As virtual card numbers (VCNs) gain traction, especially in travel payments, according to a recent whitepaper by Conferma, a technology provider for VCNs, the advantages to widespread adoption are becoming obvious.
In the paper, titled “Virtual Card Numbers: A Travel Manager’s Guide, ” Conferma states that VCNs represent “as dramatic an improvement in the way people pay each other” as has been seen in other payments innovations, ranging from the introduction of checks a few hundred years ago or cards in the twentieth century.
Simply put, a VCN is a 16-digit number that is used the same way that a code is used in, say, a plastic card such as a credit card. Therein the similarities end. The VCN number is generated at the point of sale, with a lifetime of a single payment, whereupon the number is discarded. There can also be an added security code, which can be generated at the time of use for additional layers of security. The travel manager also has the luxury of being able to limit the types of transactions a VCN can be used to satisfy, by, say, supplier, date range of use or even transaction amount.
And, notes Conferma, VCNs are more secure than the “traditional lodge accounts” that are the hallmark of bank identification numbers and standard cards, as they do not remain in a central depository of information. Traditional lodge accounts, according to the whitepaper, also may be tempting to fraudsters as they carry credit limits that are large enough to support several facets of the corporate travel experience, from hotel bookings to car rentals to airline tickets.
Conferma says the VCN technology allows for safeguards on overspending but also promotes a better information flow between travel managers, finance departments and the corporate travelers themselves.
For the travel manager, the advantages of VCN use come as there is real-time data on travel spend and no need to have separate processes across separate parts of the travel management experience. For the finance department there is the attraction of automatic reconciliation of purchase and payment activity, along with lower processing costs, which in turn boosts cashflow. For travelers there is reduced hassle, as there is no need to carry cards, and there’s no personal liability at stake. Other departments benefit, too, as human resources can link payments to employee numbers and ensure compliance — and fraud is effectively minimized.
Looking to what travel managers themselves want, Conferma cites a TMC Carlson Wagonlit Travel study that found managers want to find innovative ways to generate savings, which is helped by VCN usage due to lower administrative costs. Among other goals, executives want to automate processes and move toward online functionality and a mobile strategy, which of course is ideal with VCNs.
By making payments virtual, VCNs help eliminate the prospect of human error in the reconciliation process, which has traditionally been marked by manual reconciliation of purchase orders and payment statements. Because a payment number is generated at the point of sale, both the purchase and payment aspects of the travel cycle (no matter at what point or type of service) are reconciled instantly as soon as a payment is made.
In terms of an added benefit to the overall business, Conferma says that there could be the fact that VCNs give the companies that employ this technology better choice and independence when working with a solution which gives access to millions of enterprises across the globe and a range of currencies.
Though there are no universal statistics on VCN usage, Conferma noted late last year, in November 2014, that it handled 265 percent higher virtual payment transaction volume in September 2014 than it had a year earlier; that growth was mirrored by Citibank, which said in mid-2014 that its own virtual card transaction rates trebled in 2013 after doubling in 2012.
To view the whitepaper, download below: