Could virtual payment take off among business travelers?
VIRTUAL payment facilities like the single-use virtual credit card have been around since 2006.
Unlike a conventional card that uses one card number for multiple transactions, a virtual card uses a unique 16-digit number, for one specific transaction. The number is authorized for use on a set date, for a particular amount and merchant category.
Although not new to the travel industry, virtual credit cards are becoming an increasingly popular method for paying travel expenses like car hire, hotel reservations and plane tickets. Last year, research by the Global Business Travel Association (GBTA) Foundation found that 20 percent of American businesses paid for travel using a single-use virtual account, an increase of seven percent from 2014.
This in addition to their clear benefits over traditional methods like business travel accounts and commercial cards, has many speculating whether virtual payment could be the future of the business travel industry.
Why should travelers take the virtual payment route?
AirPlus International reports virtual payment to be their fastest growing commercial product, with uptake having increased roughly 30 percent each year since 2010. In the UK alone, their virtual card, A.I.D.A (one of the first to enter the market), accounts for nearly a fifth of all the products they issue.
Better security and control
So why are they so popular? One obvious reason is that virtual payment gives companies, corporate travel managers, business travel agencies, and business travelers greater control and security when it comes to paying for travel expenses.
As virtual cards are set to specific, predefined parameters, it makes it difficult, if not impossible, for them to be misused. And because of their ‘virtual’ nature, they can’t be lost, stolen or cloned either.
This no doubt has significant appeal, given increasing concerns around fraud. Findings from the AFP Payments Fraud and Control Survey 2016 indicate that as many as 39 percent of respondents experienced actual or attempted payment fraud on commercial cards in 2014.
But that’s not all. Virtual payment has the potential to save time as well as money. The 16-digit payment number acts as a unique identifier for a particular transaction.
That, along with the travel data captured at the time of processing –employee number, check in/out dates —allows for billed and booked data to be automatically synchronized via a virtual payment automation system.
This enables business costs to be reconciled without any need for an expense report or tedious manual data match –a task that reportedly consumes a phenomenal 442,000 staff hours a year, and costs around US$22.7 million.
The future of virtual payment
Through networks like Mastercard, virtual payment has a global reach with virtual credit cards reportedly accepted in 240 countries, by 32.6 million merchants. With such considerable representation, virtual payment certainly looks set to stay around and evolve.
But it is yet to be universally accepted to cover all expenses; restaurant bills and low-cost air travel in particular. Some, therefore, suggest that virtual payment is better to be considered as well as other payment methods rather than in place of them.
Companies like CSI, have chosen to offer it as part of a “travel payment solution”, combining multiple systems (virtual cards, mobile payment and plastic credit cards) to ensure all of a company’s travel expense management needs can be met.
The future of virtual payment may well see it act alongside other existing digital payment systems and conventional methods. It will likely also advance further on its own. AirPlus International has already taken their system one step further and introduced A.I.D.A Flex, allowing consumers to make a specified repeat transaction with one supplier.
They predict future products may even cover the duration of a whole trip. It is quite probable others will follow suit, investing in and developing their virtual facilities to meet the growing needs of consumers; especially as virtual payment currently has several limitations.
Considering the advantages of virtual payment, and the pain points associated with credit cards and business accounts, it definitely has more to offer than simply being an alternative payment method.
This may well be enough to cement its future in the business travel industry and persuade more travel suppliers to offer it alongside their existing card facilities.