by WEX Travel
Despite the prolific growth of technology in the travel industry, B2B payments organizations have been slow in the uptake of alternative payment methods. Reasons range from a reliance on legacy systems to lack of awareness in the value offered by innovative solutions. But it’s obvious that paperless payments, even in the B2B arena, are going mainstream. There is significant opportunity for corporate travel managers and travel management companies to consider virtual payments in their B2B payments mix.
In building a business case to start leveraging virtual payment solutions, it’s helpful to see what’s convincing the early adopters to get on board with the technology. Let’s explore the compelling evidence that virtual payments represent the future of travel industry B2B payments:
FACT: You’re Paying Suppliers in a Multichannel Age
- 52% of B2B suppliers are now willing to accept payment electronically (Ardent Partners)
- Monthly electronic accounts payable spending per organization is $2.5 million, up from $1.1 million in 2012 (RPMG Research)
There’s a clear shift toward electronic payment methods, and corporate travel departments and travel management companies are upgrading their tech systems and procedures to accommodate the purely digital. As this happens, integrations are being developed between systems to ensure the transfer and synthesis of data—and everything from bookings to expense reports to supplier payments are becoming faster, more efficient, and supremely streamlined. Payment via virtual card number (VCN) glides easily into the new ecosystem. Learn more in 3 Reasons Virtual Credit Cards Will Become A Leading Corporate Travel Payment Option in 2016
FACT: You Can Avoid Unnecessary Costs of Doing Business
- The cost to issue the 8 billion paper checks made by US businesses each year, along with the cost of processing the 8 billion associated invoices, add up to nearly $100 billion in annual spend (Federal Reserve)
- Wire transactions cost $8 for incoming domestic wires, $10 for incoming international wires, $25 for outgoing domestic wires and $42 for outgoing international wires
Depending how the costs are split between the travel company and suppliers, both parties have something to gain from exploring alternative forms of payment that cut fees altogether. What’s more, international travel payments can include FX rate mark-ups and cross-currency transaction fees, which can average 3% per payment. Find out more in How Much Is Your Travel Business Losing On International Payments?
Many of these “extras” can be avoided using VCNs. With widespread international acceptance, they enable you to side-step fees while helping your organization improve cash flow. And you can settle in your suppliers’ home currency. International and domestic transactions take place over the common credit card networks and are remarkably secure and reliable, resulting in time and money savings associated with automatic processing.
FACT: Your Payments Administration Becomes Simpler and Easier
- Travel managers spend 442,000 hours in staff time ($22.7 million) per year to manually reconcile and clean travel data
- 82% have to manage multiple data sources to answer questions from management about travel spending
Accuracy? Check. Timeliness? Check. Managing by Exception? Yes, check. Consider the time and effort put into travel billings and reconciliations performed the traditional, manual way. VCNs can consolidate these processes and result in more efficient workflows. Because individual transactions are given a unique “card” number, data is cleaner and matching becomes easier—and automatic. It all adds up to a more effective payments process from end-to-end. Get more insights from Into the Light: Travel Payment Reconciliations.
FACT: You’re Constantly Fighting Fraud
- 75% of companies in the transportation, leisure and tourism sector are affected by at least one type of fraud
- 53% of travel companies rate “reduced risk of fraud and supplier default” as the most important virtual card criteria (Phocuswright)
The travel industry is ripe with fraud. Numerous touch-points leave your company’s sensitive information (e.g. credit card numbers and bank account details) vulnerable to theft. Using virtual payments, especially for booking accommodation, mitigates the risk inherent in making travel payments. VCNs provide favorable chargeback rules and protect your organization from disputed charges and supplier default. Get all the details in Virtual Card Numbers Fight Payments Fraud in Business Travel.
Additionally, VCNs give travel managers more control over spending, enabling transaction-specific controls for when, where, and how payments are authorized, including how much. Read Book Hotels Smarter with Virtual Cards for more insights.
Prepare to Build Your Business Case
Single-use VCNs are being used today for many travel bookings including those with low-cost carrier airlines and hotels, especially when the travel buyer has larger volumes and can benefit from the simple yet scalable VCN technology. VCNs are also being used as an alternative to corporate credit cards for infrequent travelers. More possibilities are on the horizon, as you’ll learn further in Virtual Cards Making Corporate Travel Purchases Cheaper and Easier: Webcast