Speaking on the challenges of using virtual cards for hotel stays, one attending buyer at an educational session during the Global Business Travel Association's annual convention offered a succinct description.
"When it works, it's the most beautiful thing," she said. "When it doesn't, it's a freaking disaster."
While hardly a new technology, virtual cards are poised to become a much more dominant force in the payment sphere in the coming years. A recent Juniper Research report projected that there will be a total of 28 billion virtual card transactions around the world this year, and by 2027, that volume will be more than 121 billion. By then, the U.S. alone will generate $71 billion in B2B virtual card revenue, representing nearly three-quarters of total global revenue.
Earlier this year, payments data and news platform Pymnts published research showing that, while corporate cards remain the dominant payment method for business travel, 37 percent of travel buyers report using virtual payments in their program for some travel, and a majority said virtual card use would expand over the next five years.
New workplace realities due to the Covid-19 pandemic are propelling some of that momentum. As remote and hybrid work set-ups require larger groups of employees to regularly travel, virtual cards can be a more feasible solution than distributing new slates of corporate cards.
Allison Gustafson, senior billing travel specialist for Rocket Central, said during the GBTA session that her company has been using virtual payment for groups and meetings invoices.
"A lot of our team members are out of state and considered remote when they previously were not, and we're bringing them back on a monthly basis," she said. "We've been creating groups of preferred hotels, and we're paying those invoices with a virtual card and are able to track this in our spend."
The particular problem with using virtual cards for hotel payments, however, is that the technology still has not quite caught up with the process. Marriott International VP of global sales for the U.S. and Canada Kathy Mouw explained the standard process, in which the front desk gets the virtual card information, but there is no way for them to decipher whether it is a virtual card on standard credit card. The fax machine, surprisingly, still is frequently used to send authorizations, but depending on their training level, the front desk employee might not even know to check for it there. The hotel industry has seen a high level of turnover in recent years, particularly among front desk employees, which further has complicated the situation, Mouw said.
"Making sure they're all up to date on this is more of a challenge," she said. "Many of our global salespeople were getting calls late at night, saying they have an entertainment group sitting in the lobby who can't check into the hotel."
In August, Marriott and Grasp Technologies announced they had implemented a new workflow for virtual payments, alongside travel management company Corporate Travel Management and the travel team for The Walt Disney Co. The workflow allows GraspPay to send payment details to Marriott's property management system, which enables front desk associates to see that information without leaving the property management system.
Marriott is working to expand that project, and Grasp had said it someday could become an industry standard to simplify virtual card use for guest stays.
"It's not easy when you have multiple PMS systems across different brands and regions globally, but we have turned around a customer from saying they were about ready to walk out the door with millions of dollars in business to advocating and saying this is a great process for us," Mouw said. "We will have an integrated, end-to-end solution, but it will take some time."
Grasp senior sales director for virtual payments Stacey Mack said being able to communicate with property management system is "the first step in the right direction" in easing the pain points around hotel virtual card use, and the company is working on other technologies solutions to move it further. In the meantime, buyers still need to work closely with hotel partners and other suppliers to make the process as seamless as possible. Gustafson, for one, said her virtual pay company calls hotels on their behalf to confirm virtual payment card information is on file three days in advance of a stay, so a traveler will at least have a heads-up if there is a problem on the horizon. She also said she has worked with her TMC to add a button on itineraries that they can click and enter a hotel's fax number, if it's different than what was in the GDS, and have the virtual card information sent to the front desk if they have trouble with check-in.
There are other obstacles to overcome in hotel virtual card use. The card terminal at some hotels, for example, might be set to the wrong merchant code, which would block the virtual card from being used. Virtual cards configured only for hotel stays can't be used for incidentals, which might leave guests surprised or unprepared if they have to provide a second card at check-in, Mack said. Gustafson said hotels in Las Vegas have been a particular challenge for virtual cards, as many require authorizations up to 10 days in advance.
Both Mouw and Mack, however, said they have seen more recent focus on the challenges around virtual card use in the hotel industry.
"We've come leaps and bounds in a year, and having good relationships with hoteliers, we're being able to come up with processes that make sense for everybody," Mack said. "As an industry, we have to work together to make these solutions work."