What policy should you adopt in the face of the reduction in interchange fees decided by the European Union in order to facilitate card payments, including for small amounts? With the entry into force at the end of 2015 of an new regulations setting the commission rate at 0.28 % 1.5 % previously, the players in corporate payment solutions have been faced with a moral dilemma. Should they leave their charges unchanged? Or should they be more accommodating, but review their terms and conditions? Or should they pass on the loss of revenue to their customers? Another possible strategy is to push companies towards corporate debit credit cards, which fall outside the scope of the regulations and retain a higher interchange rate. This, by the way, enables financial institutions to reward their customers by paying them back part of these commissions through annual rebates.
Among the hardliners, AirPlus has introduced charges of between 1.09 % and 1.19 % for each transaction carried out in Europe, excluding cash withdrawals, in the countries where it issues its Travel Expense credit cards, i.e. Germany and the United Kingdom. As a result, the number of plastic cards distributed by the German specialist fell by 22 %, a decline largely offset by the growth of its dematerialised payment solutions.
Unlike AirPlus, whose sole business is business travel, the major banks have a wide range of relationships with companies, and have therefore opted for a gentler approach. "Admittedly, with the modification of European regulations on interchanges, we have had to revise upwards our pricing on the corporate card service with debit on the employee's account, but with conditions that remain very competitive on the European market.says Laurent Sautré, Head of Commercial Cards at BNP Paribas. And Laurent Sautré explains one of the main reasons for this policy: "The aim is to be able to maintain and develop this range of services for our customers in all the countries where we offer them, with the launch of the corporate card in Germany this month, for example."For his part, Société Générale has kept its rates the same, "whether customers choose the business account debit or the employee account debit," explains Élodie Trouillaud, head of the French bank's card offerings. Even though, she points out, "the profitability conditions for these two options are different."The French bank has mainly distributed CB co-badged cards to its customers, which are already subject to 0.28% interchange, although it has also launched a Mastercard-only corporate card. "The impact of the new regulations on our business card offering is therefore less significant than if corporate MasterCard or Visa "only" cards had accounted for 100% of our customer base."says Élodie Trouillaud.
Value for money
There is no doubt that this issue is far beyond the control of
It's an issue that's on the minds of almost all business travellers, whose main expectation from their employer is that they will have effective means of payment to meet the expenses inherent in their business trips. However, it could affect them more directly than it seems... Indeed, many companies, especially in France, prefer to debit business expenses to their employees' accounts in order to make them more responsible for these expenses. Expenses which, on the basis of expense reports, are obviously reimbursed to the traveller even before they are deducted by their bank. However, with the new regulations, habits could change.
The evolution of corporate card strategies should have another consequence, namely to see the growth of centralised payment solutions continue.
"Some of our new customers have gone straight to business account debit."says Laurent Sautré of BNP Paribas. "Companies are starting to migrate to 'corporate pay"Jean-Charles Sarrasin, Vice President of Commercial Cards at Citi, also notes this. The American bank, which mainly offers corporate debit cards, also offers cards that are debited from the employee's account, but where the company is responsible for payments. "For example, if, for whatever reason, the traveller does not pay us after a certain period of time, it is up to the company to settle the bill.explains Jean-Charles Sarrasin. For companies that have decided to maintain a programme of cards debited from the employee's account, management fees are charged to the company for the change in business model."
If corporate account debit is beginning to be favoured by companies, could the change in model be even more radical, with a form of abandonment of corporate card programmes?
Commenting on the decline in its corporate card offering, Patrick Diemer, CEO of AirPlus, explains that some of its customers had realised that with centralised payment solutions, such as the "log-in" card and the virtual card, they were already covering a large proportion of upstream travel expenses. As a result, they could rely on their employees to pay the remaining expenses using their personal cards. It is, of course, up to the company to reimburse them or advance the costs. Could this trend spread to France? Not so sure, especially as employee account debits still have their fans, as Élodie Trouillaud admits "receive many requests."
