Virtual payments could be a winner for travellers and businesses alike; wider industry is becoming increasingly receptive to using ‘progressive’ payment methods

We know that traditional payment methods for business trips are fraught with shortcomings and a GBTA Foundation study highlighted that with the statistic that companies on average spend 40 hours a month reconciling travel expenses and payment data. A recent study from business travel management company BCD Travel has identified the stages corporate travel programmes can take to achieve virtual payment success.

Its ‘Payment: Virtual is Your New Reality’ provides actionable information travel buyers can use to make educated decisions about virtual payment options. It explores five steps which it believes corporate travel programmes can take to achieve virtual payment success: Select, Agree, Connect, Test and Roll out.

“Travel managers looking for ways to increase traveller satisfaction while avoiding some of the pitfalls of traditional payment methods should investigate the benefits of virtual payments,” says Mike Eggleton Senior Manager of Analytics and Research at BCD Travel. “With increasing adoption of business travel-related technology, we see ever greater numbers of corporate travel programmes adopting virtual payment.”

The paper highlights the rise in virtual card usage. In 2016, fewer than 1% of respondents to a BCD Travel study said their company was using a virtual card as a method of payment. By 2017, this figure had increased to 11% and today, virtual cards are becoming more common use, primarily used as an alternative to corporate credit cards for hotel payment.

The report highlights that travel managers are more receptive to using ‘progressive’ payment methods including virtual cards. In fact 40% of US travel managers are now considering using virtual payment, it says. Ease of use is highlighted as the main benefit of virtual credit cards, according to travel managers, followed by security and control

Virtual credit cards clearly offer benefits and can improve security, efficiency and data collection. But most payments are still handled by one of three major credit card companies – American Express, MasterCard and Visa and deliver excessive merchant fees. It will continue to be a tough exercise educating businesses and individuals to the role of virtual payments, albeit the EU’s new Payments Services Directive (PSD2) has opened the way for a disruptive new payment model.

This requires banks to enable authorised third parties to access customers’ accounts and initiate credit transfers, of course with prior customer consent.

“PSD2 is helping to promote open banking, where direct payments are made between a customer’s bank account and the bank account of the merchant. This approach is intended to improve speed, security and transparency. And it eliminates the need for an intermediary,” says BCD Travel in the report.

With PSD2 allowing “authorised third parties” to participate in the payment process, it’s not hard to imagine fintech companies (including existing credit card suppliers) developing new payment solutions tailored to the needs of individual clients,” says the report. Blockchain is certainly one option. Bu, while BCD Travel says its cryptocurrency proposition “may appear compelling” when set against today’s payment methods, it “becomes less attractive” when compared to the new approaches enabled by PSD2, which “are secure, inexpensive, and most importantly, regulated”.