Many view the payment and expense sectors as two of the most
innovative and technically advanced areas associated with travel management.
With mobile devices increasingly influencing the way payment and expense
procedures function, these two areas will have many more opportunities by 2020—as well as some inherent concerns and implications. A sea change toward
virtual cards, for example, already may be underway, leaving many questioning
the future prominence of plastic.
Payments today are "transaction and functional"
and serve the important role of enabling the quick, efficient and secure
settlement of hundreds of millions of transactions between business travelers
and suppliers, said MasterCard group head of global T&E products and
solutions Richard Crum. "But payments can offer so much more value in
predicting what's necessary to help people manage through disruptions and the
challenges of business travel and proactively inform people of opportunities,"
he said. "I would argue that payments has an opportunity even broader and
deeper than a travel management company or a tech company to do that. Payments
see it all."
As payment providers holistically see a transaction in terms
of what, where, when and how much was purchased, Crum said payment mechanisms
in the future will play a "much more significant role" than simply
paying for items. They won't supplant travel management companies—"there's
still a service and functional element for the TMC," he said—but payment
systems can help clients use data to understand behavioral patterns. Outside of
travel, for example, MasterCard uses data to gauge fuel prices and holiday
spending trends. This helps retailers, intermediaries and other partners better
understand data and make smart decisions, according to Crum.
HRG chief executive David Radcliffe said one consumer
technology that will have one of the bigger impacts on corporate travel by 2020
is the concept of cardless payments. He said such a solution "encaptures
what is needed: security at both the individual and corporate level."
Simon Barker, CEO of payment company Conferma, envisions
virtual cards as the solution for much-discussed traveler-empowered models
(open booking, Managed Travel 2.0, etc.) as well as for content and channel
fragmentation, because they can be the "consistent thread" for policy
application and data collection, regardless of how a booking is made. Barker
said virtual card numbers will give travelers more freedom to book any supplier
through any channel, and, should policy rules be built into card number
generation, provide managers with the ability to authorize an itinerary.
"It means the rules engine can be the payment
authorization process, not a policy document," Barker said. "The
correct booking data will have to be entered to create the card number, and
that data can be used for management information and reconciliation.
"The one universal fact about managing travel is it all
has to be paid for," Barker continued. "If you can pull the data in
from the payment solution, you have a universal standard of reporting."
While he doesn't think conventional plastic corporate cards
will be completely replaced by virtual cards, Barker predicted they will be "fewer
in numbers" and used only by "frequent power travelers." Virtual
cards, he said, have the potential to account for 50 percent of the corporate
payments market, but while they are "growing at an exceptional rate,"
such options today "still only have 2 percent of the market."
Crum said the world of payments will look a lot different in
2020. It's already shifting. Rather than simply viewing credit card providers
as doing only what that moniker suggests, increasingly they are thought of as "payment
networks."
"That world is going to change so rapidly to a more
secure and sophisticated form of payment devices and payment interactions,"
Crum said. "That future is not that far off."
Cindy Estis Green, CEO and co-founder of hotel data
consulting firm Kalibri Labs, said the growth of mobile devices and electronic
payments and currencies—such as iWallet, Google Wallet and Bitcoin—may lead to
integrated incentive programs encompassing merchandise and travel. However she
is uncertain whether hotels will partner with the electronic payment systems,
as that may affect the value of the hotel frequent guest programs, which
essentially are a "type of electronic currency."
"There will be a lot of ways you can pay and build up
points for things in a similar kind of way and that's a big wildcard,"
Green said. "It will affect corporate travel a lot, so it's difficult to
know what's going to happen if iWallet and Google Wallet will tie into expense
reporting. The frequent guest programs will be heavily influenced by the new
payment systems."
Citing security concerns, DHL regional category manager for
T&E Michelle Hunt is slightly more skeptical of mobile payments becoming a
cure-all solution. "I talk to our phone guys about how often we're hearing
from travelers about lost, stolen, broken or dropped-in-the-toilet phones,"
she said. "If that's your lifeline and your form of payment, you're in
trouble. There's still some concern on my side on how prevalent that will be on
becoming a form of payment."
Tracking Optional
Services
Managing expenditures on all the various supplier ancillary
products and services—a pain point for many travel buyers—will be easier by
2020, but only if sufficient data is available, according to Advito principal
Bob Brindley.
"As ancillaries aren't bought at the time of ticketing,
they're not in the TMC data," he explained. "The only way to get that
is through supplier or credit card reports—if the credit card [companies]
improve on the level of data that they are able to capture and pass it on to
the buyer."
University of Texas at Austin director of travel for
intercollegiate athletics Kevin Maguire believes the ability to track
ancillaries already exists; however, the industry will be in the same
predicament by 2020 unless suppliers release the ancillary data. And suppliers
won't release that data unless there is more pressure applied from the consumer
side, and notably from corporations. Maguire said he doesn't yet see such
pressure applied to suppliers to force a change.
Maguire said the current situation means suppliers are
passing the blame to each other.
"If you ask for ancillary fee breakdown the credit card
company says, 'We can, but the airlines say they can't,' " Maguire
explained. "You ask the airlines, and they say the credit card companies
can't. You go back to the credit card companies, and they say, 'We can, but the
TMCs won't.' "
One reason why suppliers are hesitant to release the data is
because ancillaries, which generate billions for suppliers, currently are not
taxed. "So it's a circle of who won't do it," Maguire said, "but
everyone says the tech and capabilities are there."
This report
originally appeared in the Nov. 11, 2013, edition of Business Travel News.