Paysafe, a leading specialised payments platform, has announced the global launch of its safeguarding solution for the travel industry. Paysafe also outlined its vision for the future of payments risk management in the travel sector, in its latest whitepaper.
The new solution eliminates the need for travel operators or other travel businesses that accept payments from consumers to offer cash collateral to their acquirer to offset the risk of non-delivery of services. Instead, consumer payments are held by a third party, and released immediately and in full to the travel business upon terms agreed by the company and Paysafe being met.
The safeguarding model has been created using Paysafe’s extensive experience in the travel industry to build a new risk management mechanism that benefits both travel companies and their acquirers. It has been developed in partnership with industry-specialised trust solution partners and uses Paysafe’s payment technology and sophisticated data management capabilities to immediately reconcile when funds should be released to the merchant.
Currently, holding cash reserves as collateral is industry standard, as acquirers manage the risk generated by consumers making high value transactions well in advance of delivery of the service. As the value of cash being withheld can often fluctuate, this has created numerous problems for travel businesses, including liquidity concerns and uncertainty.
Having identified the need for the industry to move away from traditional collateral-based risk management, Paysafe has been rolling out and battle testing its services with a limited number of partners in Europe. Following the COVID-19 crisis and the challenges that travel companies have faced during this period, the need for the travel industry to move away from payments relationships built on cash collateral and rolling reserves has grown, and the highly flexible and scalable solution from Paysafe helps to support this shift.
Commenting on the launch, Paulette Rowe, CEO of Integrated & Ecommerce Solutions at Paysafe, said: “It is no secret that the travel industry has been heavily impacted by COVID-19. Many travel companies have struggled to find a payments partner that is willing to work with them on agreeable terms during the pandemic, as acquirers simply haven’t been prepared to accept the risk profiles the industry is generating. At Paysafe, we’ve leaned on our deep understanding of the sector to evolve our safeguarding solution to enable us to work more closely with our partners in a way that is preferable to both parties. Stress testing the model throughout the crisis puts us in the best position to support the industry in its period of recovery, and to thrive in the long term.”
She added: “In addition to supporting travel businesses directly as they recover and grow following the pandemic, Paysafe’s safeguarding solution benefits the consumer as their payments are completely protected against non-delivery of service. Consumer trust in the industry will be a critical component of its revival and this isn’t guaranteed in many existing circumstances.”