Home Message company Stuart Ostrow, Chairman of ShipMoney

Stuart Ostrow, Chairman of ShipMoney

9
0

Posted on March 16, 2022 at 2:21 PM by

The Maritime Executive







Managing crew pay has always been a complex part of running a ship, usually involving large-scale cash payment. This adds costs, logistical difficulties and administrative overhead for the operator, and many are now turning to electronic payment systems to reduce this burden. Amid financial disruption for thousands of Ukrainian and Russian seafarers due to the crisis in Ukraine, instant cross-border electronic payment has become more timely than ever. The Maritime Executive recently sat down with Stuart Ostrow, chairman of digital payments company Shipmoney, to hear his thoughts on this developing area.


Many cruise lines and commercial shipping lines use ShipMoney to manage crew pay – why did they choose your service?


We started this industry many years ago and have extensive institutional knowledge and experience, as well as our state-of-the-art shipping account management and payment processing system, which we own and operate entirely in-house. Since we are vertically integrated as both program manager and payment processor, which is unique among our competitors, we are in a much better position to develop very specific solutions to meet the needs of each of our clients. This is especially the case in the commercial market as the requirements of a shipowner in Germany can be very different from those of a ship management company in Cyprus.


Many of our solutions are confidential, but a good example of our technical capabilities for integrating our platform with a customer’s crew system is data synchronization. When a crew member is on board, the ability to update an email address and phone number is disabled in our app, requiring the crew member to update this information in the customer’s Onboard Crew Member application, which in turn sends the update to our system. When the crew member is not on board, the ability to change their email address and phone number is re-enabled and this updated data is sent back to the customer’s crew system, ensuring that the sets of Demographics are synchronized.


The client also wanted to provide crew members with a way to withdraw cash on their ships, but did not want to install ATMs. We have developed an integrated multi-currency ATM. A crew member logs into our app and requests funds from their ShipMoney account. The request for funds is placed in a queue for a scheduled duration when the crew chief is available to respond to the request. The crew can only request funds from the ship they are working on and this service is disabled once the crew leaves the ship. For the client’s larger ships, we have developed an upgrade that uses specialized ticket machines which are a much more modern and sophisticated version of ticket machines, based on very old technology.


It is a clever and specific solution that has been developed specifically to meet their needs. We can do this because we have our own processing platform. Everything a customer or crew member touches is developed and owned in-house.


As we grow and expand in the commercial space, we’ve learned that every business’s needs are unique and different. For example, Scorpio is one of our clients, and they had very complex reporting needs because they are actually two publicly traded companies, Scorpio Tankers and Scorpio Bulkers (now Eneti). We have developed specialist solutions to meet their treasury and compliance needs for segregation of funds and reporting.


Which sectors use your service the most?


Well, the cruise industry is where we started with digital payments. Not so long ago, the industry paid virtually all of its crew members worldwide in cash. It’s actually quite remarkable – a Brinks truck would back into port with a million dollars and two security guys would walk to the ship. They would hand it over to the purser and a few people would spend the whole night breaking the million dollars into envelopes. And the crew members would be lining up the next day to collect their pay. And that’s how the whole industry paid its crew. Today, the entire cruise industry has moved to some form of digital payment system,


The commercial shipping industry still pays crew members with a combination of cash and bank transfers. For example, a crew member can take $500 in cash on the ship and $2,000 will be sent to their family via wire transfer.


This is costly and administratively inefficient, as the owner or manager of the vessel must ensure the supply of the vessel with cash and must pay wire transfers for each crew member. We saw an opportunity to impact the commercial space similar to how we changed the cruise industry in terms of managing crew compensation.


With our solution, crew members can be paid instantly, in real time. And as they please, they can send money home. If they want to send it to a bank account on payday, they can create a bank payee and schedule it. If they want to send money via Western Union or MoneyGram, they can also schedule them.


Ship operators are finding that they can reduce the amount of cash they keep on board by using a digital alternative. We find that most of the expenses seafarers have in transit these days – even taxis – can be made as a cashless transaction in most parts of the world.


How much could the shipowner save by changing?


Savings can be calculated in several ways. Owners/managers have dramatically reduced costs, resulting in ROI savings ranging from thousands to hundreds of thousands per year. Not to mention the cost savings for the crew that can reach hundreds of dollars per month.


For example, the cost of delivering cash to master in most ports is about three percent of the total amount, and in some parts of the world it is much more expensive. In parts of Africa we have heard of costs north of 10%.


Wire transfers can also be very expensive. They can cost $12, $15, $18 and we’ve heard prices as high as $25. Then there are also the administrative costs of managing recipients and executing these payments. What happens if a crew member gets divorced and doesn’t want the money to go to that bank, or if they change banks? The sailor can manage all of this himself, on his own terms, if the shipowner uses ShipMoney.


Has the pandemic changed the way shipowners think about crew payments?


We are in a very traditional industry and some companies are more forward thinking than others in terms of adapting to change, but the pandemic has forced us all to change. We have had a very good track record in terms of onboarding new customers during this period. I think it’s a permanent, structural shift from money to master, and that’s basically what we’re trying to enable.


Are you working on new features that you could share with our readers?


Yes, we are also working on an exclusive payday advance solution that will reduce capital requirements for customers and provide a valuable benefit to the crew. The shipping industry pays the crew on a monthly basis, which can create difficulties if there are financial needs in the middle of the month. For example, let’s say it’s the 10th of the month and the crew member has a personal emergency and needs funds. The crew member can log into their account to request a cash advance. The funds will be credited instantly to their ShipMoney account.


Given the current crisis in Ukraine, how are Ukrainian and Russian sailors paid and managing their money?


We are well aware that Ukrainian and Russian seafarers are very concerned about access to their salaries, with many of them asking their employers not to send money to their bank accounts.


We use our eWallet solution (Visa Virtual cards) which will allow crew members to receive and manage their salaries in secure US dollar accounts accessible via a mobile application after a simple registration process.


ShipMoney e-wallets will facilitate:


  • Bank transfers
  • Send money with Western Union and MoneyGram
  • Mobile phone recharges
  • Transfer money to other ShipMoney cards
  • Make purchases online


Our client management team is highly experienced in helping clients get these systems in place quickly. We have a very large ship management company with complex reporting needs and dozens of client administrators in multiple offices accessing our card management system that we deployed our e-wallet solution in less than 3 weeks.


We hope this will help our cardholders during these extremely worrying and difficult times. Our hearts go out to all affected crew members and their families.