While the global payments market has made great strides toward faster, easier and more secure payments, the travel industry has lagged behind. Thanks to peer-to-peer apps, consumers are enjoying real-time payments, but the inefficiencies in payment models, legacy systems and processes mean that settlements to airlines can be delayed by several critical days.
The back-end settlement between airlines and travel agencies is a slow, complex process,” said Tribh Grewal, Director of International Markets in EMEA at Discover® Global Network, “as it typically happens in cash and bank transfers from travel agencies, to Billing and Settlement Plans (BSP), and then to airlines.”
The associated costs also present challenges. For example, cross-currency purchases typically use an exchange rate based on a five-day moving average, which can make or break the value of deals.
Modernizing travel payments with Mystifly
Singapore-based Mystifly, which unifies distribution, fulfillment and payments in the global travel industry, has seized the opportunity for a more modern approach.
In December 2021, the company announced the launch of MystiPay—a payment and settlement solution— in partnership with payment services company Diners Club International® (DCI), a member of Discover Global Network. “We wanted to be our own issuer, where we could work very closely with a global scheme and have a branded product without getting a bank involved,” said Rajeev Kumar, CEO of Mystifly.
MystiPay was designed to replace cash and bank transfers with card payments, cutting settlement time by weeks and standardizing the cost of acceptance. After years of planning, the company turned to Discover® Global Network to spearhead the network development and bring MystiPay to market.
“Discover has been an ideal partner,” Mystifly’s Kumar said. “Our vision to democratize air travel demanded that we be a card issuer. Discover helped us kick-start the whole product initiative, brought in the other partners we needed for a successful launch and have been very responsive throughout.”
Indeed, Mystifly was not a typical end client for Discover Global Network, “but we had the right products, and we were confident we could fulfill their requirements by looking at our newly expanded partner base,” said Grewal. In fact, two partners that Discover had just signed—PSI-Pay, an e-money issuer; and Digital Payments Group (DPG), an issuer processor and program manager—fit Mystifly’s needs perfectly, according to Grewal.
PSI-Pay brings an issuing solution
Because Mystifly is not licensed as an issuer of cards, Discover® Global Network enlisted support from PSI-Pay. Regulated within the UK as an e-money issuer, PSI-Pay accepts funds from its clients, holds them securely in safeguarded accounts at authorized credit institutions, and then makes payments—relying on both physical and virtual cards—on behalf of those customers to airlines and others.
As a member of DCI, PSI-Pay’s customers can use Diners Club cards to make payments in multiple currencies, and, in the case of Mystifly, with virtual cards, said Andy Downes, CEO of PSI-Pay. PSI-Pay is also responsible for ensuring the delivery of a robust financial-crime framework, including know-yourcustomer (KYC) and anti-money laundering (AML) policies and procedures—required processes that ensure they’re dealing only with legitimate and legal customers.
The issuer-processor model Discover conceived for MystiPay, coupled with a high level of agility and a laser focus on clients’ needs, has served Mystifly well. “Offering a timetested B2B travel payment model, but with the hunger of a startup— that’s very appealing, for partners and clients alike,” noted Downes.
The collaboration between Discover® Global Network and PSI-Pay for Mystifly was the first of its kind. But the relationship continues to accelerate and deepen thanks to significant growth opportunities in the B2B travel space, and not just in the markets Mystifly currently serves. The broader online B2B travel market, given its global nature, makes it ripe for disruptive virtual card solutions like MystiPay.
“There’s so much momentum there already,” Downes said. “I think there’s a very bright future for firms with the right experience and an appetite to disrupt the market with a new brand, a new approach and an agility which will certainly provide healthy competition to the B2B travel payment incumbents.”
DPG provides a program management solution
To provide program management and ensure seamless transaction processing and connection with DCI, Discover turned to Digital Payments Group (DPG). DPG, with its modern technology hub and a consultative approach to building products for customers, was well-suited to help Discover Global Network redefine the payment model, according to Rob Appleby, CEO of DPG.
DPG’s expansive virtual card solution leverages platform features, including multicurrency, scheme-enabled crossborder payments and a prefunded stored-value solution. In addition, its payments are secured through cutting-edge fraud prevention and detection and chargeback capabilities.
But most important for Mystifly is DPG’s real-time funding and payment capability, which removes the need for credit. Without this feature, Mystifly would need to provide payment to its providers upfront, while waiting several days for the funds to settle from the client.
“A virtual card payment solution is far better in this situation, because it goes straight across the payment rails instantly, and circumvents all those hassles,” Appleby explained.
The collaboration between Discover® Global Network and DPG to deliver an embedded finance solution for Mystifly is a prime example of the way emerging technologies and new partnerships are changing how B2B travel payments are made. But the relationship has been especially fruitful thanks to the simple pricing structure that Discover uses, as well as the company’s flexibility and willingness to listen and adapt, Appleby said.
“The whole Discover team has been genuinely invested in making each step of the journey successful,” said Appleby. “They’re a very large corporation, but somehow they have the responsiveness of a small company, which is refreshing to me.”
Expanding into new markets
Now, having launched MystiPay, Mystifly—working together with Discover Global Network, PSI-Pay and DPG—has effectively eliminated many of the existing inefficiencies in the traditional airline payment settlement model. In addition, the four companies have regular steering committee meetings as they work on phase two of the program, where MystiPay will be offered as a stand-alone product, not just for airlines, but for use by any player in the travel industry.
Looking to the future, Mystifly also plans to expand its customer base to include B2B travel industry players of all sizes—airlines, of course, but also hotels, cruises, rental cars and trips or travel packages sold by intermediaries. And moving into new geographical regions is another important goal.
“Our focus right now is on growing our current business with European carriers, but eventually we’d like to take the next step with APAC and then the rest of the world,” Kumar explained. “There are definitely opportunities to do that with Discover, given their network relationships and how well we’ve worked together.”