Whatever the case, the evolution of corporate card strategies should have another consequence, that of seeing the rise of centralised payment solutions continue. Among these, the lodged card is already firmly established in the landscape, favoured by 62 % of companies according to AirPlus. Again according to the German specialist, it is used in 68 % of cases to pay for plane tickets, followed by train tickets (18 %), hotels (8 %) and car hire (2 %). The benefits of this solution are well known to travel policy managers: a simplified booking process, hosted within the tools of the major business travel agencies, optimal monitoring of expenditure with level III data, and seamless integration with the company's main management software.
Increasingly global players
It's not just through their ever-expanding range of solutions that corporate payment players are aiming to appeal to businesses, but also through their geographical presence, which meets the needs of multinationals and medium-sized businesses with a global reach. "Companies are increasingly looking to standardise their card programmes around a single point of contact in order to have a single contract and a single rate."says Jean-Charles Sarrasin of Citibank. Along with American Express, the American bank is undoubtedly best equipped to respond to global contracts, with its presence in 65 countries. But competition gets organised as well. So BNP Paribas highlights its coverage of the whole of Western Europe and North America. "Many calls for tender now concern these two geographical areassays Laurent Sautré of BNP Paribas. We are positioned in this area with all our solutions, centralised management and local implementation."For its part, AirPlus is also continuing to expand internationally, with the opening of a subsidiary in Brazil and the recent acquisition of BCC in Belgium, the market leader in travel payment solutions, while at the same time launching new products where it is already established, such as the virtual card in Hong Kong and Japan.
Increasingly virtual
With advantages similar to those of a fully-fledged card - integration into reservation tools, accurate reporting, a priori control of expenditure -, the single-use virtual card has enabled companies to take a new step forward in payment centralisation. Launched ten years ago by American Express with its vPayment offer, then adopted by AirPlus under the name AIDA and by BNP Paribas, the virtual card is based on the on-demand generation of a virtual 16-digit card number to facilitate online purchases. It has made its mark on the market by compensating for the limitations of stored-value cards, which, for example, are not accepted by low-cost airlines, online travel agencies and many hotels.
With the proliferation of solutions, companies are now being offered a whole range of products to cover all their travel expenses.
At AirPlus, 40 % of companies make one payment in five using a virtual card. In more than half of these transactions, the virtual card is used for hotel reservations made by the travel agency or a reservation platform, for low-cost airline ticketing (23 %) and also, in 24 % of cases, for MICE expenses. "The virtual card is a good way to organise travel for occasional travellers and to pay for exceptional expenses for events."says Julie Troussicot, Director of AirPlus France. It helps to give companies visibility over a whole volume of expenditure that is still rather vague, while providing a framework for the costs incurred in holding seminars and conferences.
With the proliferation of solutions, companies are now being offered a whole range of products to cover all their travel expenses. "BNP Paribas now has a global approach to business travel expenses, which enables us to offer a "Business Travel Solutions" package that includes corporate, hotel and virtual cards. Naturally, customers can choose the payment methods they need from this range"says Laurent Sautré. The French bank is one of those players which, like American Express, Citi or AirPlus, has a very extensive range.
These could soon be joined by Société Générale, which has just officially launched an embedded card with the Mastercard acceptance network. "We are one of the leaders in France for corporate cards, and it was important for us to have a complete solution for our customers. We can see that calls for tender are increasingly focusing on the combination of corporate and corporate cards."explains Élodie Trouillaud. Still in its infancy, the solution is set to expand gradually.
