PAYMENTS
VIRTUAL
ADVANTAGES OF SINGLE-USE VIRTUAL CARD NUMBERS
• SIMPLE RECONCILIATION One card number per transaction makes it very easy to match the payment to the booking.
• ENHANCED INFORMATION Additional information can be attached to the payment, such as cost-centre numbers or project codes.
• ALMOST IMPOSSIBLE TOMISUSE Limitations can be imposed on the amount, data, merchant or merchant category for the transaction.
• FRAUD MINIMISED Virtual numbers cannot be stolen.
• IDEAL FOR NON-CARDHOLDERS Organisations don’t want to give plastic cards to everyone who works for them.
• EFFICIENT FOR ISSUERS Virtual numbers don’t need replacing, as plastic cards do, because they cannot be lost.
• EFFICIENT FOR TMCSANDOTHER INTERMEDIARIES Solves the challenge of ‘cardholder not present’ transactions, making virtual card numbers particularly well suited to internet commerce.
• EFFICIENT FOR MERCHANTS Any merchant which accepts plastic cards can accept virtual card numbers.
have a corporate card. Conferma, a virtual card number specialist, claims automation reduces the cost of the traditional billback process by 70 per cent, which should reduce the fee TMCs charge corporate clients for the service. UK government departments are reputedly now paying less than 50p per billback transaction, compared with more than £10 per transaction before virtual number technology was introduced. Low-cost carriers are paid for with virtual card numbers because they do not always accept lodge cards, and the quality of data generated is poor even if they do.
are their fastest growing commercial card products. Airplus experienced 44 per cent growth in spend through its Airplus Integrated Data and Acceptance (better known as AIDA) single-use numbers solution in 2012. That followed 55 per cent growth in 2011 and 48 per cent in 2010.
ONE-OFF USAGE So what, precisely, are these virtual card numbers or single-use accounts that are making payment people so giddy with excitement? A virtual card number is a 16-digit number just like those stamped across the middle of a plastic corporate card. However, with virtual numbers, there is no plastic – instead, they are generated electronically to be used (usually) for a single transaction. In that sense, they are more akin
to lodge cards, which have been used for decades by corporate clients to pay for flights and other transactions booked through their TMCs. A lodge- card number is a central account
In association with
“Virtual card numbers are going to be the biggest change we will see in the payment industry in the next five to ten years”
placed with the TMC, with all bookings for the client paid through that one number. Virtual card numbers are essentially central accounts too, but instead of one number covering all transactions, a unique number can be generated each time. At present, separate single-use virtual numbers are rarely used for every transaction put through a lodge card. Instead, they are mainly used where a traditional lodge card or corporate card arrangement is inadequate, principally when paying for hotel billback or low-cost carriers. Hotel billback is where a hotel invoices a corporate client (or, more often, the TMC paying on behalf of the client) because the traveller does not
WIDER BENEFITS Now that virtual numbers have become an established process for these well-defined areas of spend, the card and travel industries are waking up to the idea of appending them to every payment. Whatever the transaction, the same benefits of single-use numbers apply, because the 16-digit number can act as a unique identifier for the transaction all the way from booking through to payment, reconciliation and data consolidation. “You can tie that one transaction down to that one booking for the client and achieve high-level, back-end data reconciliation,” says Helen Mason. The other major benefit of virtual numbers, wherever they are deployed, is control. A client can specify
ARE WE GOING TO RUN OUT OF VIRTUAL NUMBERS?
ALTHOUGH BILLIONS of card numbers will start to be used if one is generated for every payment, there are a lot of potential card numbers out there. For example, Visa owns the right to issue every card number that begins with the figure 4, which puts about 100 trillion numbers at its disposal. It is also possible to recycle numbers that have been used before. And if the payment industry should start to run out of numbers for reasons that cannot be foreseen today, the solution would be to enlarge card numbers so that, instead of having 16 digits as is the norm at present, there would in future be 17 or more. So it doesn’t look like the well will run dry just quite yet...
2013 Buying Business Travel • 13
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