Paying for travel with virtual cards cuts fraud, beefs up data reporting and slashes time spent on reconciliation and other administrative processes. Here’s how it works and why it’s a smart move for your company.
Online booking. Sophisticated travel monitoring. On-the-go apps. Corporate travel is packed with technology. Unfortunately, there’s one major exception: The way most companies pay for travel has barely changed in a quarter of a century.
This is particularly true for companies with contractors, job candidates or even employees who don’t carry individual corporate cards. For these travelers, the company often pays for their hotel stays using central payment, such as a lodge card, business travel account or the like. And with traditional central payment, one card number is used for hundreds, or even thousands, of hotel reservations and travelers.
“Central payment is like one of those puzzles you see in kids’ comics asking, ‘What’s wrong with this picture?’” says Guillaume Leclerc, product planning manager for BCD Travel. “In this case, the answer is almost everything.
“For a start, central payment puts companies at risk for fraud and overcharges. Sending the same card number to different hotels to pay for multiple employees is not very safe. It can be misused by anyone who has access to the card number—and for any amount,” Leclerc explains. “Then, on top of all that, reconciling the payment invoice to the original booking can be a nightmare, sometimes leaving administrators trying to match up hundreds of lines of data.”
The good news is this 20th century problem now has a 21st century solution: the virtual card. Described by some experts as the biggest innovation in commercial payments in 30 years, the virtual card is a 16-digit series created to pay for only one transaction. BCD Travel’s Virtual Payment Automation solution, powered by Conferma, automatically generates a virtual card number, provided by the client’s card issuer, within the normal reservations process. The virtual card number is sent to the hotel via an automated fax. The fax makes the number look like the front of a real card, accompanied by a three-digit virtual security number that looks like the back. Detailed payment instructions are also included.
Virtual cards greatly improve security, not only by preventing external fraud, for example by hotel staff, but also by cutting down on both intentional and unintentional overcharges. A travel manager can set strict limits on how each virtual card is used, including supplier category, spend amount and even expiration date.
“Let’s say you have a traveler going to the Netherlands. We create a virtual card according to the booking, with a limit of €200 at a hotel and a short expiration date,” Leclerc says. “If someone picks up this number, they can do little harm because the virtual card severely limits the payee, the payment amount and the timeframe in which the card number can be used.”
The benefits of Virtual Payment Automation are clear at the end of the process, too. When the traveler checks out of the hotel, the virtual card payment transaction is sent back to the reconciliation system. Since both the booking and the payment are identified through the same unique card number, the two pieces of information are matched automatically.
Virtual payments are starting to be used for much more than hotel payments. The meetings and events space is a major growth area. And some industry experts believe airline tickets eventually will be paid for this way because of the flawless reconciliation of payment and booking data. “Interest is mainly in hotel payments at the moment,” Leclerc says, “but a couple of our clients have said they would like to make all payments virtual.”
Why Virtual Payment Automation is good news for businesses
Increases security—virtual cards protect against thieves and skimmers
Boosts control—protects against overcharges by limiting how muchtravelers can pay and what they pay for
Saves time—matches booking and payment data automatically because the virtual card number acts as a unique identifier
Enables outstanding reporting—applies corporate data (e.g., cost center or project code) to every booking, leading to better information management
Check out this Virtual Payment Automation infographic to learn more. And ask your BCD Travel account manager how virtual payments can help your company gain efficiency, security and better data.
