Virtual cards are growing rapidly in popularity because of the opportunities they can bring while easing the payments process for users. When it comes to travel, they can eliminate the need for receipts and putting through expense claims, and mitigate risk of a payment being declined.
Beyond this they offer a wealth of other benefits and the opportunity to transform the way payments are made throughout the travel industry. With this in mind, Anjana Haines, head of content, at The Payments Association explores exactly how this can be achieved, touching on the impact of the pandemic, the need for education and more.
Imagine a world where a business trip does not involve numerous receipts, expense claims, or the risk of a payment being declined, but does offer effortless automated reconciliation and record matching, as well as the added benefit of a lower carbon footprint by not using physical plastic credit cards. Sounds great, doesn’t it? The growing popularity of virtual cards means these opportunities can be seized today.
The strengths of virtual cards
One of the major strengths of virtual cards was highlighted during the covid-19 pandemic, when travel protection insurance ensured that travellers got their money back. The ability to make chargeback claims to refund money also demonstrated how virtual cards offered protections that other payment methods lacked. As several airlines went into bankruptcy or cancelled flights, virtual cards enabled online travel agents (OTAs) to file chargebacks for purchases used to reserve flights.
Dave Robinson, COO and deputy CEO of Pax2pay comments on the evolution and usage of virtual cards in the travel industry as part of an upcoming whitepaper from The Payments Association:
“During the pandemic, we have never seen anything like it. When [airline] Monarch and [travel agency] Thomas Cook collapsed it was tough. However, nothing prepared us for what was coming down the line when it came to the covid pandemic. We were literally processing thousands of chargebacks per day. The media was full of reports over airlines not issuing refunds or giving credit notes. With chargebacks lots of people got their money back. Lots of companies now see the benefits, so they want to use virtual credit cards as their primary payment mechanism, knowing the protection is there and they can use it if they need to if the airline fails to deliver the service.”
What are the obstacles?
A company considering using virtual cards will need to update processes, rewrite company policies on card usage and expenditure, and look at how to integrate any new solution with their existing expense management, accounting or enterprise resource planning (ERP) portals.
Supplier acceptance can also be a sticking point. Some suppliers may be reluctant to switch from tried and trusted payment methods, concerned about the merchant service charges associated with cards, or how they might impact settlement terms.
However, fears about integrating new solutions and cost concerns disappear when the benefits of accessing better payment processes, actionable data insights, and effortless compliance are explained clearly. With the right guidance and expertise, companies can hit the ground running with a virtual card solution that meets all of their needs.
SMEs that have had good experiences with virtual cards are far more likely to tap into additional financial solutions that could further help them grow their business.
Tapping into the opportunities
To tap into these opportunities, issuers, financial institutions and payment platform providers need to educate and encourage companies to seize the moment. By showing the tangible, immediate benefits of virtual cards, and allaying misplaced concerns over costs, solution providers can help companies to deepen employee and supplier relationships, strengthen their foundations and position themselves to take advantage of every opportunity in front of them.
The importance of teaming up with the right expertise cannot be overstated. Collaboration can offer the quickest route to market. It leverages complementary skills and strengths, and gives companies the smoothest implementation of new solutions, and the widest choice of value-added services.
As companies across more sectors see the tangible benefits of digitising payment and operational processes, virtual cards are gaining rapid traction. The future of virtual cards has never been brighter.