Efficient expense management practices are more important than ever. Virtual payments have emerged as a viable and secure alternative to traditional payment methods such as credit cards. This payments technology has now even been consumerized outside of the enterprise arena, with consumer apps like Privacy offering single-use numbers for security. But what exactly are virtual payments? What problem do they solve and why should corporate travel managers, agencies and business travelers care?

Virtual payments solve the security issue of having one card number to use for multiple transactions. This means that anyone with the number – including a criminal – can use the card to buy things. So rather than a fixed number that can be re-used, a virtual card payment is a one-time number for a specific travel event. This is ideal for travel agents and corporate travel managers who want to protect from themselves fraud and be sure a particular transaction is for approved travel. This also means that transactions do not need to be manually reconciled post-trip. This saves time and reduces the potential for human error.

The problems of fraud, compliance and reporting

There are three key problems when it comes to payments in business travel: fraudulent transactions, policy compliance, and expense reporting. Since a virtual card payment is a unique card number for each purchase, it addresses each of these problems.

Fraud has become an enormous issue throughout the world, especially when it comes to “card not present” transactions generally associated with online commerce.


In the U.S., one study found that 45% of all fraud was due to “card not present” transactions. In Canada and the U.K., card not present fraud is expected to nearly double by 2018. By delivering a single-use, PCI-compliant number assigned to a single designated transaction with one vendor, virtual card payments prevent “card not present” fraud.

Contrary to popular belief, corporate credit cards are not the most compliant payment tools. With cards in their possession, employees can use them at will. This introduces the need for audits to ensure that transactions match travel policy, while bookings must be matched to payments manually. Sabre research found that travel buyers spend an average of 40 hours reconciling expense and other payment data each month. However, with virtual card payments, bookings are automatically matched to payment.

Finally, employees must spend time reconciling expenses into expense reports. This all takes time away from revenue-generating activities, which costs companies real money in both lost productivity and non-compliant travel spending. It’s also much more clear for employees as far as what in-policy travel consists of when a virtual card payment is applied up-front. Unscrupulous expenses are not covered with a virtual card, thus giving the control back to the corporate travel manager and reducing program travel expenses.

Millennial preferences

Virtual Payments (4.15.16) (3)

When it comes to the business case for virtual payments, there’s a looming force ahead: Millennials. This demographic will soon make up the majority of the workforce: by 2025, nearly 75% of workers will be considered Millennials.

Millennials have some key characteristics that make them especially suited for virtual payments. This generation went through the Great Recession while facing record levels of student debt. Combine those two events with stagnant wages, and traditional credit-building events such as buying a house are no longer mainstays. This means that many Millennials are not able to qualify for a corporate card – and if they do, many prefer not to carry one. A recent Bankrate.com study found that 60% of 18 to 29 year olds don’t even own a credit card. Virtual payments allows employers to offer a payment method suited to employees within this shifting environment.

Millennials also expect a higher level of service than most demographics. So rather than spending time on rote bookkeeping, agencies and travel managers can spend more time maintaining those important traveler relationships. The traveler is more satisfied, which encourages more overall compliance with travel policies and tools selected by the company.

The future of payments is virtual

The cultural shift away from physical credit cards is also tied to technologies that eliminate the need to even carry plastic: Apple’s ApplePay makes a fingerprint into a payment method, as do “express pay” options for point-of-sale transactions. Altogether, these technologies enable a vision of a future with far less fraud and more time spent on the important revenue-generating activities that drive business forward.

Learn more on virtual payments here.