. And now yesterday, American announced that it will begin accepting electronic checks.

An electronic check is an electronic funds transfer (EFT). The money is taken directly from a bank account and sent to American. For customers, it's just another option, and one that's especially handy if they don't have credit. For the airline, it's assuredly a way to reduce transaction costs, otherwise they wouldn't be doing it. Who loses? Well, the credit card companies do if it means they see fewer transactions.

From an airline perspective, any competition in this space is good, because it will inevitably bring down costs.