There is no automatizable causal relationship between the transaction and the movement of a shipment under existing payment methods.

Under a B2B credit card method, freight forwarders and customs brokers would set up a dual purchase card/merchant card account. An account with a predetermined credit limit and maximum transaction amounts would be established and the account number given to specified suppliers. Only specified suppliers with merchant accounts would be able to execute transactions with the purchase card account holder. This way, debits from unauthorized merchants could be prevented, as well as transactions of excessive sums from any specific merchant. Transactions would be on-line in real time with a mandatory data field showing invoice or reference number. Thus, the controller at the customer can reconcile debits with suppliers’ invoices as transactions occur as well as transfer funds from current account to credit card account in order to avoid interest charges or declined debits.

Similarly, the freight forwarder, having paid the carrier, can charge his customer in turn in back-to-back fashion. Such a community of purchase card/merchant account holders will effectively eliminate credit risk, bad cheques and free freight financing.

Other Advantages

Besides the immediate advantages of an electronic freight payment facilitation outlined above, there are other tangible benefits. Branch offices will no longer need to have accountants, signing officers, freight cashiers or even local bank accounts. All payments can be centrally controlled at head office in Canada or, for that matter, virtually anywhere the world, and transaction details would be confidential as no cheques are issued or deposited. Cash and accounts receivable management will be a matter of managing one’s purchase card and merchant card transactions. Risk of bad credit, bad cheques and fraud will be eliminated under this system. The process could be automated by programming it into to a company’s legacy invoicing/accounting system. Cash flow will vastly improve as overhead is reduced.

Another major advantage to a VISA/MasterCard settlement system is that the application would be universal and worldwide. Foreign exchange fluctuations and overseas credits are a risk in the international transportation industry. An agent overseas could be holding substantial sums of freight collected on behalf of a freight forwarder or a carrier for numerous shipments over time. As happened during the Asian financial crisis in the late ‘90s such overseas account balances can suddenly lose value depending on the exchange rate at the time of remittance. Under the proposed model, transactions would take place shipment by shipment on real time with overseas agents, shippers and consignees so that there would be no account balances. Furthermore, by utilizing the system of authorization codes, VISA/MasterCard guarantees payment when the transaction ultimately takes place.

The concept can also be applied to the international purchase of goods itself. It can easily replace the antiquated paper intensive methods of the Commercial