Payments: Why it can pay to go virtual

The way corporate travel is paid for is changing. Influenced by high expectations of a seamless
payment experience, as well as the need to find operational efficiencies,
businesses and their payment providers are increasingly looking for new solutions to meet
these ever-evolving needs.

To understand
more about the drivers of change, Conferma recently surveyed 400 financial
decision makers at global businesses to understand their attitudes
towards payments. According to its Growth Ignition Index report, 57 per cent of
respondents have significantly invested in payment capabilities over the past
five years.

Among the
numerous payments offerings available in the marketplace, virtual cards have
emerged as a multi-benefit solution, with users worldwide recognising their
value. This is highlighted by Juniper Research’s prediction that the global
value of virtual cards will increase more than threefold in just five years,
climbing from $1.9 trillion in 2021 to $6.8 trillion by 2026.

Kelly Cleeton, head of corporate payment solutions at Conferma, explains more.

BTN Europe: Explain the basics of virtual cards and why their popularity is growing.

Kelly Cleeton: Virtual cards are
similar to their physical counterparts: they carry an expiry date, cardholder
name and security code. However, the number is generated digitally at the point
of sale and the dynamic controls ensure that the card has a spend limit set to
only to cover the cost of the purchase. Demonstrating their growing relevance
to the business community, Forbes recently described virtual cards as a ‘burner phone for your digital
wallet’.

With pre-set spending
and time limits and other purchasing restrictions, as well as tap-and-go and
digital wallet functionality, virtual cards combine control with an ease of use
to help make business trips run smoothly. Due to tokenisation and the lack of a
physical card, virtual card payments are also extremely secure, significantly
reducing the risk of fraud.

BTN Europe: What do corporates like about them?

Kelly Cleeton: Unsurprisingly,
virtual cards’ inherent security and improved fraud risk was the most popular
benefit according to the corporates we spoke to. But it doesn’t
end there. Spiralling costs was the biggest risk factor identified for
preventing growth among the businesses we surveyed, and virtual cards offer a
clear solution here. The ability for finance teams to set sensible spend
controls – on the value of the purchase, its time limit and even the vendor –
can put an end to any lavish corporate spending and ensure costs are managed
effectively. This process makes life easier for the user and their employer,
allowing much greater oversight and control over costs in real-time. 

BTN Europe: And what’s in it for the business traveller?

Kelly Cleeton: An obvious benefit
for business travellers is that using virtual cards can help to avoid employees
covering business expenses with personal funds – that was an issue identified by 26 per cent of the
financial decision makers we spoke to. It’s easier and safer for finance teams
to send virtual cards to individuals across the business rather than giving all
employees a physical commercial card. This is most important for mid-level or
junior employees, for whom covering business expenses can have an adverse effect
on their personal finances and leave them out of pocket.

Adding virtual cards
to the digital wallet provides business travellers with the tap-and-go
functionality they have come to expect in their consumer payment experience. There
is no need for complex encryption, downloads, links or login processes that
only serve to frustrate customers.

BTN Europe: How about efficiency? Can they save users time?

Kelly Cleeton: One of the most
eye-catching statistics from our research was that, on average, all employees –
not just those within the finance function – spend 3 hours and 12 minutes per
week on financial tasks. This activity, which
includes onboarding suppliers, tracking spending and reconciling expenses equates to almost seven days per employee every year, purely spent on
financial tasks rather than progressing their main priorities and
responsibilities.

With so many
alternatives available, there really is no need to be messing around or
commonly losing paper receipts anymore. Given their tokenised nature and
spending controls, virtual card payments are data-rich, which can make
reconciliation easy.

BTN Europe: What about suppliers and TMCs – how do they fit in?

Kelly Cleeton: With their
customers’ focus turning to solutions such as virtual cards, the message to
travel management companies and hotels is clear: they must align their
operations with the technological preferences of their corporate clients in
order to remain competitive and provide the best traveller experience possible.