Virtual Cards: The Problems & the Solutions

Video game publisher Riot Games considers itself a young company, as the age of its roughly 2,200 employees, based in 14 countries, averages 24. "The company doesn't really want to give corporate cards to a lot of them," Riot Games global travel head Sean Parham said.

About 400 of those employees travel for work, 35 percent of them internationally. "A lot of them don't have credit, and they're running around with debit cards," Parham said. So at the beginning of the year, the company implemented AirPlus International's Virtual Account with Wex Bank to pay for hotels, which account for $8.5 million in annual spend.

Parham, however, is disappointed with AirPlus' lack of aid in getting more hotels to accept its solution, despite requests for help. "When we first started down this road, they basically told me that it was on me to get the hotels to accept the payments. I did that with our preferred hotels. … [AirPlus] did little more than provide verbiage to share with the hotel management."

About half of Riot Games' AirPlus Virtual Account hotel transactions go through, and non-U.S. transactions are rejected about 90 percent of the time, according to Parham.

Parham requested that BTN not reveal Riot Games' name when providing AirPlus the opportunity to respond to his comments, though he said the payment provider was "fully aware of my position." Yael Klein, head of AirPlus International and president and CEO of the Americas, said it was hard to respond without that information but that, "we try to work very closely with both customers and TMCs to make it a smooth process." She acknowledged that virtual cards still present challenges, but also said the situation has improved.

"I don't want to downplay it. … There's still a handful, and every handful is too much for transactions where it didn't work. I get it, because the traveler feels lost at reception. But it has improved significantly. Ten years ago, no one knew what a virtual card was," Klein said. In 2015, AirPlus processed more than 1.3 million virtual card transactions for hotel rooms and the vast majority of the bookings had no issues, she added.

Trouble Spots

"What I really need help with is nonpreferred hotels and international hotels," Parham said. "We have a Hilton in Tokyo that is pushing back on normal authorization because the traveler doesn't have the same credit card in hand when arriving at the front desk. [Hilton] told my travel coordinator that if she would book it through Expedia, they would accept that payment." Riot Games has gone as far as indemnifying the hotel from charges and chargebacks in the case of fraud, something virtual cards are said to reduce or eliminate, but Parham said the Hilton in Tokyo continued to refuse the payment method. Parham spoke with Hilton Worldwide but was told the company does not accept virtual payments because of liability. "That means that none of these [virtual card] providers, not just AirPlus, are really doing much to bridge the gap ... with the big chains to make this happen," he said.

Las Vegas hotels also have posed obstacles for Riot Games. Parham said MGM properties, where Riot Games books most of its Vegas rooms, require virtual card authorizatiosn to be signed and returned on the hotel company's own form. That's an extra step that virtual cards are supposed to eliminate. "I have been arguing with MGM International about this for months with no success," Parham said.

Hotel companies that are not part of Riot Games' program, such as Marriott International, also have been challenging. Marriott requires corporates to use the hotel company's own authorization form to complete a virtual card payment.

Hilton and Marriott declined to comment on their plans for virtual card acceptance. MGM Resorts International could not be reached for comment.

"This goes far beyond AirPlus and Wex," Parham said. "This is really between the card providers, aka the banks, the GDSs and the hotels." While jaded by his frustrating experiences, Parham is not ready to give up. Riot Games will require hotels to accept AirPlus Virtual Account as part of its upcoming request for proposal process in August or September. Those hotels with which Riot Games has had long-term relationships likely won't have a problem with the RFP requirement. "It's the others … that we struggle with," he said.

Industry Solutions

The payments industry is well aware of the virtual card acceptance issues and the outdated and yet nearly universal requirement to fax a credit card authorization to each hotel for each booking made with a virtual payment. Travelers often are stranded when faxes are lost or misplaced. From payment providers to hotels and from GDSs to startups, the industry has taken steps to remedy and advance the situation.

To decrease lost faxes, providers like Wex and CSI have created solutions that automatically fax authorization forms days before check-in and again on the arrival day. Others have apps that allow a traveler to refax the authorization form with one click and show a digital version of the card at the front desk. Sabre vice president of virtual payments Neil Fyfe said his company is working on a solution like this within TripCase, Sabre's itinerary management app.

But such solutions can be a burden for smaller hotels. Parham realized that on one day, 42 Riot Games travelers were checking into the same small hotel. The AirPlus/Wex solution generates a fax two days before check-in and on the day of check-in, which would have resulted in 84 faxes. "For some of these hotels, we put in thousands of room nights a year. That's a lot of faxes," Parham noted.

The goal is to eliminate the need for faxes. In May 2015, Hotel Technology Next Generation released the Virtual Payment Cards Specification standard to help hotels distinguish virtual card numbers from traditional cards and process them without faxes. But HTNG COO David Sjolander said adoption would take several years. "Because the standards are open to the public, we often don't know when they have been implemented. The head end of the process for corporate travel will be the GDSs," Sjolander said in April. "I tried to get information from them about six months ago but was unsuccessful."

Several other suppliers have taken matters into their own hands. In July 2015, Choice Hotels International released its own remedy that allows a travel manager or TMC to populate a field during the booking process with a code that indicates a card number is associated with a virtual card and that Choice has authorized it. This eliminates the need for a fax authorization and the need to request a physical credit card from the traveler. The solution, however, is limited to Choice hotels or properties that use Choice's SkyTouch cloud-based property management system.

In June, City Express Hotels became the first chain in Mexico to process Conferma virtual cards without requiring fax authorizations. Conferma delivers the virtual card numbers to the hotel through a direct connection to the application programming interface of Conferma's Hotel Booker platform. Conferma already had fax-free capability with Premier Inn in the United Kingdom through a similar connection. The solution was feasible because City Express Hotels has a cloud-based system that allows it to update all its hotel reservations systems simultaneously.

"My mission over the next few years is to figure out universally how to eliminate the fax," said Grasp Technologies vice president Dave Lukas. "We're talking with a few hotel partners on it now." He said Grasp has the ability to send the card data now through its Secure Connect system, but "some hotels won't let us do that directly because maybe they don't want us behind their firewall or don't want us to connect to their system."

Meanwhile, credit card networks began enabling mobile wallets for corporate card use last year, and the possibility to merge virtual cards with mobile wallets may be closer than imagined. Combining both technologies is "definitely something that is under review" at Sabre, according to Fyfe. "Virtual payments pushed out to mobile wallets is something we should look forward to in the not-too-distant future," he added

EDITOR'S NOTE: Aug. 2, 2016. The context around AirPlus president and CEO Yael Klein's initial comments in this article has been updated to reflect more accurately her conversation with this Business Travel News reporter. BTN regrets any misrepresentation, which was unintended.