Virtual Payment Offers Several Benefits for a Corporate Travel Program
Travel programs and business travelers tend to pay for corporate travel in one of two ways: ghost cards or physical (plastic) corporate credit cards. Ghost cards tend to be reserved for air transactions, while corporate cards are generally used for on-trip spend, including hotel accommodations and other expenses. Both payment methods offer benefits to companies, but they also bring challenges. These include providing trip payment for infrequent travelers, fraudulent use and, in the case of corporate cards, inconsistent reporting due to time-consuming manual data matching processes.
Across the globe, over $22 billion dollars have been lost from global fraud, and 130 million hotel guest booking profiles are for sale.* However, the landscape of corporate payment is slowly changing. In 2016, fewer than 1% of respondents said their company was using a virtual card as a method of payment. By 2017, this figure had increased to 11%.*
Companies also face many obstacles when tightening a travel program. Travelers may have cemented habits like booking outside the TMC, using personal cards and putting rewards programs above company policy. Influencing this behavior is tricky to navigate and travel managers are often left with few options outside of pushing for a mandated travel policy. Centralized Payment and Virtual Cards are an excellent way to create a “soft mandate” and reign-in these expensive actions. Here are a few things to keep in mind when you are deciding to implement a new centralized payment:
Is it easy to use?
Often, travelers are making decisions based on convenience. It is easier to book in the way they are comfortable rather than worry about compliance or whether vendor targets are being met. By using an automatically generated Virtual Card as the primary payment option, travelers must remain within the bounds of the TMC. Travel managers can communicate the time saved in submitting expenses as well if the TMC provides an API integration. Travelers will naturally change their booking behaviors to avoid the additional work that this solution eliminates.
Will it mitigate risk for fraud?
Like any plastic card, corporate cards can be stolen or copied, exposing the company to financial losses. This also puts the traveler’s digital identity information at risk. With a virtual card, the risk of a traveler’s information being stolen is reduced simply by removing the need for a physical card. Furthermore, internal fraud is also lessened. With a virtual card, the available funds are dependent on the transaction and cannot be used later to, for example, upgrade a seat at the airline or change to a larger room.
Is it widely accepted?
This is an imperative point to consider when it comes to hotels. Different hotel properties and chains require different pieces of information to confirm a booking using Virtual Cards. When your TMC sends a detailed authorization fax, the friction and frustration during check-in greatly decreases for travelers. Additionally, there are available Virtual Cards that will only work for hotel and not air. Be sure that the solution you choose can be applied to as many transactions as possible to reap the full benefit.
Will it improve your travel program?
Traveler experience can make or break a program. One of the largest areas of contention for travel managers is how to handle guest travel. Virtual Cards and Centralized Payment can vastly improve this process by removing the need for issuing extra corporate cards for contractors. Travelers should also be able to use the product either online or offline without any change in process or issues. Another issue for travel managers and finance departments is the amount of time spent reconciling credit card charges against what was booked and expensed. An integrated Virtual Card solution can reduce or even eliminate the need to spend hours comparing charges. Be sure that the solution you are choosing offers comprehensive reporting
How will the product affect costs and compliance?
Many Central Payment and Virtual Card programs include a rebate as incentive. However, for some, this rebate may only include the travel spend, or there are additional transaction fees. Carefully compare these rebate choices, especially when there are some that are so aggressive, they may significantly offset the cost of your managed travel program. Limiting the chance for fraud and added ancillary fees will also reduce the overall travel spend. By implementing Virtual Cards that are generated for the specific amount of an air or hotel booking, the chance of a traveler upgrading out of policy or charging anything unapproved back to the card is removed.
*1AirPlus 2017 International Travel.
*2Nilson Report, publication covering global payment systems in 2016.
*3August 2018 news.