NewGen ISS – Remittance Holding Capacity and Risk Management  26th Mar 2018

The Remittance Holding Capacity is a key part of the NewGen ISS risk management framework. Designed to create a more secure financial environment, the Remittance Holding Capacity introduces a monetary threshold for agents’ outstanding BSP Cash sales.

Implementing effective risk management procedures is fundamental to the success of today’s travel industry. To promote safer selling, NewGen ISS is introducing the Remittance Holding Capacity (RHC) for all agents with access to a Cash facility in the Billing Settlement Plan (BSP). The RHC sets a maximum threshold for agents’ outstanding Cash sales pending remittance via the BSP. The implementation of the RHC is part of the broader update of the risk management framework under NewGen ISS.

The RHC is a key feature of the risk management framework under NewGen ISS. This framework reflects the introduction of the new accreditation models, GoLite, GoStandard and GoGlobal, where an agent’s choice of accreditation model determines the applicable risk management.

For agents with access to a Cash facility under the GoStandard and GoGlobal accreditation models, one of three risk statuses will be assigned (A, B or C). This risk status will be determined by the agents’ ongoing risk history (historical behaviour in the BSP) and the outcome of their financial reviews. For GoGlobal agents, the financial review will be quarterly, in accordance with the multi-country assessment framework. For GoStandard agents, the financial review will be annual in accordance with the applicable local financial criteria of the agent.

Each risk status will carry different conditions related to financial security requirements, applicable remittance frequency and the calculation of an agent’s Remittance Holding Capacity.

How is the Risk Status assigned?

One of three statuses will be assigned per the following table:

Financial Review Result

Risk History Assessment

Risk Status Assigned

Pass

Pass

A

Pass

Fail

B

Fail

Pass

Fail

Fail

C

What are the conditions associated to each Risk Status?

Depending on an Agent’s Risk Status, different Cash Conditions will apply as shown below:

Risk Status       Cash Conditions

A

  1. RHC = Calculation
  2. Financial Security only if required per LFC for Standard Agents with Cash Facility
  3. Standard Remittance frequency of the BSP

B

  1. RHC = Calculation
  2. Financial Security required
  3. Standard Remittance frequency of the BSP

C

  1. RHC = Financial security provided
  2. Financial security required
  3. Most frequent remittance frequency in the BSP*

*Applicable for BSPs with multiple remittance frequencies

In addition to the assignment of a risk status, all GoStandard and GoGlobal agents will be granted an individual RHC. The RHC is the maximum amount of monies at risk that an agent may have outstanding to the BSP at any time. IATA will continuously monitor, in real-time, agents’ sales and if ever an agent reaches the RHC granted, Cash as a form of payment will be restricted. The agent will nonetheless be able to continue transacting using other available payment methods. Once a remittance is received and the agent’s outstanding amounts fall below the RHC threshold, Cash as a form of payment will be restored.

How is the RHC calculated?

The RHC calculation is designed to promote safer selling while ensuring that the majority of agents will not reach their maximum threshold. Agents will be notified by email when they reach 50%, 75%, 100% of the determined RHC, and agents will be able to monitor their RHC usage directly through the IATA Customer Portal.

An agent’s RHC will be reviewed at minimum once per year and will be reassessed with any change to an agent’s risk status or applicable cash conditions. Agents may also request an ad hoc recalculation of their RHC considering sales from the previous 12 months.
In case the RHC threshold is reached, agents will have the ability to continue issuing tickets using IATA EasyPay, a new, voluntary pay-as-you-go e-wallet solution or customer cards. In addition, agents will be able to make full or partial advanced remittances to the BSP to lower their amount outstanding.

These measures are intended to provide agents with the necessary tools to manage their RHC.

Risk
Status

Remittance Holding Capacity Calculation

A

Total Days X Daily Average BSP Cash Turnover (3 Highest Reporting periods) + 100%

B

C

Remittance Holding Capacity = Financial Security Amount Provided

Total Days = Number of days in Reporting period plus number of days in Remittance period.
Daily Average BSP Cash Turnover (3 Highest Reporting periods) = Agent’s Average daily BSP cash
turnover for the 3 highest Reporting periods of the previous 12 months.
100% represents the year-over-year growth threshold.

Agents will also be able to adjust their RHC by amending the amount of financial security provided to IATA. One type of financial security option available to agents is Global Default Insurance (GDI), which can be easily adjusted to facilitate changes in an agent’s RHC.

As GoLite agents do not have access to a cash facility within the BSP, no Risk Status or RHC is applicable. No minimum financial security is required for GoLite-accredited agents opting to use only IATA EasyPay. To address the potential risk related to card transactions, a minimum financial security in the equivalent of USD 5K is required for GoLite agents who wish to have access to the customer card payment method. GoLite agents’ ADM levels in the BSP will also be monitored and additional security may be requested if ADM levels exceed a defined threshold.

Courtesy of IATA: https://newgeniss.iata.org/travel-agents/risk-management/

 

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