The world of payments has changed drastically over the last several years during the concurrent rise of fintech. Consumer payments today are almost unrecognizable compared to a decade ago; with payments made by apps or credentials stored in digital wallets becoming commonplace, and cash and even physical plastic cards being marginalized.

In the world of business travel, this payments revolution has been a bit slower to take hold; it’s typical in a B2B environment for the pace of innovation to lag behind the consumer world. But that is beginning to change as the rate of innovation in corporate travel payment systems is accelerating, with new technologies like virtual and mobile payments, as well as alternative solutions from suppliers outside the circle of traditional payment providers, becoming more popular.

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One such example is the increasing popularity of virtual cards for corporate travel, says Wendy Ward, senior vice president of marketing and communications at UATP. She points to the rise in the acceptance of virtual cards at hotels as evidence of this.

“Significant advancements have been made, with [the need for] fax communication down significantly and the reliance now upon secure email and APIs,” Ward notes. “Payment modernization, such as the automated workflow implemented by Grasp Technologies and Marriott with a TMC and corporate client, allow for wider hotel acceptance and readiness. Some work remains to get completely away from manual processes, but it is expected that fax reliance could be eliminated in the next few years.”

The ability for greater spending controls and more insightful analysis of spending and spending patterns is a primary driver for the increased use of innovative payments such as virtual cards for corporate travel.

“Duty of care – knowing when and where your employees are – requires extensive data, and by utilizing virtual cards, travel managers are able to make sure approved hotels and preferred airlines are being used, in addition to payment options such as UATP where Level III data reflects all itinerary level data for travel managers” says Ward.

“Knowing exactly what is spent, when, where and by whom, is driving the modernization of technology in payments. True end-to-end offerings are getting closer to reality,” she adds. “Of course, with the recent rise of AI and machine-learning, while we don’t know the implications yet, you can expect to see advancements in processes to ease travel friction.”

Overcoming Legacy Systems
Another major factor driving the increasing use of innovative digital payments for business travel is a desire on the part of corporates to get away from inefficient technology and processes, says Ajay Singh, vice president, digital payment and expense products at BCD Travel.

“For many businesses, payment and expense management is plagued by cumbersome forms of payment and fragmented, manual processes and silos that obscure spend visibility and control,” Singh explains. “As a TMC, it’s our goal to remove the pain points related to payment and expense management by offering simple, digital and transparent solutions to meet our customers’ needs.”

For example, Singh notes that BCD recently introduced virtual payment automation (VPA) which allows travelers to book hotels with a virtual card, making it simple for employees, contractors or any guest to travel. “VPA also makes the reconciliation process easier,” he says. “All charges on a virtual card account are automatically matched to bookings, saving finance, travel managers and travelers’ time and resources. VPA also offers strong control features to defend against payment fraud making it the ideal payment solution.”

According to a recent BCD Travel survey of 1,340 travelers, the biggest pain point among business travelers is creating expense reports. The top pain points for expense reporting were time to create a report (63 percent), collecting paper receipts (54 percent), collecting and expensing receipts in different formats (52 percent), keeping up with receipts after a trip (51 percent) and complex expense categories (50 percent).

Singh points to those results as a prime reason for the adoption of virtual payments. “Digitization and automation of payment processing through virtual payments, and AI-based reconciliation and data enrichment alleviates this pain for travelers,” he says.

Still, according to the BCD survey, virtual cards were used by only 1 percent of respondents, and nearly three-quarters said they were not familiar with virtual card technology, meaning there is still a long way to go when it comes to modernizing business travel payments. “Our goal in business travel is to continue providing digital solutions to make travel easier and more efficient for companies and their travelers, which is why we’ve invested in fintech solutions,” adds Singh.

AI & Super Apps
Artificial Intelligence, or AI, seems to be everywhere these days. There is likely not a person reading this right now that hasn’t tried – or at least heard of – ChatGPT. Meanwhile, AI-related stocks keep skyrocketing in value.

There is also a place for AI and machine learning in business travel as well. “Artificial intelligence has been shaking up every industry,” notes Tim Lebel, VP and head of spend products at SAP Concur. “This AI-focused innovation applies to the business travel payments landscape as providers look for ways to apply advanced technologies and improve the employee experience.”

Lebel adds that SAP Concur solutions have incorporated AI and machine learning “for quite some time” to streamline spend processes for businesses and employees. He cites ExpenseIt, a mobile receipt scanning service which “leverages a variety of techniques including optical character recognition (OCR), machine learning, and individual user history to read and understand receipt images and automatically populate expense line items for end users – improving accuracy, reducing time on task, and reducing returned reports,” Lebel explains.

