Michael Wirth, senior director payments for CWT, notes there’s no one “best option” and that the choice often depends on the type of travel transaction. “Generally, we recommend centralized forms of payment to relieve travelers of post-trip expense efforts where possible, especially the need for personal expenses,” he says. “For air travel, lodge cards are the best option; for hospitality, we advise virtual cards; and individual cards for car rental are most common.”
Regardless of payment method, an automated expense management system is paramount, according to Tim Lebel, vice president and head of spend products for SAP Concur. “Businesses must be able to integrate their travel payment method with an expense management tool that automatically captures spend data in one place,” he advises. “When you can track every dollar, it’s easier to analyze spend data and see opportunities to negotiate better rates and spot noncompliance.”
Chris Weedon, vice president, global sales and service for GlobalStar Travel Management, recommends a combination of virtual cards for air and corporate cards for hotel and other expenses as the best option. “This helps to avoid corporate cards being ‘maxed out’ with high air fares and avoids potential issues with virtual cards at hotel check-in,” he says.
TravelBank, which was acquired by U.S. Bank last year, offers an all-in-one expense card travel solution for businesses, with a focus on helping companies manage and reduce spend, and making the process easier. “One of the challenges a lot of companies have is what path to go when it comes to travel payments,” says Duke Chung, co-founder of TravelBank. “We don’t force the company to use payments in any particular way because we know businesses – particularly companies of different sizes – all have different needs. So, what we found was there isn’t really a one size fits all model today.”
The Pandemic Boost
Like many paper-based processes, travel payments have increasingly gone virtual in the past few years. This digital transformation accelerated during the pandemic as many programs that relied on paper-based, in-office processes were forced to find virtual and automated alternatives. Travel management companies and expense solutions providers recognized this need and worked to quickly enable more integrations for virtual payments.
“During the pandemic, because of COVID-related safety issues, what we really saw was a transition to the virtual card capabilities, and it was really fascinating,” Chung says. “A lot of the hotels and airlines started to accept contactless payments as well, and we believe it may have accelerated the roadmap by as much as five years.”
Jason Hawthorne, head of content and commercial for Serko, says that from a spend management perspective, virtual cards are the preferred option. “By defining the parameters of what payments the cards can be used for, you can effectively integrate policy and pre-approval processes into your means of payment seamlessly,” he explains. “There is also minimal fraud risk as virtual credit cards are single use, and less insolvency risk than invoicing when used to pay suppliers via intermediaries.”
Wirth notes that CWT has seen a tangible trend toward centralized forms of payments again, and virtual cards are playing an important role in that development, most likely a result of the pandemic. “Their application in contactless mobile wallets have taken root,” he says. “We see demand for digital payments and expense solutions, and CWT is modernizing its payments architecture to deliver just that.”
Greeley Koch, managing director for 490 Consulting, notes the pandemic brought out expanded offerings and adoption of various payment methods. However, he sees the lodging industry as a roadblock to widespread adoption on new payment methods such as virtual cards. “Until the lodging industry solves how each individual hotel will accept virtual payments, we are left with a frustrating situation where the TMC, company and traveler will not have a standardized way of assuring that virtual payments will be accepted for the reservation or check-in,” Koch says.
Koch notes fewer companies are requiring their employees to use personal cards for business expenses because employees don’t want to provide the company with cash float and tie up their own personal funds. “Virtual cards make sense when dealing with certain types of travel and travelers,” he says. “Maybe a recruit is coming in for an interview or an employee is taking a once-a-year trip. There is no reason to issue corporate cards in these situations and instead go with a virtual card.”
Still, according to an SAP Concur survey of 1,000 US business travelers, 86 percent reported that their company has delayed reimbursing their business expenses at least once, and 89 percent say that a delay in receiving reimbursements impacts their personal finances.
“If companies reimburse travelers’ personal cards, they must have a solution that makes it easy to file and submit expense reports on the go,” Lebel cautions. “Not only do delayed reimbursements provide an inaccurate picture of company finances, but they also strain employees’ wallets.”
Charged with the Choice
The responsibility of who makes the choice of payment provider can vary based on company size, but most often payment providers are selected by technology decision makers, finance managers, accounts payable departments or travel managers.
