Lodge cards are set to receive their biggest
shake-up in 30 years as various trials start later this summer to generate
single-use 16-digit card numbers in the passenger name record of every air
booking made through a central payment account with a travel management
company. With the 16-digit number acting as a unique identifier, booking and
payment data effectively will become one and the same thing, with expected
benefits including 100 percent matching, less work for TMCs, reduced risk of
fraud and improved quality control of data input. Some experts, including
MasterCard, believe the implications are even more significant, with single-use
numbers, hitherto used predominantly for hotel payments, potentially turning
global distribution systems into the corporate travel industry's primary
aggregators of pre-trip data.
Sabre and United Kingdom-based virtual card
specialist Conferma told BTN they
expect to start trials of virtual card numbers for air ticket payments later
this summer with a multinational TMC in both the United States and U.K., as
well as with national TMCs in both countries. Separately, MasterCard Europe
said it is looking to start similar pilots in "the next couple of
months" following consultations with leading TMCs, according to head of
large market commercial products Rene Stynen.
Those involved in the pilots believe the
"next-generation lodge solution," as Conferma chief executive Simon
Barker described it, will lead to profound changes in travel management.
"This is revolutionizing payments for the travel industry," said
Michael Pape, director of product marketing for Sabre. Lodge cards currently are
considerably less popular in the United States than in Europe, as American
companies often prefer employees to pay for TMC bookings through individual
corporate cards, but Pape's colleague, vice president of product marketing Neil
Fyfe, believes the single-use revolution will help convert these customers to
central payment solutions. "Anyone looking to the future for controlling
expenses has got to be looking at this," he said.
In a separate development, Conferma this week announced a partnership with U.S. Bank, representing the first time its virtual card
services will be available to corporate customers in the United States. Taken
with the impending transatlantic Conferma joint pilot with Sabre, the news
suggests a nascent U.S. interest in expanding beyond plastic to other payment
types.
Another strong advocate of the new technology
is HRG director of ancillary products Brian Merry. His TMC is not involved in the
Sabre pilot, but he expects use of one-time numbers for lodge cards to become
ubiquitous within 18 to 24 months. "No one I have spoken to has disagreed
with that timeframe," Merry said. Stynen predicted single-use numbers will
become ubiquitous for lodge accounts for large travel programs, but foresees a
future for the current lodge format for small and midsize customers.
Lodge cards, in their traditional sense, arguably
are the original virtual card programs because no plastic is issued. Also known
as central payment accounts, a 16-digit number is "lodged" for a
corporate client with a TMC to cover all air or hotel bookings made by all
employees through that TMC. Separately,
companies such as Conferma, as well as individual issuers like American Express,
AirPlus International and various banks,
in recent years have started to offer single-use virtual cards. Applicable for
only one transaction, the vendor, amount and even the date of payment can be
specified in advance, making them highly secure.
Single-use numbers have gained prominence as a
method to pay for travel services for contractors or employees (such as
trainees) who do not have their own corporate cards. The numbers have been used
predominantly to automate bill-back, the process by which hotels invoice the
traveler's TMC on departure instead of the traveler having to settle on the
spot with plastic.
Opportunities to use single-use numbers to pay
for and reconcile bookings with low-cost carriers also have been identified.
Unlike traditional airlines, low-cost carriers do not issue an International
Air Transport Association ticket number, which acts as a unique identifier to
match booking and payment data.
However, many payment companies, GDSs and TMCs now
realize that single-use numbers can improve traditional airline payments too,
because matching is never perfect despite the unique identifier provided by the
ticket number. "One to four percent of requests for money issued by
airlines do not match the files sent by the TMC for a multiplicity of
reasons," said Merry. "In the main, the airline only provides the
ticket number and value. A virtual card becomes the hook to match everything
up. You will get 100 percent matching." Stynen agreed. "If we can
have the GDS as a single source for matching booking and payment data, we can
start doing away with all the links" required to make that happen today,"
he said.
Bookings that are not matched through a lodge
card eventually are reconciled through expensive manual interaction by the TMC,
so single-use numbers will reduce that cost and improve TMC productivity. Proponents
said there are additional significant benefits. "The request for the
number is made within the booking process, so the matching is an integral part
of that process" said Conferma's Barker. "In a traditional lodge
process, matching happens only when the payment is made." Consequently,
the booking process also acts as a data quality-control mechanism because the
agent can be required to input more details about the reservation. "The
card company won't release the number until the data is provided," said
HRG's Merry.
The challenge has been to create a way to integrate
single-use card number generation into the agent's workflow without changing
it. Conferma, for example, has integrated its application programming interface
into both Sabre and Amadeus, and the pilots set for this summer are intended to
see if this problem has been cracked. If it does, Barker believes it will help
make GDSs much more valuable to the corporate market at a time when they are
threatened with loss of sales due to direct-connect strategies. "Sabre
manages more than $80 billion of travel spend one way or another, but it
doesn't have anything to do with the high value created after the booking
phase," said Barker. "It is why GDSs have been looking into how they can
strengthen their strategic proposition in the payments area."
MasterCard's Stynen agrees this is potentially
a momentous breakthrough for GDSs, going way beyond becoming an efficient
payment facilitator to assuming a role as key data aggregator for corporate
clients. "From my perspective, capturing data within the GDS is a much
harder proposition," he said. "We are currently investigating the
feasibility of it, but we are not yet in a position to say it will work for
sure."
Another company with GDS connections involved
in single-use virtual numbers is eNett International, a joint venture between
Travelport and the Melbourne-based payment solutions company PSP International.
eNett already offers virtual card numbers for airline payments that can be generated
in the GDS. However, it is a pre-paid product, requiring customers to pay into
a fund from which money is drawn each time they book an airline ticket. This
has the clear disadvantage of not offering the cash-flow benefits of a credit
account, unlike perhaps any corporate payment product other than the AirPlus
Debit Account. eNett managing director and CEO Anthony Hynes told BTN his company is responding by
launching a credit-based version of its product in July, enabling clients of
MasterCard issuers to pay with single-use credit card numbers. "They will
be able to maintain their existing card relationships," said Hynes.
Also keeping a close eye on developments is
AirPlus International, arguably the one card issuer better known for its lodge
product than its plastic. U.K. managing director Yael Klein said she expects
MasterCard and Visa issuers to move to single-use numbers for IATA airline
bookings but claimed that her company does not need to because it already
achieves 100 percent reconciliation. "We capture additional data [such as
employee numbers and cost-center codes] at time of booking in up to nine
fields," she said. "It is unique data, all of which helps to
reconcile the invoice. MasterCard and Visa cannot capture data in that way at
time of booking because they were not built to do that." Klein added that
she believes Amex also approaches 100 percent reconciliation through its lodge
card.
Although Klein considers single-use numbers
unnecessary for IATA airline bookings, she said they have proved very useful
for making low-cost carriers and hotel bookings payable through a lodge card.
One-third of the transactions handled by AirPlus in the United Kingdom on its
Company Account lodge product are single-use numbers, of which 70 percent are
for hotel and 30 percent for low-cost carriers.