Remittance Holding Capacity 2019-12-05T20:30:21+00:00

NewGen ISS – Remittance Holding Capacity and Risk Management

The Remittance Holding Capacity is a maximum threshold for agent’s Cash sales pending remittance via the Billing Settlement Plan (BSP).

The Remittance Holding Capacity promotes safer selling and significantly mitigates airlines’ risk exposure to agent default losses.

Implementing effective risk management procedures is fundamental to the success of today’s travel industry. Airlines have lost millions annually as a result of agent defaults in the Billing Settlement Plan (BSP), and in the past, there has been no effective mechanism to limit airlines’ risk exposure. To better protect airlines’ funds and create a more secure environment, NewGen ISS introduces a Remittance Holding Capacity (RHC) – a maximum threshold for agents’ Cash sales pending remittance via the BSP – for all agents with access to Cash as a form of payment in the BSP.

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 accreditation model determines the applicable risk management.

Learn more about IATA’s accreditation options.

What is the Risk Management Framework?

For agents with access to a Cash facility under the GoStandard and GoGlobal accreditation models, one of three risk statuses is assigned (A, B or C). This risk status is 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 is quarterly, in accordance with the multi-country assessment framework. For GoStandard agents, the financial review remains annual in accordance with the applicable local financial criteria.

Each risk status carries 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 is 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:


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

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

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

*Applicable for BSPs with multiple remittance frequencies

What is the RHC?

In addition to the assignment of a risk status, all GoStandard and GoGlobal agents are 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 continuously monitors, in real-time, agents’ sales and if ever an agent reaches the RHC granted, Cash as a form of payment is restricted. The agent is, nonetheless, able to transact 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?

Risk
Status
Remittance Holding Capacity Calculation
A Total Days X Daily Average BSP Cash Turnover (3 Highest Reporting periods) x 2
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.
x2 (+100%) represents the year-over-year growth threshold.

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

In case the RHC threshold is reached, agents have the ability to continue selling by using a customer card or IATA EasyPay, a new, voluntary pay-as-you-go e-wallet solution. In addition, agents will be able to make full or partial advanced remittances to the BSP to lower their amount outstanding.

An agent’s RHC will be reviewed at minimum once per year and is 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.

Note,  the Local Financial Criteria in a number of markets establishes the percentage of the RHC which must be covered by a Financial Security for agents in Risk Status A & B.

Learn more about IATA EasyPay

Agents will also be able to increase their RHC by increasing 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.

Learn more about Global Default Insurance

As GoLite agents do not have access to a cash facility within the BSP, no risk status or RHC is applicable. For GoLite agents, IATA will nonetheless perform risk management focusing on unusual sales activity. No minimum financial security is required for GoLite-accredited agents. However,  GoLite agents’ ADM levels in the BSP will be monitored and a financial security may be requested if ADM levels exceed a defined threshold (equivalent of USD 5,000 in a quarter).