Mastercard's Pettican discusses:
Mastercard this year has made moves to accelerate growth of virtual payments, including enabling banks to more easily embed Virtual Card Number technology with third parties and adding clearing controls to make transactions more secure. Mastercard EVP of global corporate solutions Marc Pettican,
who was among the individuals named to BTN's Top 25 Most Influential
list this year, spoke recently to BTN executive editor Michael B. Baker
about Mastercard's latest developments with virtual cards and its
corporate business in general. An edited transcript follows.
BTN: Your role includes both travel and non-travel activities. How big of a part does travel play?
Marc Pettican: Travel is a very critical vertical for us, so much so that we have a dedicated team facing off to the travel industry, and that's really because the size of the market is huge. We see a lot of flows today, and there's still significant flows to go after. It's a complex ecosystem with lots of people in the chain who need to either be paid or want to pay. There still remain some challenges around manual invoice collection and reconciliation. So, for us, it's
a critical industry vertical and one we will continue to double-down
in, and innovation is driving our organization. It has benefits further
into our business, because some of the capabilities we have built we then use in different use cases in other verticals. We're doing a lot of work around fleet, logistics,
health care, and the capabilities we build for travel we then
effectively adapt. In a way, travel is the innovator for us, because
some of the stuff we've built is being deployed into other verticals.
BTN: What capabilities have been your focus of late?
Pettican: What we're
trying to do is solve the real customer pain points and corporate pain
points that exist out there. Manual invoice collection and
reconciliation is challenging. Quite often organizations will have policy compliance challenges. They'll have a corporate T&E business and a policy, and making sure cardholders adhere to that is a challenge. Quite often they'll have a lack of transactional visibility, making sure they're clear on what they're spending and how they're spending. From the employee perspective, you've got how do you do your expense tracking, how do you submit your expenses, do you get delayed in reimbursement if you're funding that personally rather than through a corporate T&E card. Clearly, reporting can be cumbersome. There's something about the consumerization of payments, which is how do we give an employee the same processes we're all used to in our everyday lives. As consumers, we expect things immediate. They're frictionless, they're intuitive, and that's an experience that clearly an employee of an organization wants to replicate. A lot of the capabilities we're bringing, they have a consumer look and feel. If you're a CFO, you have very different
imperatives. You want to improve your visibility and strengthen your
controls. You want to streamline your reconciliation. One of the
innovations is using virtual cards but in the context of a T&E
program, the notion of that I will send you a virtual card as an
employer, and you will propagate that into your mobile wallet, and you
will use that virtual card as if you're using a physical piece of
plastic. The benefit is that you're embedding the payment into the wallet. It still gives the corporate the policy adherence and data,
but it also gives real-time oversight. It typically means we can have
faster reimbursement and stronger compliance. We call the product
Mastercard in Control Mobile Payments, ICMP. Many of the leading banks are looking to deploy virtual card capabilities in a T&E context.
The second area is the rise of virtual cards in terms of procurement spend. One of the big things is integrating into the various digital assets, known as embedded finance. How do we embed our payment capabilities into the overarching technology stack that's being operated across any given ecosystem? In travel, there are many software as a service-type solutions, platforms, etc.,
that we need to ensure we've partnered with and embedded our capability
to provide that enhanced experience, to ensure we're reducing fraud and
that payments are happening more real-time and taking the friction out
of what can be quite a manual, cumbersome process. The travel industry
has a lot of administration. How do you apply that automation?
The big advantage of virtual cards generally is the enhanced security, control and full protection you get through that process. You can have much tighter expiry dates, you can block it to certain merchants you want to operate in. All those controls make it more secure. We have something that's
called clearing controls within the settlement side of the transaction
as well as the authorization, which has further enhanced the security
around these solutions.
BTN: What level of usage growth have you seen with virtual cards?
Pettican: Virtual cards are rising massively. We did some recent studies. Ninety-two
percent of travel professionals we spoke to believe they will have some
form of virtual cards in the hands of their employees in the next five
years. Eighty-eight percent said they saw use cases of virtual cards to be used in non-employee environments i.e., paying suppliers. Travel professionals, CFOs, etc. recognize there is a core role for virtual cards to play in the future, which is why we're putting so much effort into ensuring we're across the verticals. It's probably one of the most dynamic industries we operate in, just because of the complexity of how the ecosystem hangs together.
BTN: Have you seen corporate customers adapt their strategies in terms of to whom they issue physical cards?
Pettican: I was talking to a client, an end corporate customer, and they were saying, "If I have a really established employee, I'm quite happy to put a corporate card in their hands." Corporate cards typically have a three-year expiry date. There's a lot of use cases where they probably don't want to give somebody a card. We want them to be able to claim their expenses, but we don't want to give them a card for three years. What about somebody who's
coming into a job interview? If they are going to pay the expenses for
that job interview, can they issue them a virtual card that gets
propagated into their mobile wallet? Same for contractors. Sometimes contractors will be in the organization only six months. They need to claim expenses, and the organization would rather they don't do that on their personal card, where they lose visibility. The ability to issue them a card that's not only for a shorter period of time but locked down. So, rather than being able to use it in anywhere that accepts Mastercard, you can lock it down where they can only use if for a train, flights or a restaurant. We're definitely seeing expansion to the use cases, which hands the control back to the corporate but still provides the benefits to the employee with the consumer-grade experience and convenience we all like and enjoy.
BTN: Are clients looking to put incentives around virtual card use?
Pettican: Most corporate clients don't want to have incentivization. I'm guessing most financial CFOs aren't looking to double down on spending more on T&E. The corporate wants the control. They want to know colleagues are spending in line with policy, and each corporate policy is different. Where you might get some surround products—things like certain cards carry benefit for C-suite lounge access, and we're in the processes of building out a new proposition in that space, but that's more surround space rather than you're going to get air miles. There's a balance between removing the friction and adherence to policy. That's the opportunity and the challenge the travel industry creates, because you're trying to solve the needs and the pain points for the corporate and the needs and the pain points of the end cardholder, so how do you ensure you do that? There's always a juggling act to ensure we solve for both parties equally as well.
BTN: What has Mastercard been doing to improve hotel acceptance and management of virtual payments?
Pettican: We
have two solutions that we are taking to market as we speak. One is
commercial direct payments, which is effectively a straight-through
processing capability. We are actively in the market at the moment, working with organizations and partners to solve exactly that scenario. How do we see the death of the fax machine? That will take some time. We also just launched a very significant acquiring marketing campaign to really bring to the forefront the benefit that acquirers and merchants can [get] from taking cards and virtual cards. Travel is at the epicenter of that, so we're looking to radically increase the amount of acceptance in a B2B context.
BTN: How is AI changing the business?
Pettican: We're working with partners around all things AI in T&E. How do you start things about automating expense management in compliance? How do AI chat assistants operate and work for booking and reporting? In the recent survey, nine in 10 decision-makers said they are actively investing in AI in the travel sector. For me AI,
is two-fold. How do we use it to protect our customers and how do we
use it to help our customers grow? We see AI playing an increasing role
in many of the verticals, and travel is one where we'll see some change. We need to make sure our product solutions at Mastercard evolve to take advantage of it for our customers.