Evolving payments

From the December 2019 print edition

A new study has found that while corporate cards are the most used method of payment for business travel, many companies do not realize that alternative payment solutions exist that might better suit their needs.

Entitled “Evolving Payments In Corporate Travel”, the joint study, which was released in October, was conducted by the Association of Corporate Travel Executives (ACTE) and Mastercard, with contribution from the NAPCP, a membership-based professional association for the commercial card and payment industry.

Leigh Bochicchio, executive director of ACTE, says that digitalization is driving significant change across all business functions within organizations globally. And nowhere, she adds, is this more apparent than in the world of corporate travel management.

“When it comes to the management of business travel payments, the array of solutions now on offer can be daunting,” Bochicchio says.

Four payment types
The study’s findings are based on responses from 290 corporate travel managers and executives in Asia-Pacific, North America, Latin America and Europe who were asked what business travel payment type they preferred of the four currently in use:

  • corporate or commercial card;
  • lodge/central travel card (an account used by a travel agent to book travel for centralized management of travel expenses);
  • virtual card (a single-use or multi-use account number used for a limited scope of travel spend or purchases); and
  • a personal credit card.

While corporate cards are the most commonly used (67 per cent) and the most preferred, Jennifer Merli, vice-president of global product management at Mastercard, notes in the report that “only 54 per cent of those surveyed are satisfied or very satisfied with their current modes of payment, meaning there is room for improvement.”

She goes on to write, “is this general dissatisfaction translating into the use and adoption of new payment types, such as the virtual card? For example: those with an appreciable percentage of travelling employees may consider adopting virtual cards to apply more control than a typical central travel account offers. This approach can be complemented by corporate cards for more transient spending needs like restaurants, ground transportation and other on-the-go items.”

Staying current
In an interview with Supply Professional, Merli says Mastercard partnered with ACTE on the study in order to make sure that the company remained current with customers’ wants and needs, and how and why those customers use Mastercard products.

“It was a quantitative study, but with tons of good qualitative information that helps explain the numbers,” Merli says. “We started at a baseline with an attitudinal and behavioural questionnaire. We wanted to know how they use payment cards. What kind of payment cards do they use and why? Even at that very basic level, it uncovered some rich behavioral information. Not just ‘I am using a corporate card for hotels and a lodge/central travel card for my employees’ air spend.’ It’s the reason for those choices that we really want to know more about, for when we know what the specific needs are then the tailoring of an actual solution is going to be a better fit.”

Data capture, she writes in the report, is “more important than ever for expense reconciliation, budget and regulatory compliance reporting, ongoing travel supplier negotiations and duty of care.”

Other findings in the report revealed that:

  • While corporate cards remain the most widely-used travel payment methods, 48 per cent of respondents confirmed that personal cards are also used by travellers—especially those in organizations with lower travel spend and in North America.
  • Corporate card usage rises broadly in line with annual travel spend. Almost all (97 per cent) organizations with annual spend of over US$100 million use them, while only 50 per cent of companies spending less than US$1 million follow the same path.
  • No matter what payment solution is being used—corporate, lodge, virtual or a combination—the onus is on organizations to ensure a clear mandate is in place and that it is being followed correctly.
    Mastercard, adds Merli, believes travel data capture is paramount if companies want to:
  • Understand what employees are spending and where, for expense reconciliation and policy administration;
  • Provide a duty of care to employees; and
  • Support ongoing travel supplier negotiations around rebates, rewards and incentives

“It’s important to remember that an organization’s payments solution is only as effective as those using it,” she says. “Employee education is crucial to the success of any travel payments program.”