“The TMC should play a key role in advising on the advantages and disadvantages of the available options to help the client make an informed decision,” Weedon says. For example, CWT has a specialist team of product and technology experts that is responsible for payments solution partners and developments.
Criteria for selecting a payment services provider should consider whether they work well with travel suppliers, hand off high-quality data, work with expense tools and offer easy administration, advises Nicola Lomas, a consultant at Festive Road. Other factors include acceptance and in-country capabilities.
Utilizing Data
Embedding digital payment methods in the travel and expense technology stack enables the generation of contextual data that improve not only process efficiencies, but also offer valuable insights into aspects like purchasing behavior, program adherence, as well as real-time information related to duty of care.
After all, with better data visibility comes enhanced negotiations with suppliers and the streamlining of policies to include rate ceilings for hotels and air. On the other hand, when the data is missing, it can distort spending patterns and reduce the buyer’s leverage in negotiations with suppliers. For example, business travelers sometimes book travel outside of preferred channels and directly on supplier websites. This can create holes for companies in employee spending summaries.
Lomas notes card data is a frequently missing part of the spend data jigsaw, and good quality card data gives visibility into areas of spend that often fall into the difficult-to-manage category. “Insight into this spend helps a travel manager make informed decisions on policy, be it a policy they own or one they influence via a business partner in finance or HR,” she says. “Capturing spend on fragmented ground transportation for example, may not reduce the overall spend or behavior, but it may highlight to the business that a preferred supplier agreement should be implemented to meet duty of care and efficiency of booking.”
It’s not unusual, Lomas adds, for a company to implement a card program and find a much greater volume of spend than anticipated, which can lead to cost savings opportunities.
Big Players
Among CWT’s multinational clients and global players with sizeable travel programs, the banks with the largest geographical footprint are the most in demand. “It is not very efficient having to deal with many commercial banks, and you’ll want to consolidate your spend to leverage economies of scale, i.e., maximize rebate incentives,” Wirth says. “Amongst the ‘premier league’ of worldwide banking institutions, there aren’t vast differences between them. All of them are offering digital payment methods that we’re so used to as consumers, in the commercial as well as the business-to-business space.”
Weedon notes the primary players in this space are Airplus, American Express and Conferma, though in the broadest of brushstrokes, they are similar products. “The main differences are around reporting features,” he says. “There are limitations in the space as not all hotels accept virtual cards for payment or to guarantee accommodation. We sometimes see, in a global program, some limitations around where local banking partners are available.”
Apple & Google
The pervasiveness of smartphones has led to digital wallets, such as Apple and Google Pay, becoming commonplace and that has really turbocharged the opportunity for virtual credit card adoption. “A few years ago, explaining virtual credit cards to a travel manager required a PowerPoint presentation, but now the concept is much easier to grasp,” Hawthorne says. “At the same time, retailers moved away from cash towards contactless payment during the pandemic, increasing acceptance of digital or virtual methods of payment.”
Consumers have seen the convenience of contactless mobile wallets, and the same is true in the commercial space. “Large banking groups are attempting to establish their own wallets. But the ubiquity of the dominant mobile phone operating systems’ wallets is an advantage that is not easily matched,” Wirth says. “While that might come at a price – namely, the small slice that Apple or Google take from every transaction, opaque to users but not to payments suppliers – there might be an argument whether that is, or is not, worth paying.”
The pandemic definitely boosted the use of digital and contactless payments. The US market, which historically lagged behind Asia and Europe, saw an increase of over 30 percent in tap-to-pay transactions in 2021, according to a survey conducted by Visa. “Worldwide, consumers now expect to be able to pay for even small transactions using a credit card/payment tech and the market is making it possible,” Lomas says. “The technology provides great benefits: Instant receipts, links to expense tools, and greater visibility for the traveler and the business.”
Koch notes the holy grail has been to combine the data from the TMC, suppliers, expense reporting tool and corporate card data into one streamline view of what a company really spends on travel, but the reality of this happening is a different story. “Various reporting tool aggregators will say that they can do this better than others,” he says. “I think we are waiting for that day when we can have one true source of consolidated travel data that can be used to make policy, supplier and process decisions.”
Image: Michelangelus/Shutterstock
