More payment solutions for travelers mean more options – and more decisions – for travel managers
When it comes to the abundance and diversity of payments options, travel managers have a veritable bounty to choose from. While this can be a blessing – in that it offers a greater variety of payment tools for travelers other than just the traditional plastic card – it can also be a curse. The daunting challenge is to find the very best option (or options) and determine what role travel managers should play in deciding which travel purchasing tools are best suited to their programs.
“The corporate travel ecosystem continues to evolve based on advancements in technology and the changing workforce,” says Jennifer Petty, head of card and comprehensive payables, global transaction services for Bank of America Merrill Lynch. “We see that many companies maintain very rigid corporate travel policies, but the way employees travel and pay has rapidly evolved. Companies rely on data to help drive down expenses and maintain their corporate obligations. Business travelers want a more personalized and enjoyable journey without the complexities of how and where to buy.'
Virtual card technology “is a tool every administrator should have in their payment arsenal and it grows more popular every day,” Petty advises. It’s a technology that can be used by administrators to help them in achieving their program metrics by building process efficiencies, reducing risk and keeping travel expenses on budget, she says. In addition, virtual cards have allowed travel managers to gain control over spending and improve data reporting, she maintains.
“Payments made by virtual cards offer flexibility to the business traveler by having the travel expenses billed directly to the company,” Petty notes. “This is an effective way for companies to offer an alternative solution to those scenarios where plastic cards may not be possible, like temporary workers, new hires, special events, infrequent travelers or customer travel paid for by the company.”
Pay As You GoMobile wallets are another type of technology that is becoming more popular among clients. Most business travelers are already familiar with their usage from their personal lives, Petty says. “Credit cardholders can self-enroll by entering their existing corporate card information into the mobile wallet already offered on their phone, for example, Apple Pay, Samsung Pay or Google Pay,” she explains.
“One situation every road warrior can relate to is the struggle of trying to get your luggage out of your taxi while holding up traffic and simultaneously trying to pay your bill. This is when travelers quite often misplace their cards by leaving them in the card reader or on seat but don’t realize until much later that their card is long gone. By not having to find your wallet, pull out your card and wait for the chip transaction, you’re able to keep your card stored securely in your wallet and speed up your checkout process significantly. From the corporation’s perspective, a mobile wallet payment reduces fraud risk as the actual card number is not shared with the merchant. Instead, a tokenized number is created. This means that even if the transaction is intercepted, the fraudster does not gain access to the full account number.”
The value of mobile wallet technology in corporate travel programs is getting positive reviews from business travelers, according to Peggy Yankovich, senior vice president, corporate product and marketing for U.S. Bank Corporate Payment Systems. “We remain high on mobile wallet,” Yankovich says. “The capability is still in its infancy – in 2017, we were the first financial institution to offer mobile payment for Visa travel card transactions, and this year we added it for accounts on the MasterCard rails as well. Our clients are just starting to understand the functionality and where it is accepted, but the clients who use it love it.”
Research proves this point as well: In the spring U.S. Bank sponsored a survey conducted by the GBTA regarding mobile wallet use by business travelers. The research, which is expected to be published in June, found that about 32 percent of the respondents said mobile wallet is offered as an option by their card issuer, but only 18 percent said their organization was making it available. The reasons for that discrepancy range from companies being unclear on the benefits to a feeling that not enough vendors have mobile pay at the point of sale, Yankovich notes.
“So clearly we have some educating to do,” she says. “But what was interesting to us is that, among the respondents who have overcome the challenges and adopted mobile wallet, 65 percent report increased employee satisfaction, 47 percent report a reduction in lost or stolen cards, 41 percent find them to be more secure and 41 percent report better adherence to company travel policy. Granted, it’s one data point, and a small one at that, but it is encouraging.”
Other forms of contactless payment beyond mobile wallets may also start gaining in popularity among corporate travelers in the US, says Yankovich. These include charge cards, key fobs and other mobile devices that don’t need to be swiped or inserted. “Some of these are being rapidly adopted in Europe, Asia Pacific and even Canada,” she explains. “In the US, multinationals with sizable numbers of international travelers are likely to be the first to adopt these.”
Choose Wisely No matter what new payments solutions are out there for companies to choose from, it’s important to pick the one tool, or the combination of tools that address a company’s specific travel expense needs, says Gonca Latif-Schmitt, the managing director and global head of the commercial cards business for Citi.
“It is important that the travel buyers understand the technology available to them so they can include in their travel policy preferred methods of payment for specific spend types that will drive company’s strategy,” she says. “Understanding the underlying technology is not essential, but it is important to focus on the use case and choose the right solution for your organization.”
Ultimately, travel programs need to evaluate the proper combination of payment options for purchasing travel for their specific needs, says Rebecca Kilby, president and CEO of AirPlus International Inc.
“What we have seen is the combination of various payment types creating a client’s overall payment strategy,” Kilby says. “Until recently, it has been a central bill product with a corporate card. Now with single-use virtual cards coming on the scene, it is starting to become a three-pronged approach.”
However what’s more important than the nuts and bolts of payment tools is the way travelers use them, she says. “Ultimately it’s less about the technology and more about solving a customer’s needs. Technology is the assisting vehicle. What companies need is comprehensive travel program data and the clear understanding of costs associated with payment options. Technologies that provide them with quality data in a cost effective manner is the most important consideration.”
Whither Blockchain?If there’s perhaps one payments technology that has garnered the most media attention over the last couple of years, it’s blockchain. The suggested uses for blockchain technology, also referred to as distributed ledger, have ranged from payments processing and money management to storing and sharing digital IDs, real estate title transfers and even tracking and confirming the authenticity of jewels and fine art. But despite the hype, could blockchain have a role in managing travel expenses and payments? Opinions are mixed on that subject.
“As a payments organization we continue to explore all existing and potential payment methods that could benefit our customers,” according to U.S. Bank’s Yankovich. “Blockchain is in its infancy and its promising potential is still being explored across industries.”
U.S. Bank is one of the firms exploring that potential; it is part of the R3 Consortium, a blockchain platform company that counts several other financial institutions among its membership. Through R3, U.S. Bank has successfully piloted blockchain applications in syndicated commercial loans, commercial letters of credit and mortgage-backed securities.
“While those consumer oriented pilots have not been in the corporate travel space, it’s entirely possible that blockchain technology could one day play a role in streamlining operations and processes,” Yankovich says. “That said, I would note that my personal barometer for whether a technology is catching on is whether my kids know about it and are clamoring to use it. I must say that is not the case for blockchain. To the extent that the younger generation is a bellwether, this is worth taking into consideration.”
Blockchain could work well across the travel value chain, but that likely won’t happen until further down the road, said Citi’s Latif-Schmitt. “But in the near term, virtual payments will become the dominant way to pay – with mobile technologies enabling individuals to request virtual cards to make payments at the point of sale,” she says.
“With virtual cards seamlessy integrated into end-to-end solutions, organizations will enjoy increased data flows,” she notes. “That could mean that a car-service payment would have a tax-accredited statement attached, which could be conveniently submitted to the local tax authority for expense purposes.”
Given the amount of venture capital flowing into blockchain companies, it’s safe to assume that the concept will see more usage in financial services in some capacity going forward, even if that’s not the case now, says Kilby.
“At the present time, we do not see any specific solutions that solve a real problem for consumers of financial services nor is there a solution in the market that seems to be scalable due to the deep roots of the current financial systems,” she says. “Regarding security, it is more likely that ID management blockchain-based solutions could be offered in combination with the financial services to reduce fraud. However, given the incompatibility with legacy systems and lack of interoperability across blockchain based solutions, it might t
ake a while until we see benefits in scale. There is a lot of potential for more security, transparency, efficiency and value coming alongside blockchain-based solutions for financial services.”
Ultimately, any technology that is adopted by companies should be done with the ease of making payments for the corporate traveler the chief consideration, Kilby says.
“For the travel buyer, technologies that help them manage their program efficiently in less time – whether that is from a booking perspective or a post-trip reconciliation perspective,” is the most important aspect, she advises. “Again data is important so technology should provide comprehensive, quality data.”
However, for the business traveler it’s all about the experience, Kilby says. “Making payment invisible for them will greatly improve that. Once they return from their trip, making the expense report process as automated as possible is equally important. Invisibility of payment and auto-populating expense systems reduce the amount of time that a traveler needs to spend on expense reports which, as we know, no one likes to do.”