Virtual payment cards of all types continue to be on the rise, says Jennifer Petty, Bank of America’s global card and comprehensive payables executive, and indeed over the past 12 months Bank of America’s virtual travel card adoption has more than doubled.
“The biggest draws for our clients are enriched travel data, 100 percent match rates and customization of data fields – all of which are challenges with traditional payments,” Petty notes. “Our clients have also found value in issuing virtual travel cards for other expenditures such as transportation, office supplies, meetings and events, utilities and more.”
Petty further adds that Bank of America is making global consistency “a major area of focus” for corporate cardholders, such as offering the ability to use tokenization to be “more responsive to the regional nuances of other payment systems.”
According to new research from the Association of Corporate Travel Executives, developed in collaboration with Mastercard and the NAPCP (a global professional association serving the commercial card and payments industry), the use of corporate cards for business travel continues to expand globally.
The main benefits cited are security, efficiency and convenience that both employees and companies derive from their usage. Travel managers also report increased utilization of virtual cards and single use accounts to help manage spend for infrequent travelers, helping manage a bigger piece of the total corporate travel budget.
The global study, titled Evolving Payments in Corporate Travel, found when it comes to paying for corporate travel expenses, a majority of organizations (67 percent) continue to use corporate credit cards, with 60 percent saying they are very or extremely satisfied with them. Sixty-three percent say it is their preferred payment method. And while just 15 percent of organizations surveyed use virtual cards or single use accounts for business travel, another 28 percent plan to adopt them in the future.
Another research study conducted by Airplus International in conjunction with the GBTA this year, found virtual card usage increased from 11 percent in 2018 to 20 percent in 2019.
“There are a number of benefits to virtual payments, with the primary one being security,” says Diane Laschet, president and CEO of AirPlus. “With the common occurrence of data breaches, virtual cards are really the most secure against a data breach because the number expires once it is used. So if a travel supplier (like a hotel) has a data breach, any virtual cards exposed in that breach for previous stays are not at risk as they are no longer valid.
Also, the detailed transaction data companies can receive with virtual payment is unrivaled, adds Laschet. “If you want to make the most informed decisions for your business, you will want this level of detail,” she says. “The central bill format is what drives this ability to have such detail around your travel transactions.”
Invading Personal Space
While a major benefit of new forms of payments such as virtual cards is the ability provide additional controls, the biggest increase in control comes from the traveler using the company’s preferred product, versus using a personally preferred product (such as one that is loyalty or convenience-driven), says Bradley Matthews, SVP, head of middle market product and marketing for U.S. Bank.
Indeed, the ACTE study also found the use of personal cards offers little or no transparency into spending, inhibits travel managers’ ability to perform their duty of care responsibilities, prevents organizations from imposing reasonable restrictions on cards’ use, and can make it extremely difficult to manage reimbursement and expense reconciliation.
The study also showed there are unmet needs for some travelers and travel managers, particularly in areas of controlling or limiting card usage. Managing the spend of those who do not have company-issued cards, like consultants, interview candidates or infrequent travelers, rose to the top as well.
“The infrequent traveler space is a great example where innovation can directly impact the movement of spend from personal to corporate cards,” Matthews says. “For example, U.S. Bank’s Expense Wizard solves this challenge by allowing the company to push a virtual corporate card directly to the infrequent traveler’s mobile wallet. Doing so provides the company with greater spend visibility and control, while making the traveler’s experience less onerous. There is no more spending their own money and waiting on the company for reimbursement. This can also be a significant differentiator for the company in that it positions the company as an innovator and attractive to potential new recruits, and existing employees.”
Matthews says innovative new technology can also help with consistency when it comes to global payments. “With a few exceptions, networks – such as Visa, Mastercard, American Express – dominate the global spend abilities and it is technology that is built on those networks that can improve the business travel experience,” he explains.
“The non-network-based solutions – while spreading – are still highly regionalized. For example they may be viewed as niche or local or targeting only a particular point of friction. However, they can offer significant opportunities if they can catch up to the global level of acceptance and ubiquity that is expected from the global traveler,” Matthews says.
