Applying Robotics & Rules to the Travel Payment Process

Troovo's Kurt Knackstedt talks …

• How Troovo works
• Virtual cards in the age of security hacks
• How to realize virtual card delivery on demand

Robotics process automation provider Troovo's software routes payment decisions based on each client's needs and automatically switches on a virtual card process—or in the future, blockchain and other payment processes—when appropriate based on those client rules. Since Troovo was named Innovator of the Year at BTN's Innovate conference in October, the middleware provider has expanded via travel management companies like Orbit World Travel. The company also is expanding its partnerships with issuing banks and other virtual card providers like Airplus and Wex. CEO Kurt Knackstedt talked with BTN payment and technology editor Adam Perrotta.

BTN: What about Troovo's payments capability resonated with the Innovate judging panel?

Knackstedt: Even though we are not trying to compete on price, Troovo is low cost and, more importantly, we are scalable at low cost. We can generate multiple virtual cards per transaction or [passenger name record]. That means it costs users the same whether they use it for one part of the transaction like hotel or for all parts including air, hotel, car, whatever. [Scalability] has been the missing link around virtual card adoption. If you can achieve it, virtual card can be the next lodge card. It should be the new central bill standard globally because virtual cards provide better security and with Troovo, they provide better data that you don't have to spend months reconciling as you would traditional central bill solutions. The other thing, though, that the judges seemed to like—and our customers, too—is that our operating approach has no impact to the existing process. Troovo inserts into the workflow robotically, so you don't have to retrain travelers to use the virtual card product or retrain consultants every time you want to change policy around how the virtual card should be configured or what it should pay for. Our robots automate, which means there's also no overhead to generating the card.

BTN: Can you explain robotics process automation?

Knackstedt: Most systems lack a rules engine that drives logic to say, "Why are you doing what you are doing?" Today, those decisions, from generating the card to setting the parameters, are in the head of a travel consultant and there are a ton of rules driving those decisions. Our robots determine what form of payment should be used for a given transaction and what parameters should be set for the card: the spending limit, the expiration date, how many times it can be used. Our robot will take care of all of that. The logic in a non-routine-based system like Troovo is far more powerful than a routine-based system, [for which] you need a person to kick off the process. We can pre-program for an infinite number of scenarios and for situations that the corporate wants us to drive. We take that off the TMC's hands. [Troovo can initiate a virtual card payment automatically if, for example] the booking is made through the online channel, through this cost center [for] a hotel in London.

BTN: What's the revenue model?

Knackstedt: When it comes to virtual card, different markets have different models. In Australia, for example, the corporate books all the hotels with the TMC, the TMC bundles those charges into a single monthly invoice and the corporate pays. The TMC uses the virtual card to pay the hotel for the stay, and the TMC owns the virtual card relationship. If the corporate wants to use Troovo for travel and other procurement categories, we still implement the solution at the TMC to drive travel payments but we would also implement within the corporate enterprise platform to drive office supply [payments], equipment, monthly phone bills—whatever they want to pay centrally. In that model, we charge the corporate for those transactions at 25 cents per PNR. We do have to integrate into the [global distribution system] and configure the rules for each client. That's a one-time set-up fee. We don't charge issuers like Amex, BOA or Wex to generate the cards; we just help them get more volume, so they really like us. And, in that case, if the corporate has a volume rebate deal, we can push more volume on the card to increase that rebate. When [a] credit card company or an [issuing] bank becomes our customer, they pay the license fee to use our technology.

BTN: Has the desire for payment security directed business to virtual cards?

Knackstedt: I don't think there is a direct correlation that I can point to, but the message doesn't change. Virtual cards provide a significant level of security because the card itself disappears. If a security breach gets to a traditional corporate card, the corporate card is still out there. The industry needs to reduce its reliance on corporate cards. They really should only be used for taxi and restaurant spend, incidental spend. If you are pushing [corporate cards] for every part of the transaction, there is a bigger chance that it might be misappropriated. Even the less use of lodge card, the better because all of these are static cards and static cards are at higher risk of fraud.

BTN: What's next for virtual cards?

Knackstedt: We still have a long way to go. Step 1 is to make [virtual cards] the new lodge card. Post that, how do you get the cards into the hands of travelers themselves through digital wallets and mobile devices? The tech exists to push a card into a digital wallet and use it at the point of sale, especially if you have tap-and-pay capability in the market. The challenge is that the card issuers, card schemes and the digital wallet providers have to agree commercially to allow it to happen. It's happening all over the place for consumers. The corporate should want to generate virtual card on mobile devices even for a taxi. The traveler is sitting there, tap it against the terminal, card disappears; the taxi driver can't write it down. But you still need a logic layer for the corporate policy to generate the card, so if the traveler wants the virtual card for an on-demand transaction, logic-driven tech like Troovo can determine the parameters for the card and sort that so the travel manager still has control over the experience.

BTN: Is virtual card really the end solution? Many think it's bridge technology to something better.

Knackstedt: Our engine doesn't care which type of transaction is used or the payment method. Right now, we use virtual card. If a transaction is created through a blockchain platform or generated through a smart contacting engine, we can do that just as easily. We have done an integration already with a smart contract platform. We can even deal with bitcoin. As a buyer, moving forward, I need to work with middleware that is future proofed. Blockchain is a very relevant and useful tech for the travel system, but buyers can understand that they won't have to swap out our technology to use it.

BTN: How are you planning for expansion?

Knackstedt: With any growing company, there's the chicken and the egg in terms of when to put down boots in a new market. We have our first TMC going live in the U.S. shortly. Our strategy right now is to work in partnership with issuing banks and payment companies. We are going to follow their lead to the opportunities that are moving the fastest. We can work hand in glove with them to provide the support infrastructure the TMCs and corporate clients need to support virtual and unlock more volume for the issuers and card companies. We are working with a number of TMCs with global operations, and we'll go where they need to go. We are fully [Payment Card Industry] compliant [and General Data Protection Regulation] ready, and we are on platforms that can be deployed in any market.