REVOLUTION IN PAYMENT TECHNOLOGY

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1 REVOLUTION IN PAYMENT TECHNOLOGY VIRTUAL CARDS With travelers rising expectations, and a variety of different forces working to drive up the costs and complexities of running an efficient managed travel program, it comes as no surprise that travel managers are under a great deal of pressure to achieve program goals while still delivering a positive experience for travelers. As the role of the travel manager continues to evolve to meet these challenging objectives, technology stands to play a major part. REVOLUTION IN PAYMENT TECHNOLOGY Virtual cards are a revolution in payment technology and are helping to reduce the cost and complexity associated with a corporate payment program. They are as dramatic an improvement in the way people pay each other as the introduction of checks in the 17th century or plastic credit cards in the 20th century 1. Virtual cards function in the same manner as traditional credit cards, but with additional capabilities for improving compliance, control, security, and automating the reconciliation process. They have a unique electronically obtained number (with expiration date and CCV) and are issued for a specific travel event. Once a virtual card is issued, payment restrictions ensure that the number can only be used for a specified amount and within a specified date range. After the number has been used, it is no longer available to be charged and the transaction and booking data is automatically reconciled. 1

2 VIRTUAL CARD PROCESS IS THE SAME AS PHYSICAL CREDIT CARDS Virtual cards are becoming a standard payment method within the travel industry, and looking at the numbers it s happening faster than you may think. According to a survey released by the GBTA Foundation in June , travel buyers use of virtual cards rose 7 percentage points year over year to 20 percent. Of those travel buyers surveyed who were non-users, 39 percent said they were familiar or very familiar with this type of account, up from only 23 percent in When asked in the Travel Manager 2020 study conducted by the GBTA Foundation and sponsored by Sabre, two thirds of travel managers expect virtual forms of payment to become a higher priority going forward, with 77% of those travel managers that report into Finance believing that payment technologies will be especially important in the future 3. SO WHAT ARE THE REASONS DRIVING THE SHIFT TO VIRTUAL CARDS? Save time with automated reconciliation Reconciling expense reports and other payment data can be very time-consuming for travel managers. They report spending an average of 40 hours of internal resource time each month on this tedious process 4. Virtual cards have characteristics that allow the reconciliation process to be more automated than physical forms of payments like corporate cards, which can eliminate the manual effort required to match transaction and booking data. With virtual cards, a unique number is generated at point of sale which means that the booking and payment are inherently reconciled as soon as payment is made. As a result administration costs are cut, the time it takes to complete the reconciliation process is reduced, more timely payments can be made to preferred suppliers and it is easier to identify travelers that are not complying with corporate travel policy. Many corporations take the reconciliation reports and import the information into accounting or other offline systems enabling data to flow seamlessly through existing processes. 2

3 Make compliance easy According to the annual buyer survey commissioned by the Business Travel Show 6, European business travel buyers listed Controlling Costs and Managing Spend and Compliance and Enforcing Policy Adherence within their top 3 concerns in A virtual card is deployed during the reservation process and sends payment instructions and restrictions to the travel supplier. This ensures preferred suppliers are used and components of the travel policy are enforced fairly throughout the company. Additionally, a merchant category is placed on each card, limiting its use to a specific category of travel, such as hotel or airline. Say bye-bye to risky travel In a digital age where data breaches can compromise the financial lives of customers, security is a top of mind concern. Improve security by replacing plastic cards with virtual cards that have custom controls designed to optimize traveler security. By eliminating plastic cards and issuing virtual cards with credit limits, merchant category controls and date restrictions you can rest assured that your payment is secure. Fraudulent and non-compliant spending costs organizations hundreds of thousands of dollars each year 5. Using virtual cards instantly reduces fraud exposure by applying simple spend controls. A plastic credit card is at risk of being lost or stolen or, if your employee still has their card, the number can be recorded and misused by other parties. With virtual cards fraud is almost impossible because each number is unique, assigned to a specific travel event, limited to approved locations, and only for the amount pre-approved. BUT THERE IS EVEN MORE VALUE TO CORPORATIONS BY USING VIRTUAL CARDS: Manage all travelers There are scenarios where corporate cards are not provided to everyone who travels for a corporation; examples include contractors, temporary staff and infrequent travelers. There may also be situations where payment for non-employee travel is required, for example client meetings and recruitment. Sabre recently presented a GBTA webinar titled, From Plastic to Virtually Painless, where the changing payment landscape that involves virtual cards among travel managers was discussed. During this webinar, 37% of viewers responded that the biggest payment challenge they faced today was managing travelers without a credit card. 8 Virtual cards provide an efficient way to pay for all of these travelers without complex invoicing procedures, or undue exposure to fraud. Gain a universal payment solution Virtual cards are accepted in any country where plastic cards are accepted, by millions of service providers and suppliers across a wide range of currencies 1. If a supplier is already accepting credit card payments, there are no new processes for virtual cards. Suppliers will receive faster receipt of payments and the impacts on their cash flow can be significant. Additionally virtual card payments are less expensive than checks and ACH transactions. 9 To maximize the benefits of using virtual cards with your suppliers, once you are up and running, share your experiences and help boost virtual card awareness. 3

4 Improve expense management Travel spend is expensed at the point of sale, eliminating employee expense reporting post travel and improving the traveler s experience. 7 Virtual cards are only inserted into the booking process once all of the data mandated by your company is present, ensuring compliance and improved reporting. WHAT S THE DIFFERENCE BETWEEN CREDIT AND PREFUNDED VIRTUAL CARDS? When using virtual card technology you can choose to open either a credit or prefunded account depending on your business needs and financial circumstances. With a credit account you can take advantage of the working capital benefits by using the statement period and payment terms. With a prefunded account you transfer funds in advance of the transaction taking place so credit checks are not required. THE FUTURE IS TODAY As you have seen outlined in this article there are many compelling reasons attributed to using virtual card technology. As a result virtual cards are becoming the new standard in corporate payments and, as stated in a recent interview between Phocuswright and MasterCard, will eventually remove the need to carry cards in your wallet as they are much smarter way of managing payments. 7 Contact us to learn more about the Sabre Virtual Payment solution and start issuing virtual cards today. 4

5 1. Conferma Travel Manager Guide White Paper 2. GBTA Buyer and Supplier Outlook on Virtual Payment Solutions 3. Travel Manager 2020 Foundational Shifts in the Role of the Travel Manager, GBTA Foundation 4. GBTA Buyer and Supplier Outlook on Virtual Payment Solutions 5. The 3 Biggest Problems in Corporate Spending Programs Presented by Oversight 6. Annual buyer survey commissioned by the Business Travel Show 7. Phocuswright and MasterCard Virtual Cards: Ready for Take-off? Episode 4 8. GBTA From Plastic to Virtually Painless Webinar 9. WEX Corporate Payment Insights Promoting Virtual Cards Among Your Suppliers 6