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Travel and payment providers believe they have
found their way around an obstacle preventing widespread adoption of virtual
cards: taking them mobile. Virtual cards have long been hailed as the ideal way
for business travelers who don't possess corporate cards to settle hotel bills
upon departure. Despite years of attempts to educate hotels and their staffs, however,
too many front desks still either do not recognize virtual cards as a valid
payment method or cannot, when needed, find the virtual card number guests'
travel management company had sent in.
The travel industry does not appear to track
non-acceptance, but one card issuer said, "A global TMC told us that
payment problems at the front desk are the most complained-about issue on its traveler
Among various initiatives underway, virtual
card technology company Conferma Pay is trialing an upgrade of its app to store
virtual numbers in an Android or Apple mobile wallet. Payment is made by
holding the phone to a near-field communication reader and then providing a
secondary form of authentication, such as thumbprint identification. "E-wallet
enablement is here," said Conferma Pay CEO Simon Barker. Visa told BTN it
is working on a similar development.
Conferma Pay's mobile strategy includes
becoming an issuer to corporate clients in its own right for the first time,
offering a prepaid option through the mobile wallet. "It's our plan to
enable all our intermediary partners to deliver mobile virtual payment, but
where the intermediary isn't a partner, we can deliver directly to the
corporate client," Barker said.
Meanwhile, the U.K.'s GTMC, a membership
organization for TMCs, has launched a strategy with payment partners AirPlus
International, Barclaycard, Diners Club and Wex and with hotel and global
distribution system partners to create a standard approach to mobile virtual cards.
The initial intention is to standardize the passive presentation of virtual
numbers within mobile phones for travelers to show front-desk staff at check in.
The next phase will be to align as far as possible as the industry evolves to
active payment through mobile virtual numbers. "Our intention is to have
standardization because of rapid turnover at hotel front desks," said GTMC
CEO Adrian Parkes. "It would be so much easier. Clearly there are other
payment companies beyond our own partners that we would have to talk to."
Although Conferma isn't a GTMC partner itself,
all four of its payment partners use Conferma technology. "What GTMC is
looking to do is the right thing," Barker said. "Giving virtual cards
mobile functionality can definitely be done technically speaking. It's now
about galvanizing the travel industry to get behind it. It's the infrastructure
and awareness that need to catch up. We have to make sure we're not VHS and
Betamax about this." That was a reference to a global battle for dominance
between videocassette formats in the 1970s.
AirPlus UK managing director Paul Spelman said
the GTMC initiative will help issuers develop on a common time frame. "If
this becomes a standardized way of operating, it will provide the business case
internally for us to invest," he said.
Barclaycard managing director of commercial product Maria Parpou said
one example of standardization would for issuers to agree on the start date for
the validity of a virtual card: the day of booking or the day of check-in.
Parpou also is pressing to avoid the phrase "virtual cards" because a
virtual card stored in a mobile wallet will look exactly the same as a plastic
card stored in a mobile wallet. "Let's call them Visa cards or Mastercard cards," she said. "Language
matters. 'Virtual cards' sounds like something from science fiction."
GTMC and its partners are well aware that
taking corporate payment mobile is more challenging than in the consumer
sector, in which it has become ubiquitous in China and other parts of Asia and
is gaining momentum in the West, too. Part of GTMC's strategy is to create a
back-office process to use the same mobile payment technology being created for
virtual cards also to generate and transmit invoices to clients. "TMCs
spend a huge amount of time claiming invoices so that clients can claim back
the VAT," said Parkes.
Barker believes mobile can make virtual cards
payable for any on-trip transaction, in addition to the pre-trip transactions
for which they are used today. However, said Barker, more hotels and other
merchants will need to introduce near-field communication readers to make this
ambition reality. There is also an even wider, global VHS/Betamax-type issue to
be resolved: The West uses NFC for mobile payments, whereas China uses QR code
Another challenge is that parts of the lodging
industry still use fax machines to receive virtual card confirmations. While bookings
made through GDSs transmit to hotel groups' centralized reservation systems,
payments are made to individual properties. Yet TMCs have no means to transmit
virtual card details to hotels' property management systems. Consequently, TMCs
had to fax the information because faxes are Payment Card Industry compliant,
whereas e-mail is not. Fax communication is highly unreliable, according to
Spelman. "The fax number the TMC has is not necessarily up to date,"
he said. "You have no idea whether the fax is going to arrive or with
which department or what's going to be done with it by the hotel."
In 2016, though, Conferma Pay launched an
encrypted e-mail service called Conferma Connect, which is PCI compliant. According to Barker,
60 percent of Conferma's virtual card confirmations are now communicated by secure
e-mail, and in the U.K., that number is higher, at 85 percent; it's unclear
whether he's referring to Conferma's book of business or the market as a whole.
However, many independent hotels have not converted to Conferma Connect, and
even e-mail messages can go astray at front desks.
"Mobile wallets are far more secure, and
the traveler feels more comfortable," said Spelman. "Why not align
with the direction in which the consumer payment world is moving?"
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