Blockchain-based ecosystems have unleashed incredible innovative potential and are creating exciting opportunities to tackle some of the stickiest challenges in today’s financial ecosystem. Yet it’s not clear how all this potential can be harnessed as safe and scalable business models. Innovators, traditional financial firms, policymakers, regulators and global standard-setting bodies are all trying to solve that puzzle in ways that preserve the integrity of the global financial system. The development and adoption of digital assets are still in early stages, and more work is needed by many participants to improve security and compliance. One effort toward this broader goal is Mastercard’s new Multi-Token Network, which will explore a set of rules and services designed to make blockchain ecosystems safer and more predictable. We believe the Multi-Token Network can encourage positive developments in the private sector, enabling the broader adoption of blockchain technology as an engine for digital commerce and innovation across the financial system. For example, blockchain technology could be utilized to build more efficient and faster cross-border payment rails that are always on, unlike traditional financial infrastructure, which often imposes delays related to business hours and holiday closures. Clear regulatory guidance, alongside private sector innovations like the Mastercard Multi-Token Network, could both unlock greater innovation and support stronger compliance. Understandably, regulators and policymakers are concerned about the many risks in digital asset ecosystems, including the presence of fraud, market manipulation, money laundering, sanctions evasion and — increasingly — the potential to expose the traditional financial system to contagion. Regulators are faced with the challenge of developing rules that rein in these risks while supporting the innovative potential of digital assets. The variety of blockchain services, nuances in each blockchain technology and the complex networks of intermediaries that enable them mean that established regulatory frameworks may fall short; bespoke rules that borrow from oversight practices in disparate industries are needed. Regulators and the private sector are working toward the same goal: safe and secure adoption of innovative solutions that address real pain points in financial services. Public authorities have engaged in robust dialogue among themselves and with private actors. Tremendous progress has already been made by standard-setting international bodies such as the Financial Stability Board and by policymakers in the European Union, to name just a few, in clarifying obligations for new entrants and conceptualizing frameworks that will govern digital asset activities. Yet work remains to be done to overcome the barriers to the safe and compliant adoption of digital assets. New and prospective private sector standards and guardrails, including Mastercard’s Multi-Token Network, will have their best chance of succeeding if they develop alongside a handful of clearer regulatory frameworks. Those include:

01 Clarification and enforcement of consistent compliance expectations across payment technologies

In general, all payment technologies and networks should operate under the same expected compliance requirements and enforcement actions, but that’s not the case today. More consistent compliance measures would help avoid regulatory arbitrage and ensure that incumbents and digital asset innovators are competing on a level playing field, as has been called for by the Financial Action Task Force.

02 Establishment of clear regulatory frameworks for stable payment tokens

This would enable trust in the underlying store of value and address uncertainties around the regulatory treatment of floating digital assets. The development of robust regulatory frameworks for payment instruments within digital asset ecosystems, including stablecoins, tokenized deposits and, in some instances, central bank digital currencies should be a priority. The distinct characteristics of each of these assets necessitate that they be considered independently of one another.

03 Upholding the integrity and stability of the system

Upholding the integrity and stability of the system. Today, technical vulnerabilities that make interactions with blockchain systems vulnerable to cyberattacks and heists, as described in this MIT research paper, arguably pose one of the greatest risks to the whole ecosystem. The concentration of activity on just a handful of blockchains and the role of third-party services that support decentralized finance represent additional ecosystem risks. Technical experts who are most familiar with these networks could facilitate industry cooperation and partnership with public authorities to develop appropriate obligations designed to uphold the integrity and stability of these ecosystems. Important work to understand the technical vulnerabilities of blockchains is already underway at the Financial Stability Board and the Banque de France.

