Innovations in financial tech are opening up new ways to pay for business travel.
ByDavid Jonas, Jay Campbell Business Travel Executive
There's a lot happening in corporate travel payment. New technologies like virtual and mobile payments, blockchain and other FinTech innovation are changing expectations among corporate program managers and employees. Thanks to a bevy of new partnerships, alternatives are coming from suppliers not thought of as payment players, including travel management companies.
These won't be on the level of the American Express closed-loop network for clients using travel and card services. But they will offer new options especially for small or midmarket companies.
In October, for example, BCD Travel announced it would become UATP’s first TMC issuer of central lodge card accounts. They will be available to US clients this year. The TMC will generate income from card fees applied to airline transactions. In return it takes on card provisioning, credit allocation, customer support and credit risk.
Bringing sources of card and travel data under one roof helps with reporting and expense management. A unified travel, payment and expense process makes for a more convenient traveler experience.
“In many instances, you do provide a stronger value proposition,” according to CWT vice president of payments Dave Holmes. “Tech is a better enabler of that whole issue now. Virtual cards are capturing cost center info, aligning into mobile technology in the hands of a traveler, and all that flows back to things we control as a TMC.”
CWT expects to make announcements about payment partnerships this year. New payment solutions likely would appeal more to SMEs, especially if rebates or other incentives like points or cash back are more generous than what they earn on their own. Bigger organizations tend to have banking relationships managed by finance or treasury departments, and those agreements often wrap in corporate cards.
For both the small and large markets, the benefits of single-use virtual account numbers are well-known: Fraud reduction, precise spending controls, auto-populated expense reports, easier reconciliation and quicker reimbursement. They've become a popular payment option for managing recruits and other non-employees, infrequent travelers, employees without sufficient credit and remote workers in energy, marine and construction.
Some very big accounts have made virtual payment a required part of payment programs. That includes Bristol-Myers Squibb (which selected Citi for a 32-country implementation), California's state travel program and, the biggest travel account of all, the US federal government through the GSA SmartPay program.
Adoption challenges remain, especially at hotel check-in desks where virtual cards aren’t always accepted or recognized by staff as the form of payment. Some hotels now use encrypted e-mails to handle payment authorization rather than faxes. Sabre has been testing a virtual payment indicator for booking info in global distribution system records. A few industry associations are working on a payment “channel” established alongside booking channels.
Hotel specialist HRS last year acquired mobile tech firm Conichi, which transmits traveler details – including payment information – to hundreds of hotel properties. HRS itself offers virtual payment options to corporate clients, including a centralized, virtual Business Travel Account setup.
Virtual card numbers often are added to mobile wallets. According to U.S. Bank's 2019 data, 62 percent of merchants accepted mobile payment. “In the United States, we are starting to hit critical mass in terms of availability at the point of sale of mobile payment capabilities,” said CWT's Holmes during a February podcast produced by the TMC. “In the coming years we will see a tipping point in terms of mobile payment acceptance.”
Whether it’s virtual cards, mobile capabilities or both, some global travel managers are frustrated by inconsistencies in what’s available from one market to the next. They want processes to work wherever they send their travelers, not only for better experiences on the road but also for data consolidation. Local employees around the globe want to use the same payment services they use in their personal lives, like AliPay and WeChat in China. While some virtual payment kinks have been worked out in Europe and the United States, other regions lag behind.
“If you go to one of the big card providers, they have [lodge cards] in 50 markets, corporate cards maybe in 60,” said BCD Travel commercial payment solutions vice president Mario Kriebel, speaking at last summer's GBTA convention. “And how many for virtual cards? Fifteen markets. Whoops. This is across the board; no provider can issue all the cards you need.”
It's not just big companies that pursue global payment solutions. Forty-one percent of 152 surveyed companies that spent less than $30 million on travel annually said they wanted to manage payment providers globally by 2022. Currently, 30 percent do, with nearly half managing locally.
