Conferma Pay was founded in 2005 and combines innovation and expertise to push the boundaries of what can be achieved in the world of virtualized
Business travel is a sizeable market in its own right, worth an estimated US$1.4tn annually and supporting an estimated one-in-seven jobs worldwide.1 But it also has an outsize influence on the fortunes of the wider travel industry. For example, while business travellers only account for around 10% of passengers on the major airlines, they account for half of their revenues and up to three quarters of profits.2
How business travel evolves is therefore likely to have an impact on all of us – and not just the routines of the corporate card-carrying travellers who have traditionally been identified with the sector. In the face of economic turmoil this century, business travel has been more volatile and slower to recover than leisure. During the 2008-09 global recession, for example, international business travel from the US fell by more than 13%, compared with a decline of 7% for leisure travel – and, while leisure travel had recovered within just two years, business travel didn’t fully rebound for more than five years.3
Why this time is different
In the post-pandemic world, there are many more variables at play than in previous recoveries. Barclaycard, as one of Europe’s largest issuers of commercial payment programmes, has a unique insight into the everyday behaviours of business travellers and the evolving needs of the companies they work for.
As Linda Weston, Head of Core Product, puts it: “The market recovery is not just a matter of economics. It is also a matter of corporate responsibility, wrapped-in with new working patterns, wrapped-in with mass-adoption of technology, wrapped-in with a pent-up desire to start seeing and engaging with people, real-face-to-real-face, once again.”
As a consequence, business travel patterns look certain to evolve. For example, the volume, the nature, and the destinations may all continue to shift, along with the type of people who travel and the experience they demand. All of this means that companies will want to look afresh at how they manage their travel – and how to pay for it.
Helen Jones, Executive Director, Visa Business Solutions adds: “In the wake of the pandemic, companies will be re-evaluating how they manage their business travel and will be looking for greater flexibility in the future. New payments solutions will be needed to enable that flexibility, while companies also tighten the oversight and control of their actual spending.”
So, with this as our background, here are six big factors at play, with implications for payments, that have been identified by a panel of travel industry experts.
1. Employer’s duty of care
The employer’s duty of care to their employees has been an underlying theme in the world of business travel for some years. But, in the time of COVID, it has taken centre stage.
“If you are going to get your people back on the road, you cannot take any chances,” says Paul Raymond, Director of Strategic Relationships at Conferma Pay, a leading provider of virtual payments technology. “One of the best safeguards is a payment mechanism that ensures people always travel in the right ways, stay in the right places and benefit from the ease and convenience of touchless payments. Through a smartphone, it is now possible to provide travelling employees with payment credentials that exactly match their pre-booked travel itineraries, but can be dynamically updated if circumstances change.”
2. Dealing with uncertainty
“We can’t predict how long the recovery will take, but business travel is essential to a thriving economy and will return,” says Mario Kriebel, Vice President of Commercial Payment Solutions at the global travel management company BCD Travel. “Vaccine coverage will be the most important factor deciding when and to what extent travel will come back in 2021. But even with vaccines broadly available, it might still take some time given that certification is necessary for travel to certain destinations and airlines will need time to gear up capacity.”
The travel industry has had to adapt to this level of uncertainty, by offering greater penalty-free flexibility, enabling travel to be re-booked at will, recognising that payment will be generally made much later in the process and a greater likelihood of refunds. There has already been a need to accommodate changing travel trends, including an uptick in car rental. As the pandemic finally recedes, it is possible that some of these shifts may become permanent.
3. Operating on a need-to-travel basis
Another dimension is the degree of diversity among business travellers and the reasons behind their travel. Mario Kriebel highlights an anomaly: “On a global level, in March 2021 we were around 84% below pre-pandemic transaction levels. Yet, if you zero-in on travel paid for using virtual card programmes, the decline in 2020 was only 40%. The difference is that, traditionally, virtual cardholders have been people who have no choice but to travel.”
Similarly, Barclaycard anticipates a reshuffling of the business travel pack, which will have a knock-on effect for payments. “The people who return to travel the quickest won’t necessarily be the ones who have traditionally been issued a corporate card,” says Linda Weston. “So, we are looking at how to bring more of a company’s employees under the umbrella of a card-based payment programme, without the cost or complexity of giving every one of them a physical card with a permanent credit limit.”
4. Travelling sustainably
The pandemic has coincided with and quite possibly contributed to a heightened awareness of environmental issues. For companies looking at how to meet ambitious commitments to net zero emissions, travel tends to be high on the agenda. Once again, there is a clear payment-related dimension, argues Paul Raymond. “The more data you capture through your payment processes, the easier it becomes to measure and therefore manage your travel-related emissions. Also, if your environmental commitments are reflected in your travel policy – which they ought to be – an intelligent payment mechanism can also be used to monitor and enforce compliance.”
5. Adapting to the new world of work
There is, of course, uncertainty about how the world of work itself will evolve, which will have a knock-on impact for travel. With less time in the office, there is likely to be a need to bring home-working team members together on a regular basis. All of this could, in effect, open up an entire new category of business travel spend.
“In these circumstances, it makes no sense to issue a card to every employee. But it makes perfect sense to push payment credentials to their smartphones to enable and also manage their spending. The last thing a company wants to do under these circumstances is revert to the old ‘pay-and-reclaim’ model,” adds Linda Weston.
6. Putting the consumer at the centre of business payments
“The pandemic has accelerated the up-take of digital payments in our lives as consumers – and there will be an expectation that business payments follow suit,” says Paul Raymond. “Wouldn’t it be great if, as business travellers, we never had to think about payment – it just happened automatically, in the background.”
Once again, virtual card solutions offer real promise, and the pandemic looks set to have fast-tracked their adoption. “The pandemic has accelerated the timetable for going cardless,” agrees Linda Weston. “Pre-pandemic, when we launched Precisionpay Go, we loved the idea of app-based business travel payments, but saw it as a relatively niche proposition. Now, post-pandemic, we see it as being far more relevant to far more companies.”
Helen Jones concludes: “As countries begin to open up again, payments is set to have a new level of prominence in the world of business travel. Companies that recognise and meet the changing needs of the business traveller in this new world will be those that will have an advantage as people get back on the road again.”
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About Conferma Pay
Conferma Pay is a global financial technology company. We design and integrate virtual payment systems that provides a more efficient, seamless and secure way to pay for for businesses.
Travel Meets Payment
Conferma Pay was born in Manchester in 2005. Since then we have connected over 700 TMCs, and directly integrate with all the major GDSs and OBTs. Our roots lie in corporate travel payment integration.
We enable our payment providers to flow virtual cards into the preferred purchasing process of any business travel buyer. Crucial to this is our network of banking partners, who have issued virtual cards in over 200 countries, in 40 currencies with over 45 commercial banking partners via all major card networks.
Our ecosystem continues to expand to meet the growing requirements of our global customer base.