Why 2022 will be the breakthrough year for virtual cards

John Sturino, vice president of product and technology, Egencia

As business travel continues to mount a tentative recovery, expect a surge in the use of virtual cards in place of the traditional plastic corporate card.

Virtual cards are digital-only temporary credit cards that never exist but can be used digitally with a pre-approved supplier either by directly providing the card number as part of the booking process or by downloading a dedicated mobile app. The result is a faster, easier and more secure way of paying for business travel.

Because the cards don’t physically exist, adoption requires changes in the way travellers and retailers behave. The rise of contactless payments to a ubiquitous level during the pandemic has solved both of those hurdles, paving the way for companies to gain real traction in rolling out virtual payments.

Virtual cards were steadily growing in popularity with corporates before the pandemic struck at the start of 2020. In the next eighteen months, we will see an exponential increase in their adoption driven by a number of key trends.

Increased scrutiny on travel budgets
The economic pressures created by Covid-19 have increased scrutiny on budgets in every department and business travel is no exception. A study of 140 travel managers conducted by Morgan Stanley revealed that more than half (52 per cent) expect their 2022 travel budgets to be between 11 and 50 per cent lower than in 2019.

In this environment, it is critical that corporate travel managers can demonstrate that travellers are complying with company policies and that travel programs are delivering the expected ROI. For organisations, virtual cards are an extremely effective way of promoting compliance with policies and gaining efficiencies in travel spend.

With virtual cards, companies benefit from centralized visibility on their spending, allowing them to better control budgets as well as gain easier access to actionable insights. This approach streamlines a corporate’s often-complex spending reporting, reconciliation, expense and invoice management processes.

In addition, equipping travellers with a digital one-time-use virtual credit card and sharing it directly with approved suppliers helps fraud and streamline the prevent post-trip expense report process.

Speed ​​and simplicity
Virtual cards also have clear benefits to the end user, especially in the context of the future of work. Because physical cards are not required, it makes distributing corporate cards to remote employees virtually instant, helping to make onboarding new employees even simpler.

Because adoption of contactless payments has now become the norm, it is also easier for travelers to use virtual cards for all travel-related expenses – from the rideshare to the airport to the coffee in the morning – making expense management much less painless.

Travelers benefit from the increased speed and simplicity that virtual cards facilitate. A busy, tired traveler that shows up in a hotel lobby off a long-haul flight is delighted to find that their pre-loaded virtual card has already been given to the hotel, speeding up their check-in (and check out) and eliminating the need to present a physical card.

Similarly, at the end of a trip, the same traveler benefits from a drastically simplified expense process that automatically reconciles a hotel or flight against the employer’s virtual card, reducing the burden of individual expense claims that need to be created and submitted.

Also, if desired, employees can link their virtual card with a physical card, allowing all trip expenses to sync with spend management platforms automatically. This is especially useful for road warriors who are usually equipped with corporate cards.

Personal debt challenges
Virtual cards also eliminate the need for business travelers to spend money out of their own pocket by ensuring that the biggest spend categories on a business trip are paid directly from employer to supplier, bypassing the traveller altogether.

Partly as a result of Covid-19, but also due to the rising cost of living, personal debt levels are soaring. A study from LendingTree revealed 36 per cent of US consumers went into debt in December 2021 by an average of $1,249.

Virtual cards are an effective way for employers to alleviate the unfair burden placed on cardless travellers and ensure that they don’t suffer financially as a result of their trip.

As the business travel industry starts to rebound, virtual cards will soar in popularity as corporate travel managers respond to increased scrutiny on budgets and travelers start to experience the benefits that this payment model creates.

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