GlobalStar Travel Management and the Nina & Pinta consultancy, which conducted the November poll, noted that lodge cards, traditional corporate cards and virtual cards each have advantages. “The important point is to choose one (or a combination), instead of staying with old-fashioned processes like invoices, vouchers, cash advances and bill-backs,” they wrote. “Those older options are all admin-heavy, and both data quantity and quality are inferior.”
In a move that should help virtual payment adoption, intermediaries Corporate Spending Innovations and Conferma Pay in February announced a partnership. Clients can use CSI's virtual payment product “almost anywhere” thanks to Conferma's network of 700 travel management companies, major booking tools and GDSs, according to the companies. They said customers wanted a single virtual payment partner.
A virtual payment toolkit published last year by GBTA’s payment solutions committee offered best practices. During program design and implementation, buyers should communicate and schedule meetings with all involved players. Buyers also should determine when and where to apply virtual payment, and educate affected travelers accordingly. It’s important to explain to preferred hotels the new payment option to be sure staff are up to speed.
For requests for proposals sent to relevant suppliers, GBTA suggested buyers make clear that virtual cards should be accepted as a preferred payment method, and that they function “in the same manner as a traditional credit card,” although processed as “card not present” transactions. They should use merchant category controls and integrate seamlessly into existing TMC workflows.
To help clients sort out all the flavors and opportunities, BCD Travel's Advito partnered with consultancy Edgar, Dunn & Company to offer payment consulting.
Targeting small and midmarket companies, several industry providers in the past year or so announced or partnered to provide integrated business travel, payment and/or expense management.
New-age TMC TripActions, for example, now offers its own payment product. It includes a virtual card component as well as individual plastic on the Visa network. TripActions Liquid integrates with the TMC’s travel booking platform and expense audit automation firm AppZen. Users get a 1.5 percent rebate, spending controls and a “real-time” approvals process.
“TripActions Liquid knows when an employee is on a work trip and can be configured to auto-enable the traveler’s card for travel-related purchases,” according to a company statement.
Expense management system provider Expensify made available a new debit card on the Visa network. The card integrates with Expensify's expense reporting system and mobile app, offers discounts on some third-party business services and directs 10 percent of the revenue generated for Expensify to charities.
In February, startup spend optimization firm Center introduced its similar Visa Business Debit corporate card after a few years of work. Center also announced an expense system. A dashboard provides data reports. Concur co-founder Steve Singh created Center along with his son, Naveen Singh, who serves as CEO.
Emburse announced a new card product for users of the Abacus expense management system. It includes both virtual and plastic options, and spending controls for administrators. Emburse in the coming months will release the card to customers of its Certify, Chrome River, Nexonia and Tallie expense systems. Emburse also introduced an expense reimbursement system for non-employee travelers.
U.S. Bank, in cooperation with Chrome River, last year announced a similar product for infrequent travelers and non-employees. With the aim of creating a “zero-touch expense report,” it brings together a mobile app, virtual payment and expense reporting.
“The technology missing for TMCs today is putting virtual cards in mobile wallets,” U.S. Bank vice president and group product manager Tory Passons says. “It solves for the virtual card challenge they have with hotels today. They no longer have to fax a copy of the card. The traveler can just use their mobile wallet at check in.”
Could blockchain obviate many payment processes? Blockchain is a distributed ledger technology that provides a “single view of the truth.” Some want to see it adapted for corporate travel settlement and payment, with suppliers paid automatically after a product or service is consumed.
It’s early days, but at least one project is kicking the tires on the concept. Blockchain startup Blockskye, the Airlines Reporting Corp., United Airlines and one of its undisclosed clients a few years ago started trialing a direct-booking and payment program. The process eliminates GDS, expense management and payment costs.
Blockchain's other emerging use cases in corporate travel relate to contracting, commission recovery, unused ticket tracking and inventory management.