The most extensive and ambitious modernisation of BSP (Billing & Settlement Plan) since it was created in 1971 is set to be rolled out.
The resolution for the full implementation of the New Generation of IATA Settlement Systems (NewGen ISS) was adopted by the Passenger Agency Conference, which comprises IATA member airlines.
“Implementation of NewGen ISS is a critical step forward by the global air transport industry in ensuring that BSP continues to serve the industry’s financial settlement requirements for years to come.
“It is the culmination of a multi-year engagement with participants in the air travel value chain, including airlines, travel agents, and IT and system providers,” said Aleks Popovich, IATA’s senior vice president, financial and distribution services.
“It will bring greater options and flexibility to our travel agent partners, while providing even more financial security to airlines,” he added.
The NewGen ISS pillars include a three-level travel agent accreditation that allows travel agents to choose the model most applicable to their business, and to convert across models as their business evolves.
Also introduced is IATA EasyPay, a voluntary pay-as-you-go e-wallet solution for issuance of airline tickets in BSP that offers a lower cost per transaction. As a secure form of payment, IATA EasyPay transactions are not part of a travel agent’s cash sales at risk. This allows travel agents a means to lower their financial security amounts held with IATA, and to issue transactions which are not included in their BSP remittance capacity.
The third is Global Default Insurance (GDI), an optional financial security alternative for travel agents that presents a cost-effective and flexible alternative to bank guarantees and other types of security, an IATA statement said.
A newly added pillar, the Remittance Holding Capacity (RHC) risk management framework, is being introduced to enable safer selling and mitigate losses resulting from travel agency defaults.
For the majority of travel agents, the RHC will be calculated based on the average of the three highest reporting periods of the previous 12 months plus 100 per cent. Furthermore, measures will be available, allowing travel agents to manage their RHC, and to continue selling in a secure manner should their RHC ever be reached.
Meanwhile, the resolution text for the initiative also incorporates provisions related to Transparency in Payments (TIP), which reveals the different features and costs associated with each form of payment and agent remittance of airline funds. As it stands today, airlines only see the settlement costs after the fact, if at all.
No form of remittance is barred by TIP, but travel agents can only use those forms to which an airline has previously given consent. TIP allows travel agents to use their own credit cards – previously not supported in the BSP – if an airline consents.
“TIP provides a pro-competitive framework for bilateral arrangements between airlines and travel agents that will facilitate the introduction of new and innovative payment solutions,” said Popovich.
NewGen ISS and TIP will be rolled out progressively from March 2018. Certain NewGen ISS pillars, including IATA EasyPay and GDI are already available in some markets. GDI has been implemented in more than 20 markets worldwide, while IATA EasyPay is being piloted in Norway, Sweden, Finland and Iceland.