Adopting new technology to improve payment options will have a significant impact on the travel industry, says Wendy Ward, senior vice president, marketing and communications at UATP. This may be especially true in cases where international travelers abandon finalizing the booking because they aren’t comfortable with any of the payment options presented to them. She points to a recent Booking.com survey revealed that one out of five travelers don’t complete a reservation if their preferred method of payment isn’t available.
Ward believes new technology and payment solutions will give travel managers more control over their programs. “We work with alternative forms of payments (also known as AFPs) to make payments more secure and intuitive,” she says.
“AFPs provide travelers with more options to choose how they want to pay for travel expenses, which is especially important in emerging markets where access to localized payments is crucial. At this moment, AFPs are mainly used in leisure travel,” Ward says. “However, the business community follows leisure so things like local payment options will become more important to travel managers.”
TMCs in the Mix
In a relatively new trend, travel management companies are also becoming more involved with corporate cards and payments. In October, UATP entered into a partnership with TMC provider BCD Travel, in which BCD became the first travel management company to issue UATP accounts. BCD will launch the payment program internally with a test group before making it available to all clients as early as first quarter 2020.
Under the new UATP program, BCD's clients will instruct the TMC through traveler profiles to use their UATP account when booking travel with relevant merchants. Similar to UATP's airline Issuers, BCD will help manage their clients' UATP program and provide customer service. The program is currently available only to subscribers in the US.
“Involving TMCs in the payment process simplifies the settlement procedure for TMCs and their corporate customers and allows for easier reconciliation,” says Ward. “In this space, UATP has added travel management companies [such as the BCD Travel partnership] to our issuing program. With TMCs as the issuer, TMCs can create a brand-new revenue stream and leverage UATP as another acquisition tool and compliment ongoing retention efforts with existing clients.”
The recent integration of virtual cards directly into travel agencies – mostly as an improved ghost card – is a move U.S. Bank’s Matthews says will further bring them into the T&E space. “True virtual cards with new unique 16-digit account numbers, expiration dates, CVV codes, speed and accuracy, substantially reduce payment account misuse and fraud compared to traditional plastic cards or ghost cards with static account numbers and credentials.”
Matthews agrees TMC integration, especially as a replacement to the ghost card, significantly improves the reconciliation. “Even with enhanced data, all ghost card transactions posting to a single account makes reconciliation challenging, versus having individual transactions tied to individual users.”
However, notes Airplus’ Laschet, TMC involvement may or may not settlement easier. Ultimately it depends on the payment product that is being used, how it is set up and what level of data is available on the transactions.
“Traditionally, TMC’s are not issuers of credit so they haven’t built up the support for functions like anti-money laundering (AML) and know-your-customer (KYC) checks that all other issuers have in place. There are also state and national regulatory licenses that might be needed to issue credit through a payment card,” Laschet cautions.
“While all this can be done, it is time consuming and it requires specific systems to manage. TMC’s will also be carrying a much larger financial risk on their balance sheets as an issuer. We’ve always be incredibly supportive of all our TMC partners and will continue to do so as we advance our systems and products to meet the needs of business travelers all over the world.”
In general, Bank of America’s Petty says the whole reconciliation process, “with or without travel management companies, becomes much more efficient and secure” with the increasing use of virtual travel cards.
“Beyond the expected use of employee travel, virtual cards solve the problem of how to manage travel for non-cardholders, such as job candidates, consultants or infrequent travelers,” she says “Where previously these individuals had to use their own card and seek reimbursement, our clients can now issue them a virtual travel card which includes all the spend controls of a company card. Not only does this remove the out-of-pocket expense burden from the traveler, it gives the travel manager the ability to set parameters on how, when and where the virtual card can be used.”
Petty points to several innovations Bank of America has made in virtual card programs such as mobile app functionality which lets business travelers make purchases just like they do in their personal lives, helping reduce friction.
“Furthermore, we anticipate that in the coming months, virtual travel card will move from the mobile app to mobile wallets,” Petty says. “This will allow travelers to use virtual cards for meals, entertainment and other spend, while allowing the travel manager to maintain control over the program and obtain their custom data elements for reporting.”
