Payments: Why it can pay to go virtual

Kelly Cleeton is head of corporate payment solutions at Conferma

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.

Seamless virtual card integration allows TMCs and hotels to meet the increasing demand for streamlined, digital processes. Features like invoice reconciliation and frictionless check-ins enhance the travel experience for customers, making their journeys smoother. These improvements benefit not only the travellers but also TMCs, hotels and corporates by increasing efficiency and satisfaction across the board.