Amex To Offer Virtual Card Alternative To Hotel Bill-Backs

American Express's Global Commercial Card business announced Tuesday that it will roll out next month a virtual card alternative to hotel bill-back payments, which are highly popular in Europe despite costly inefficiencies.

Under a bill-back arrangement, a corporate guest checking out of a hotel does not settle up on departure. Instead, the hotel sends the invoice to the travel management company or hotel booking agency that booked the stay. The TMC settles up with the hotel, then sends one monthly bill covering all hotel reservations to the client.

According to Conferma, the company that created the automated alternative announced by Amex, bill-backs account for 80 percent to 90 percent of corporate hotel bookings in Spain, 60 percent to 70 percent in Italy, 30 percent in the United Kingdom and 20 percent in France. They also are popular in Latin America, but are rare in Germany and almost unknown in the United States.

Corporate clients value bill-backs because they consolidate hotel expenditures into a single monthly invoice, but bill-backs create significant administrative costs for TMCs that they usually reflect in their fees to clients. Conferma has solved the situation by creating a process for TMCs to give each hotel booking a unique identification number. In conjunction with Amex's VPayment virtual technology, this enables the TMC to create a virtual Amex account number for a specified hotel booking.

"The corporate pays one bill to Amex, which ties up the booked and billed data for the TMC," said Simon Barker, chief executive for U.K.-based Conferma, which launched a similar arrangement with Barclaycard in 2006.

Line-item data through the card transaction shows all booked details, including the room rate, project numbers and cost codes. These are augmented in the statement with the total sum billed on departure and a value added tax breakdown. Conferma also has an arrangement with the United Kingdom's two largest hotel chains, Premier Inn and Travelodge, to display full folio data.

Barker told EuroBTN that the virtual payment alternative should result in lower TMC fees for corporate clients because it reduces the TMC's manual intervention by around 85 percent. "Bill-back is very inefficient," he said. "TMCs charge a significant amount for it."

Barker also claimed that the virtual card reduces risk and fraud because of the controls that can be placed on a one-off transaction. These include a financial limit, an expiration date and restriction of the merchant fee category so that the account number can only be used in a hotel. He added that Conferma expects to confirm a deal with another card company in the new year.