With all these new developments, both travel managers and business travelers have lots of new options to consider. Many business travelers prefer to make payments the same way they do in their consumer lives, but travel managers need to weigh the pros and cons of different methods of payment. In this new world, what does the travel buyer really need to understand about card programs and card technology to make their travel program work? And what should they be leaving up to someone else in their organization?
“While multiple new technology options are available, each program is first dependent upon the client’s requirements and culture to determine the right solution,” says Gonca Latif-Schmitt, North American head of Citi Commercial Cards. “The buyer needs to understand the options available and how they impact their internal partners to best ensure buy- in and success. Integrating a new travel technology solution can be complex, but working with the right partner will aid in this initiative and make the effort as smooth and productive as possible.”
She adds that travel managers should work with a partner that has the ability to manage as much of the complexity as possible. Citi, for example, is integrated with over 200 travel management companies and global distribution systems.
Companies should also determine which areas certain payments work better in, since there is still a place for several card account categories, says Jennifer Petty, head of global card and comprehensive payables in Global Transaction Services at Bank of America Merrill Lynch.
“Card plastics are good for traveling cardholders who need to pay for such items as food, parking, car rental and trains,” she says. “In some regions, some of those cards under low-dollar amounts are also being issued as contactless cards for quick, convenient payments when getting on trains in London, for example. For the foreseeable future, card plastics will still play an active role for business travelers, but we will continue to see an evolutionary process to make those payments easier and faster.”
Meanwhile virtual accounts, Petty notes, have traditionally been focused on airline spend. But virtual accounts and the associated technology will help expand usage to other key travel categories such as hotel and car rental, allowing organizations to more efficiently manage travel spend centrally, she says.
“The industry is moving toward a single use environment for booking hotels to a corporate travel account, to facilitate easier reconciliation back to the employee or employee ID,” Petty says. “Going forward, virtual accounts will begin to intersect with other technologies such as mobile wallets, enabling a client to easily send an account to anyone they need to for any business travel or purchasing transaction – all with the proper controls and flexibility necessary.”
Saving Time & Money
Businesses have more options than ever when it comes to corporate travel payments, so they are looking for solutions that provide seamless expense management, mobile tools, rewards to re-invest in their business or their employees, and – importantly – service and support both for program administrators and their company’s business travelers, adds Brendan Walsh, executive vice president, US sales and account development, American Express Global Commercial Payments.
“It’s important for travel buyers to evaluate and understand the specifics of their company’s travel needs,” he notes. “An assessment of the business travel function can help make sure the card program and its affiliated reporting tools, services and benefits are the right fit for the company’s overall priorities. An evaluation of the current travel program can also help identify and measure potential business travel savings opportunities from card program rebates, process efficiencies and working capital benefits.”
In this vein, Walsh says American Express has added several new travel benefits to its Business Platinum Card, as well as providing services around cross border payments, global currency solutions and business financing.
Walsh also advises travel managers to secure buy-in from senior leaders and key business stakeholders on the role and importance of business travel for the company, and how the card program and technology will support underlying business objectives.
“Additionally, travel buyers should ensure there’s a clear plan to communicate within the company about the scope and benefits of the card program and technology, so that employees know what services and support are available to them,” he says.
For the best results, travel managers need to understand which payment solutions work best in different situations, says Peg Yankovich, large market product and marketing manager for U.S. Bank.
“It’s about being able to offer various solutions to meet program needs,” she explains. “You’ll probably use traditional plastic for a frequent traveler, and a virtual account for someone with infrequent purchasing needs. Businesses should pick an issuer who has multiple solutions to fit their needs, and is offering things like airline or lodging deals.”
Finding a payments solution that offers these kind of deals is especially important as travel buyers look to manage budgets while travel costs keep going up. According to consultancy firm Advito’s 2017 Industry Forecast for Corporate Travel, global hotel rates are expected to increase worldwide as much as 5 percent in 2017.
The rates will increase in all regions, led by North America, according to Advito. Rates in the US and Canada are expected to climb by 3 percent to 5 percent with slightly smaller increases for hotels in Mexico. The Southwest Pacific and the Middle East also will see a rise in hotel rates due to insufficient supply and strong demand. In Europe, a modest economic recovery and little new supply will push up rates by up to 2 percent, the firm says.
With the pace of innovation in the consumer payments space, U.S. Bank’s Yankovich notes that this same trend is making its way to the corporate payments arena. U.S. Bank, for example, has recently added Android and Apple Pay options for some of its corporate customers. It has done a limited rollout so far and plans a full launch for all its corporate customers later this year.
“The commercial market always follows the consumer market,” she says. “Mobile payments are very fast and very convenient. And when you can incorporate expense reporting into a mobile app, it becomes very appealing for the business traveler.”
But digital payments are becoming more popular in corporate travel not just because employees want them, but because they also align with the increasing automation and digitization of accounts payable systems. Digital payments feed in directly to the new AP systems to streamline expense reports, for example. According to Concur, companies using automation in accounts payable see on average a 34 percent decrease in the time spent on tasks related to invoice management, resulting in a monetary benefit of $14,953 per 1,000 invoices processed, thanks to increases in productivity, cost reductions and savings in invoicing team-related benefits.
Further, we are in a world where business travelers are looking to book flights on an app and summon Ubers linked to a digital payments mechanism. And it’s up to businesses to provide the means to accomplish all this, according to a report released earlier this year from travel and expense management solutions provider Certify.
“Business travel got a lot more personal in 2016,” says Robert Neveu, CEO, Certify in the report. “The growing preference for sharing economy services like Uber and, to a lesser degree, Airbnb really underscores the trend toward consumerization of traditional corporate travel. Advances in personal technologies and travel-based smartphone apps have made it easier for business travelers to choose the experiences and vendors they prefer. And the companies they work for are following suit with expanded travel policy guidelines to accommodate new services and payment methods. More than a footnote in history, it’s the kind of transformational change that will continue to shape the industry for years to come.”
In this new world then an issuer’s job is to keep up with the technology and know what it can do for business clients and their travelers, says U.S. Bank’s Yankovich.
Travel managers “don’t need to know much about the technology itself,” she adds. “They just need to understand how the technology works within their travel programs. They should work with issuers who can take care of much of the technical aspect on the back end, and explain how it can be used for different programs,” she says.
Whither Blockchain?
When it comes to bleeding-edge technology, blockchain is the latest buzzword. It could create an interesting dynamic to travel by connecting airlines, hotel and rental card companies with travelers, potentially using bitcoin for payment, says Bank of America’s Petty.
“Some of these start-ups are beginning to enter the market, so we will continue to watch the trend,” she adds. “Blockchain certainly has some interesting possibilities, but it likely is the furthest away in terms of mainstream use. Initial applications will also generally be more focused on the B2B side versus travel, allowing for faster payments to suppliers and greater efficiency for global payment needs. With that said, it definitely is something that will inevitably impact the travel space as well, whether as an efficient way to pay travel suppliers or as a means to get all business travelers using a single, fully-digital currency regardless of where they are traveling and transacting around the world,” Petty explains.
Ultimately, it is the travel manager’s responsibility to keep current on all these trends and determine what is best for his or her company’s travel needs, says Citi’s Latiff-Schmitt.
“To ensure success, a corporate travel manager should remain engaged throughout the entire process and work closely with cross-functional partners across technology, treasury, accounts payable and HR as a firm’s travel management strategy has multiple internal stakeholders,” Latiff-Schmitt says. “A well aligned company is best positioned to be successful in providing their employees an integrated seamless solution.”
