MAKING SHIPPING a more cash-free industry

MarTrust CCO Errikos Andreakos explains how digitalisation can reduce the risks of cash-to-master payments and improve seafarer welfare.

For the past 18 months, Seafarers have faced unprecedented hardships. Indeed, there are still tens of thousands currently stranded on vessels beyond their contracts. They have been there for many months, unable to be repatriated due to the travel restrictions imposed because of Covid-19. 

They are now seen as unsung heroes on the front line of the pandemic, overlooked and unappreciated despite playing a central role in ensuring that the wheels of global commerce still turn, and that critical goods and supplies are distributed around the world.

Unable to physically see their families for such a long period of time is unimaginable. While the emotional impact is immense, seafarers’ families also rely on their hard-earned wages to survive. It is a situation that has highlighted the shipping industry’s current outdated system for paying crew salaries, as well as suppliers, and the general management of cash onboard vessels.

Payment system in need of an upgrade

The shipping industry relies upon multiple urgent, cross-currency and cross-border microtransactions to ensure smooth and reliable trading. However, the current methods that vessels use for paying salaries to crews and invoices for ship chandlers, agents, and other suppliers require a significant amount of cash to be stored onboard. 

With circa 60,000 vessels in the commercial fleet, ship owners and managers need to carry billions of dollars in cash onboard just to manage day-to-day and month-to-month transactions. Not only does this present a real security risk and create administrative overheads, with the transaction and foreign exchange costs coming in at between 3%-5%, it’s also very expensive.  

In conjunction with this, the majority of crews are paid in the following way; cash distributed on board the vessel, in addition to a wire transfer back home to their families. However, wire transfers are also expensive and inefficient to manage, which often causes delays in payment to crews. 

On top of this, if a company pays a seafarer in dollars, which requires conversion to another currency at the receiving bank, they are again impacted by significant exchange rate costs. Every dollar matters to seafarers, particularly when they’re working away for long extended periods, and when their families urgently need it the most.

While the Covid-19 pandemic has caused unparalleled hardships, it has also forced and accelerated digitalisation and the development of digital solutions within the shipping industry; and an example of this is a move away from cash-to-master (CTM) payments.

A digital solution

At MarTrust we recently launched a new solution that combines our crew welfare solution with vessel expense requirements. It is a new e-wallet and card, a next-generation payment solution that enables companies to transfer funds to multiple accounts and execute payday and CTM transactions with complete control, transparency and security. This includes paying crew salaries, suppliers, agents and any other stakeholder involved in the day-to-day operation of a vessel.

As an integrated payment solution, it is founded upon modern e-wallet and pre-paid card technology and designed to optimise the entire payroll process for ship owners, ship managers, and manning agencies. It can be accessed via a web portal or mobile app anywhere and at any time and can be seamlessly integrated into existing systems.

From there, funds can be easily and securely transferred directly to crew to pay salaries, bonuses, overtime, and cash advances. It’s a much quicker process compared to the traditional routes and provides seafarers with complete control of their funds, including the ability to quickly transfer money to anyone they need to at any time – such as sending much-needed financial support back to their families. 

As a digital solution, it also reduces the need for seafarers to manage or store significant amounts of cash, providing increased security and peace of mind that their funds are safe. And by using the debit card, cash can be accessed at any Mastercard supported ATM or bank teller around the world, and it can be topped up in up to eight different currencies, making it a local solution in these countries, which substantially reduces fees and provides complete flexibility. 

As part of future development, the e-wallet will also include a new Salary on Demand service, which enables seafarers to track and use their income at any time and anywhere and align it with their expenses. Additionally, it also helps shipping companies optimise their cash flow, eliminate the administrative costs and hassle associated with maintaining salary advances, and save money on banking transfer fees and other charges associated with CTM payments to advance salaries to seafarers.

Amidst the global pandemic, seafarers have suffered more than most, while doing more than most to alleviate the impact on our daily lives.  While solving the issue of crew transfers is clearly a priority, we must look at every opportunity to improve their welfare and wellbeing while they are at sea.  Ensuring that their families are looked after and have access to funds to survive is a critical part of this, and embracing digital solutions is the key to delivering it.