04 Redoubling efforts to attain global standards — and their broad adoption and implementation — to reduce the prevalence of regulatory arbitrage

In today’s “borderless” world, the most effective domestic regulations can be undermined in the absence of robust global regulatory cooperation, distorting the playing field for all. Substantial precedent already exists for global cooperation in complex areas of regulation and standard setting. We encourage authorities to maintain the momentum of international work by aligning on global standards and enforcing corresponding national-level requirements for ecosystem participants. The intersection of digital assets with the traditional financial system means that establishing oversight that can facilitate system integrity is paramount. Private and public actors have put forward proposals for supporting the safe and secure growth of blockchain-based platforms and services. These ideas range from establishing self-regulating organizations to a heavier hand from public authorities. At this early stage of development, it is difficult to identify which oversight methodology is most appropriate suited. However, we are encouraged by the global efforts of public and private actors to learn and partner, with a goal of bringing about better outcomes in financial services.

Major changes to the ways people eat out and socialize post-pandemic are resetting the “economic clock” of cities from New York to Melbourne and Sydney to London. Increased hybrid working means New Yorkers are choosing restaurants closer to home, and that’s driving a jump in spending in areas such as the Bronx and Queens. In central Sydney, Thursday now tops Friday as the night to go out while Melbourne’s suburban restaurants are seeing a lunchtime boom. Restaurants in London’s business areas are still feeling the impact of fewer office workers, but tourists are providing a boost and the West End retains its crown as the most popular place for a night out. Tapping into these data-driven insights from the Mastercard Economic Institute can help restaurants cash-in on emerging trends and cities begin to adapt transport and infrastructure to suit changing times. LONDON In the City and Canary Wharf,  restaurant spending is down, but the good news? Happy hour is up.   Explore SYDNEY AND MELBOURNE Sydney’s increase in bar and restaurant spending has been more substantial than in Melbourne, particularly at night.   Explore 

NEW YORK CITY

The lunch scene in the outer boroughs is booming and nighttime spending is up in the Financial District.   Explore 

TravelMole caught up with Rohnny Swennen, Vice President, Travel Industries, to hear about how Mastercard is evolving its products and solutions to better meet travel buyer and supplier needs.   Rohnny shed light on how the Mastercard Wholesale Program has been enhanced and what this means for the sector.   What is the Mastercard Wholesale Program and how did that innovation come about? The Mastercard Wholesale Program is a business-to-business (B2B) payment solution that allows travel intermediaries to pay their partners and suppliers with greater flexibility, visibility, and protection.  It was designed specifically for the travel sector, based on what we heard from our partners and customers about their B2B payment challenges. From the outset we wanted this product to reflect industry needs so we considered what makes travel transactions unique. Travel by nature is international, therefore so are the B2B payment flows that take place between travel buyers and suppliers as they bring consumer bookings to life. For this reason, pricing structure based on geography just doesn’t make sense.  In addition, the manual processes that have historically supported these B2B payment flows weren’t keeping up with dynamic market needs. A lack of payment transparency and predictability was impacting liquidity.   What challenges were you looking to address with the solution? Alternative payment methods typically have a lot of inefficiencies when it comes to facilitating global payment flows and unfortunately, they are still rife across B2B travel payment flows. These inefficiencies have left travel buyers and suppliers struggling with poor reconciliation, long settlement periods and a lack of payment protection for far too long. Payment networks like Mastercard have the structure in place to handle global transactions more efficiently and securely. By leveraging our proven virtual card technology and embedding it into a B2B solution specifically designed for B2B travel transactions, we knew we could bring a solution to market that would benefit the entire travel value chain. Back in 2015 when we first launched, we wanted the solution to increase B2B payment visibility and protection for the sector – little did we know just how essential these would become just a few years later. We’ve now enhanced the solution even further to meet the needs that the industry faces now, delivering enhanced flexibility through a more tailored product structure and removing the limitations of a pre-defined set of tiers.   How has the Mastercard Wholesale Program evolved? The solution has always evolved based on industry feedback, back in 2019 we made lower product tiers available based on the needs of our partners. A lot has happened in the sector since then which is why we’ve again enhanced the solution based on industry feedback. Flexibility is more important than ever, but we also heard that a more tailored approach to products was important to support specific market, volume and product types. So, we took action and have evolved the program to provide a more tailored structure. Through the new enhancements, travel issuers will no longer need to set up dedicated BINs and account ranges to offer the different products to their customers. Going forward they will be able to easily convert the virtual card to a desired code or tier in real time through a simple API. Relationships between travel intermediaries and banking partners are evolving, and now the Mastercard Wholesale Program is encouraging even closer collaboration to ensure that B2B payment solutions support all potential future growth.   What benefits does the evolved product bring to the travel industry? The last few years have shown that the future health of the travel ecosystem relies on closer collaboration, which is why we have evolved the solution with the entire travel value chain in mind. Benefits for travel agencies, suppliers and issuers include:

1. Flexibility;Issuers onboard once and Mastercard will develop a dynamic structure to support customer volumes.
2. Control; Tailored tiers for different markets, currencies, and type of provider.
3. Protection; Everyone across the travel value chain receives the standard card guarantee.
4. Acceptance; Available to all travel issuers.
5. Growth;Closer collaboration between supplier, buyer, and banking partner relationships realize mutually beneficial growth.  

By simplifying implementation for travel issuers, the solution encourages greater participation which provides travel intermediaries with increased choice - ultimately supporting a more thriving travel economy.   As organisations across the travel sector look ahead to 2023, what should they be prioritising? Consumers have emerged from a couple of years of restrictions with an appetite to travel, which gives travel organisations a lot to feel positive about. However broader economic pressures remain challenging and in times where inflation impacts operational costs as well as the traveller’s discretionary spend level, adaptability is key. It’s critical that both travel agents and travel merchants adjust to these external pressures. Strong partnerships matter now more than ever so products that support this increased collaboration and provide mutually beneficial terms will drive the future health of the travel economy. This allows all parties to focus on realizing sales to grow their business. The past two years have shown the ripple effect one fault can have across the value chain, and that the industry is only as strong as its weakest link. Growth is essential, but this must be sustainable which requires a reboot of the B2B payment strategies at the industry’s core. Only by laying firm foundations that enhance protection and increase flexibility across all travel transactions can the travel industry flourish for years to come.   To learn more about how the Mastercard Wholesale Program could benefit your organization, contact Rohnny directly on LinkedIn or the Mastercard’s B2B Travel team at [email protected]

 

T&E Risk Monitor solution enables acquirers to more accurately assess financial exposure when dealing with travel merchants.

  Actuary, part of Perseuss Group,today announceda collaboration with Mastercard set to better support acquiring entities across the travel sector with adata-led risk assessment tool. Aftera successful pilot, the T&E Risk Monitoris being scaled by Actuary in partnership with Mastercardto providea real-time view of booking status across travel portfolios, increasing acquirer confidence when releasing funds to delayed delivery merchants (DDM).   DDM transactions involve a time delay between when a consumer pays for a reservation and when they board a planeor stay at a hotel. To address the financial exposure acquiring entities experience due to this delay, Actuary is leveraging its travel insights platform and Mastercard’s global travel industry partnerships and experienceto launch the T&E Risk Monitor. The solution increases visibility across travel booking and B2B payment flowsthrough interactive dashboards from which customerscan run reports and create alerts.   Providing a trusted source of secure booking and payment related data, the interactive platform enables acquirers to make data-led risk decisions, providing greater peace of mind when releasing funds and taking on new travel portfolios. Benefitting the whole ecosystem, travel merchants benefit from automation and transparency over reporting and risk levels, whilst the enhanced visibility supports greater cashflow and liquidity across the travel sector.   Maarten Alleman, CEO of Perseuss Group, said: "Already pre-pandemic, the card acquirers'credit risk conditions were in many cases a major challenge for airlines and other travel merchants. This has been exacerbated by the unprecedented levels of booking cancelations and changes, large scale use of vouchers and operational issues around refunding. Together with Mastercard, we aim to leverage our combined capabilities to restore the much-needed balance between demand and supply in airline and travel acquiring services.”   Commenting on the collaboration Chris Fendley, Executive Vice President–Enterprise Partnerships at Mastercard, said “Mastercard is scaling innovation to help the travel and tourism industry recover and grow, and our relationship with Actuary furthers our commitment to help organizations mitigate financial risk during times of heightened volatility. Through the T&E Risk Monitor, we are bringing the travel payment ecosystem together to increase visibility and assurance, helping acquirers make data-led decisions, and enhancing cashflow for travel merchants.

