Not so long ago, if you needed to travel, personally or professionally, you will call your travel agent, tell them your dates, preferences, and a few other details and in a couple of hours, voila! The trip was all organized. Today, thanks to online travel brands and digital payments we can do all of this process in one click from our home or office.
Payment control in business travel is a complicated issue. Travel managers often want to fulfill multiple needs which include speed, security, ease-of-use, fraud prevention, reconciliation, and coverage compliance. Also, taking into account FX rates and other transaction costs, handling travel payments at scale is not an easy task.
We think that virtual cards have only existed less than a couple of years, but the travel industry has been using them since the early 2000s, Clive Cornelius from Visa Europe mentioned in our latest webinar.
According to a survey from AirPlus International in 2015 only 8% of companies used virtual cards to pay for their employee’s hotel accommodation costs compared to 31% in 2018. Virtual cards have been since then the preferred solution, but why?
Reconciliation is automatic. This means that transactions are reconciled automatically with expenses. In other words, employees who travel don’t have to collect all receipts, do expense reports that are time-consuming, take a quick look to our Expense Report Calculator here. Moreover, accountants and CFOs don’t have to manually check all the transaction information. A win-win for all.
Security, virtual cards are not linked to your company bank account, in the case of Payhawk Virtual cards they are linked to a wallet that you transfer funds via bank transfer. Travel managers use one-time virtual cards that are created specifically for a vendor or a trip so if there is any security breach is almost impossible to track the account details.
Speed. In Payhawk it takes less than one min to issue a virtual card, literally. As there is no need to send a physical plastic card, you can have access to company funds fast and easily. Travel managers can issue on-demand cards for last-minute trips and employees don’t need to spend their own funds and wait for reimbursement, which on average can take weeks and even months to have the money back into your account.
Travel policy enforcement. Thanks to virtual cards, companies can now have stronger enforcement of their travel policies. If employees want to spend out of their limits, or with different vendors than the ones approved by the company, the card will simply not work. This will allow CFOs and travel managers to have better control over their travel spending and budgets.
It will not be fair to talk of all the great benefits of virtual cards for business travel without mentioning the drawbacks. Remember that not all virtual cards are the same. Many prepaid virtual cards are not accepted in car rentals or hotels. At Payhawk, we offer Virtual Commercial Debit cards with the same acceptance rates as credit cards. With extra features, such as top-up requests, where employees can request specific amounts if needed on the spot. You can read more details about this here.
Now, if you need to choose a virtual card for your business, please take into account several factors such as exchange rates, monthly fees, and the type of virtual card. Our CEO, Hristo, wrote an extensive article on this so feel free to take a look.