A decade after the idea surfaced, payment network UATP will allow travel management companies to issue UATP payment accounts. BCD Travel is the first. It will launch with a U.S. test group internally and then roll out to all U.S. clients, possibly next quarter.

In typical payment networks like Visa, Mastercard and American Express, banks are the ones to issue payment cards. In the proprietary, airline-owned UATP network, airlines until now have been the only parties to issue its centralized lodge accounts. “It’s a very progressive move by the UATP board because traditionally, there was sort of that love-hate relationship between airlines and GDS, airlines and TMCs, and so here you’ve got a case where the airlines are allowing access to the UATP network … for entities that are not airlines,” said president and CEO Ralph Kaiser.

There are benefits for airlines in the closed model. For airlines that are both the merchant and the UATP account issuer on the same transaction, the transaction is free. Delta, as an example, would pay no transaction fee for the purchase of a Delta ticket paid for with a Delta-issued UATP account.

Additionally, airline issuers can receive commissions on the interchange fees that merchants pay account issuers. If a passenger used an American Airlines-issued UATP account to buy a United flight, for example, American, as the account issuer, could receive commission on the interchange fee paid by United, the merchant. UATP merchants include most of the world’s airlines, many rail carriers, 12,000 Airlines Reporting Corp. travel agency locations and 130,000 other travel agency locations, according to UATP.

Among benefits to TMCs and their clients, according to Kaiser: UATP billing statements include Level 3 transaction data like airline, city pair and class of service that can flow to TMCs’ corporate customers. TMCs also now are in a position to gain some interchange-fee commissions. UATP, meanwhile, still gets a revenue share, Kaiser said, to cover costs for the airline owners.

“The fact that a TMC is engaging in issuing the cards is not surprising, given that they want to be the one-stop solution [and] have tighter control/audit/reporting on the payment process,” said Get Travel Solutions founder Karoline Mayr. “And it is a very nice new revenue stream that conveniently is entering at the time of distribution disruption. … Payments is a great revenue stream, working like a licensee deal where they make money off of every transaction; it appears like a small amount off each transaction, but as you look at the total number of transactions, you no longer feel like it is small.”

The downside for airlines: With more issuers in the UATP arena, fewer of those “free” transactions will occur in which the airline issuer and the airline merchant are the same entity. Kaiser noted, however, “The more UATP accounts available for airlines to accept, the less they’ll pay in merchant fees.” That’s because UATP’s merchant fees are lower than other payment networks’ transaction costs, generally by about 1 percent, according to Kaiser.

If TMCs can funnel significantly more airline transactions to UATP accounts, the relationships between TMCs and airlines also could thaw a bit, and mega TMCs like BCD are the best-positioned to make a noticeable difference.

“This probably came up over a decade ago and there was not a lot of interest within the airline industry, but more recently, we brought it up again because things evolve, markets modernize, so we thought it would be a good time to consider it,” Kaiser said. “The airlines need to accept more lower-cost forms of payment, and so, if we can have a distributor like a TMC put more accounts in the network … that’s a good thing, and I think the airline industry finally realized that opening up the network to other entities could actually be a net benefit instead of worrying about, “Oh, are we giving a benefit to a TMC? We don’t like to do that.'”

According to a press release from BCD and UATP, BCD corporate clients’ traveler profiles will signal BCD to use BCD-issued UATP accounts when booking with relevant merchants. Also according to the release, “BCD will help manage their clients’ UATP program and provide customer service.”

Kaiser said UATP is open to speak with other U.S.-based TMCs about the TMC issuer program, and he expects to announce more TMC participants before the end of the year.

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