 

Evolving virtual card payment solutions for the global travel industry

  As digitization accelerates the world over, and as travel behaviors shift, the travel industry is increasingly seeing the need for innovative and collaborative payment solutions.   Using virtual card technology and an innovative pricing model, the Mastercard Wholesale Travel Program is designed to bring scalable and seamless cross-border B2B payments to the entire industry – ultimately creating a more secure, frictionless experience for you and your customers and accelerating future growth opportunities.   Over 360,000+ travel providers across 200+ countries worldwide already rely on us to increase reconciliation efficiency, enable payment flow visibility, preserve liquidity, provide payments protection and enable payment guarantees. Start with partners and Start Something Priceless™.     Download case studies.   Why use the Mastercard Wholesale Travel Program?   Through virtual card technology, fixed interchange rates and transparent issuing and acquiring core fees, the Mastercard Wholesale Travel Program reduces costs, enables operational efficiencies and decreases risk for travel agencies and travel suppliers alike.   Maximize sales   The multiple rate tiers and fixed interchange rates provide the travel industry with a flexible framework to address the unique economic needs of the industry facilitating commercial negotiations between travel agents and travel suppliers.   For travel agencies, enabling closer relationships with suppliers to increase the range of products and generate additional sales   For travel suppliers, an ability to define payments terms for different markets, products and sales volumes.   Enhance protection   You are being protected against suppliers defaulting, going bankrupt or defaulted charges.   Increase visibility: Individual reference numbers that link consumer bookings with B2B payments   Protect liquidity: With enhanced credit lines through card payments   Reduce fraud risk: By limiting consumer card details being exposed and leveraging secure, one-time-use VCNs   Efficient refund process: Facilitated through enhanced and accurate reconciliation.   Download case studies.   Enhance protection   You are being protected against suppliers defaulting, going bankrupt or defaulted charges.   Increase visibility: Individual reference numbers that link consumer bookings with B2B payments   Protect liquidity: With enhanced credit lines through card payments   Reduce fraud risk: By limiting consumer card details being exposed and leveraging secure, one-time-use VCNs   Efficient refund process: Facilitated through enhanced and accurate reconciliation   Streamline and automate operations   Bring new and necessary efficiency to your daily oversight of payment flows and customer inquiries, allowing your team more time to focus on meaningful business operations.   Reduce complexity with fixed interchange rates and bundled core rates   Automate reconciliation and reporting   Simplify inquiry management   Forecast payment flow more accurately   Reduce PCI constraints   Reduce risk and fraud   By digitizing payment flows, the program better prevents fraud and failed payments, ultimately reducing risk and delivering savings to your business.   Leverage chargeback protection   Dramatically reduce risk of fraud with accurate data and tracking   Remove risk of bounced checks or failed payments after completed trips   Download case studies.   Reduce costs   Digitization and an overall more streamlined and efficient process lowers expenses by significantly reducing time and effort dedicated to legacy payment management processes.   Reduce costs associated with manual processes   Simplify the management of commissions and rebates   Manage cash flow more easily with guaranteed payment timing   Reduce DSO (working capital reduction)   Download case studies.  

  Fran is excited - she’s planning a reunion getaway for her college friends. Fran has researched flights, hotels, car rentals, restaurants, and entertainment, and chosen Du Journey, an online travel agency, to help her with the bookings.   Since Fran uses her smartphone to buy everything from daily coffee to new shoes, she’s certain this online travel payment experience will also be a breeze.   Fran is disappointed - the travel agent couldn’t be more helpful, but in terms of payments, the agency acts only as the intermediary for all the suppliers involved in Fran’s trip.   Her card details are passed on to the airlines, hotel, ticket brokers, and the other merchants—making her feel less secure. Equally confusing from Fran’s perspective, trip management is not as simple and straightforward as she’d like.   She has multiple charges on her card statement, from suppliers other than Du Journey, and she’s not certain who to call if she has a change in plans or runs into trouble with a booking.   Fran’s travel agent isn’t happy either - as the global travel industry has grown into a $2.2 trillion industry, the number of travel providers that Du Journey relies on has expanded significantly. In addition to well-established brands, they work with unfamiliar new suppliers to deliver the desired experiences to their clients.   Because Du Journey has a pass-through payment model, it is the airlines, hotels, tour operators and various smaller suppliers that are charging Fran’s card. The travel agent has worked hard to earn Fran’s loyalty and now needs to manage her queries regarding the numerous charges she can now see on her statement.   What if a supplier defaults or misprocesses a booking? Or loses Fran’s information in a data breach? Fran will blame Du Journey for the failure—and future business goes out the window.   Travel suppliers, meanwhile, are worried about their margins - the growing volume of travel-related payments is forcing travel suppliers to shoulder an increasingly higher risk burden related to fraud and charge backs, and associated administrative work.   It seems that business to business payments across the travel space have a long way to go to catch up with the speed, simplicity and convenience delivered in the consumer world,   There must be a better way to give Fran the frictionless payment experience she expects, make Du Journey the merchant of record, while simplifying how the agency can pay suppliers and reduce the risk and workload.   Industry opportunity and risk have never been higher   The global travel industry has experienced continuous growth over the last decade. In 2017, worldwide annual air passenger numbers topped four billion for the first time. That number is expected to nearly double to 7.8 billion passengers by 2036.   Millennials and Generation Z are key drivers of this skyrocketing growth. Adults aged 18-34 travel the most often - 35 days a year for millennials - and are likely to spend more money on vacations than any other age group.   Young adults, in particular, place high demands on the online travel purchase experience. These digital natives use social media and websites as their primary sources for travel inspiration and information, and gravitate naturally to using online travel agencies.   They expect to make seamless travel transactions from any smart device - phone, tablet, watch, or even their digital assistant - and expect their personal information will be secure.   Given the growth in travel bookings, the new players entering the market, emerging regulations, and evolving consumer expectations for service, travel merchants are feeling extreme pressure, especially in the B2B payments space.   Typically, there are two types of B2B payment flows.  

• The pass-through model: The travel agency facilitates the transaction and passes the card information to suppliers who then settle the payment directly with the consumer. This model subjects the consumer to a higher risk of data exposure. Moreover, consumers have to deal with multiple merchants, many of them unknown to them, which can be confusing and frustrating.
• The merchant model: More and more travel agencies are turning to the merchant model. The travel agency is the merchant of record, accepting the customer’s payment, authorising the transaction, and supplying the booking. The agency then arranges secondary payment to the various suppliers. These payments typically rely on legacy payment methods such as cash transfers. Such payments result in long settlement periods, poor reconciliation methods, and lack of cash flow visibility.

  Securing these secondary payments is also a concern. Traditionally, agents and suppliers have conducted due diligence and established formal contractual obligations when working with new partners.   This is becoming more difficult and time-consuming as the network of travel suppliers expands. If contracts are not properly negotiated, agencies become susceptible to higher risk exposure if one of the new partners defaults.   Over the last 17 years, the total loss due to airline default has been more than $100 billion, while agency default equates to roughly $2.5 billion.   Despite considerable innovation in the travel space, especially from the large online players, B2B travel payments have continued to lag what is otherwise a growing and dynamic market place. All concerned—consumers, travel agencies, and travel merchants are calling out for a better experience.   Virtual cards: an agent of real change   Virtual cards are digitally-generated single use card numbers that not only provide a more secure way to conduct B2B travel payments, but also mitigate many operational inefficiencies regularly faced by B2B travel organisations.   Partners who accept virtual cards can benefit from payment assurance to ensure payments on a transaction-by-transaction basis. Through this assurance, industry players can establish dynamic contracts between different parties.   This gives each party more confidence when working with unfamiliar partners. It also means that relationships between parties can be more agile, faster, and secure without the lengthy process traditionally required when setting up new relationships.   Virtual cards extend across the entire travel value chain to deliver lower risk and better experiences for suppliers, agents and customers. Suppliers are guaranteed payments; agents are protected against non-delivery; and customers are assured of receiving the services they expect.   How virtual cards work   Virtual cards are random, digitally generated, single use card numbers that are linked to a base account. A unique number is used for each booking or payment transaction making them a secure way to conduct B2B payments. Virtual cards work in much the same way as a regular payment card but without the plastic.   They are accepted anywhere traditional cards are accepted. Being virtual, the card details simply exist as digital information to facilitate a single-use transaction.   It can only be used for the reservation/ transaction to which it was assigned and can be set to expire after a specific length of time or level of expenditure. Finally, it is supported by existing payment technologies used for physical card payments.     Here are four ways that virtual cards can help improve the entire travel ecosystem:  