“One of the greatest opportunities for advanced technologies in spend management is through audit capabilities,” he continues. “Verify is an AI-powered audit service within Concur Expense that automatically checks 100 percent of expense reports to identify potential misuse while getting employees paid faster.”

BCD also has a suite of solutions, called BCD Pay, that was developed using artificial intelligence, machine learning and open APIs to simplify, digitize and automate corporate travel payment, reconciliation and invoice management for clients, says Singh. “The result will be a frictionless, digital payment experience from trip booking and payment through reconciliation,” he says. “With the tremendous evolution and growth in financial technology, payment, expense management and data solutions, the journey to innovate the T&E spend management experience is just beginning.”

For example, Singh paints a picture of a time in the future where a virtual trip card will be issued securely to a traveler prior to a trip, with built in policy controls, and spend limits based on the trip parameters, company policy, traveler profile and other factors. “This trip card will be automatically provisioned to a mobile payment wallet such as Apple Pay or Google Pay and used for the trip, with spend data automatically matched, reconciled and submitted into expense and financial systems,” says Singh.

AI will also impact business travel by its use in sophisticated fraud detection and prevention capabilities, says Dan Skaggs a senior vice president at U.S. Bank, adding that these capabilities “will only continue to get smarter.”

AI can further play a role by offering personalized recommendations during the search and purchase experience based on individual preferences, blended with policy and benchmarks. “During the purchase experience, AI-powered solutions can also provide education and guidance to travelers in a conversational manner,” Skaggs adds. “It can also unlock policy change recommendations for travel managers.”

Despite these and other potential benefits, expectations for the impact of AI on business travel “should be tempered in terms of how quickly things will pick up across all parts of the value chain,” Skaggs cautions. “Regulation, data privacy concerns and the convoluted nature of the entire travel system means that early impact will likely be limited to narrow, targeted solutions – such as AI-powered fraud detection in payments – rather than one system-wide AI application.”

The rise of so-called “super apps” are also influencing corporate travel payments. According to Gartner, a super app is an application that provides end users (customers, partners or employees) with a set of core features plus access to independently created mini apps. “Super apps can consolidate and replace multiple apps for customer or employee use and support a composable business ecosystem,” the Gartner report notes.

Though the concept of the super app has not totally taken hold in the US, it is very popular around the world – for example, in China where Alipay and Wechat dominate the landscape and Mercado Libre in Latin America. The general rise of flexible payments options, such as super apps, buy now, pay later (BNPL) and more will only create increasing demand from business travelers to have such options in their work life as well as their consumer life.

“Consumer payment options like BNPL, WeChatPay, Alipay, PayPal and many others have all advanced greatly and are the norm now,” says UATP’s Ward. “The annual FIS-Worldpay Global Payments Report 2023 study finds that BNPL amounted to 5 percent of global e-commerce transaction value in 2021 and is expected to increase to 6 percent by 2025. Payment options, flexibility and more offerings in the consumer payment world have forced the digitization and modernization of processes in the business travel space. Fintech companies’ improvements in processes and automated solutions remove pain points for travel managers, travelers and corporates in travel and expense management, invoicing, and reconciliation. Integrating and reconciling data from backend processes through fintech solutions provides efficiency and accounts for better decision making to corporates.”

Crypto and Blockchain
Like AI, it seems like you can’t go to any news site these days without reading or hearing about cryptocurrency and blockchain. Blockchain could “one day make a real difference to corporate payments, expense and settlement,” says Singh, of BCD Travel.

Specifically, he cites the ability of blockchain to act as a distributed ledger as offering numerous benefits. Firstly, its ability to record transactions of all types (not just payments) in a tamper-proof and unchangeable way. Further, Singh notes that contract terms such as preferred rates, rebates and commissions can be stored as “smart contracts” on the blockchain. He also adds that on the blockchain, records can be shared with every party involved.

“These benefits can be applied to payment, expense and settlements, especially if the blockchain is private – accessible only to a limited, relevant group of approved users,” Singh says.

Cryptocurrencies, he adds, “sound very appealing: No banks mean no fees when making a payment, especially for cross-border payments where the FX and settlement fees are high. In practice, however, using cryptocurrency publicly has had its problems, and it has struggled to gain widespread acceptance. Cryptocurrencies have so far proved highly volatile. Extreme fluctuations in value make many blockchain-based ideas unworkable for payment at present.”