1. Virtual cards recognise the consumer is king

  The travel industry is driven by consumers with a thirst for rich new experiences and lasting memories. To meet their expectations, travel agents and suppliers strive to optimize their entire journey, including the payment experience.   Virtual cards can help to drive high rates of customer satisfaction in three ways. First, they enable customers to pay how they want. Nearly half of consumers will abandon a transaction if they can’t pay using their preferred method of payment.   When travel agencies pay suppliers by means of virtual card numbers, consumers can use their preferred payment option and suppliers don’t have to assume the expense of accepting the myriad of global payment methods.   Secondly, virtual cards nurture travel network growth—and greater consumer choice. Due to their global acceptance and payment assurance, virtual cards support stronger partnerships between agents and suppliers. Agents are more likely to expand their network of supplier-partners - giving consumers a wider variety of flights, hotel options, and travel experiences from which to choose.   Finally, virtual cards help meet the consumer’s desire for secure transactions and data privacy. Unlike traditional cards, the customer’s payment details are not transferred between agents and suppliers, reducing the risk of data compromise.  

2. Virtual cards put reconciliation on autopilot

  A key benefit of virtual cards is to help automate and simplify the administration of B2B payments. Each payment transaction is associated with a unique ID number that can be automatically linked to the booking reference information.   These numbers include data such as the invoice number, purchase order number, reference number, and more. Information is available much faster and in more detail, whilst removing the administrative burden associated with other manual payment methods.   This saves time and costs for agencies and suppliers.  

3. Virtual cards are purpose-built for compliance

  The importance and complexity of regulation and compliance in travel payments is amplified by the global nature of travel and diversity of payment mechanisms—imposing costs and risk for all parties in the payment flow.   The single-use nature of virtual card numbers means there is no consumer card data to be stored, which supports an organization’s efforts to protect key payment data. Travel parties can process and transmit personal and payment data in a safer and more secure manner, facilitating greater confidence.   In addition, due to their increased security, virtual cards are not subject to the same regulatory requirements as traditional payment methods under the EU Payment Services Directive (PSD2) and Strong Customer Authentication initiatives. This helps reduce the risk and cost associated with data regulatory compliance.  

4. Virtual cards fight fraud

  Fraud is a growing problem in the travel industry. As global travel networks expand across new segments and markets, the need to actively minimize and manage fraud becomes more critical. Virtual cards are a highly effective solution.   Their one-transaction, one-use payment process has been proven to significantly reduce the instances of fraud across the hotel and airline industries.   In addition, a travel business can set transaction limits for each 16-digit number, allocate expiry dates of use, and impose restrictions to prevent the misuse of the payment details.   Unlocking growth opportunities for the entire industry   Mastercard partners with players from across the industry to deliver fresh ways for travel organizations to succeed in a dynamic ecosystem.   From virtual accounts to fraud management, Mastercard is pioneering innovative solutions that drive efficiency, deliver simplicity and offer flexibility. Is it time for your travel organization to rethink its approach to B2B payments?   Working with a partner like Mastercard can help you discover new ways to unlock growth, improve payment security and control, increase transparency, assist with regulatory compliance efforts, and deliver a seamless experience across the travel payments journey.