Travel agencies: new prospects for payment solutions
As key intermediaries for companies, travel agents have always welcomed the development of paperless payment solutions. But with the recent tightening of BSP conditions requiring them to pay for airline tickets every fortnight, compared with a month previously, the interest in this means of payment could be strengthened. "This can have a significant impact on their working capital requirementsstresses Pierre-François Brézès, of American Express. This means they can be paid quickly by us and their customers can be paid on time.". "While the large agencies are better organised to cope with this tougher environment, the independent agencies have weaker cash positions.This is a very important issue," says Julie Troussicot, from AirPlus. However, it is also the travel agencies' own needs that can be covered by lodged and virtual cards. "In the BNP Paribas offer, we have a package dedicated to agencies and hotel reservation platforms, which includes the "housed" and "virtual" cards."explains Laurent Sautré. Because, in addition to their end customers, travel agencies are also finding numerous advantages in using this solution internally, whether in terms of a simplified booking process and consolidated reporting, or in terms of benefiting from a single solution for paying suppliers, with a much wider payment capacity. Previously, agencies had to use around twenty credit cards, with limited limits, to pay their expenses.
Innovative start-ups
To increase the reach of their paperless solutions, financial institutions are working to extend their acceptance to other players, in particular to new entrants such as Airbnb and Uber which have rapidly become a key part of business travel. "We have to leave all the options open to our customers and not limit their choice because we are not interfaced with so-and-so.As Pierre-François Brézès, Vice President and Managing Director of American Express Cartes & Solutions Corporate, points out, "The need for a more flexible approach to the management of the cardholder's account has become increasingly important. As a result, Amex has joined forces with Airbnb and the Biz Travel alliancea group of start-ups whose members include restaurant booking platform Business Table and long-stay accommodation specialist Magic Stay.
As well as streamlining the booking process, these partnerships enable these innovative players to consolidate their spending. "It's the start of cutting costs"says Julie Troussicot. With this in mind, AirPlus has joined forces with BizMeeting, Snapcar, Business Table and Airbnb, with Uber and specialists in the MICE sector to follow. At the same time, the German company is extending its payment solutions to car parks. In addition to being accepted by the Ector business valet parking service, the AirPlus smart card could soon be used to pay for parking in European airports, as it already is in Frankfurt. This Lufthansa subsidiary is in talks with the hubs to find the right model for parking near airports.
The fact that more and more expenses are paid in advance of travel, without the traveller even noticing, contributes to the emergence of "invisible paymentas the CEO of AirPlus calls it. "We will of course continue to pay, but without taking our card out of our wallet, or even entering our number into a computer."Patrick Diemer predicts that the plastic card will disappear.within five years. By then, paper invoices will also have disappeared and will be directly integrated into companies' ERP systems."With this in mind, AirPlus is working on other solutions such as Dine & Go, which allows you to pay bills from a smartphone, and the AirPlus Connect mobile expense management platform.
While solutions are becoming increasingly digital, contactless payment, which is now almost a way of life for consumers, is not yet a reality for business travellers.
As a counterpoint, Laurent Sautré warns against the tendency to centralise travel expenses too much. "After a while, you lose control of spending, moderates the head of commercial cards at BNP Paribas. For example, if a traveller books a hotel or a car and then his mission is cancelled, he may forget to ask for these bookings to be cancelled as he is not directly affected. In the end, it is the no-show that is paid for by the company and not by the employee. There is a risk here with this loss of employee accountability."
Invisible" payment is part of the growing digitalisation of solutions, Although contactless payment is now almost a matter of course for consumers, it is not yet a reality for business travellers. Probably because the €20 limit on contactless payments reduces the scope for professional use. "Of the twenty or so invitations to tender we recently received, there were no requests on this subject."says Laurent Sautré. "It's not in great demandsays Jean-Charles Sarrasin. But we're going to launch a pilot phase in Europe, because it's right up there with the times. Consumers are already using it with their personal card."This proactive policy is also adopted by American Express. "In their everyday lives, business travellers are used to having a very digital experience.stresses Pierre-François Brézès. They will also not accept old processes in their working lives. Even if there is no explicit demand from businesses, we think it is important to equip travellers with contactless cards. We are working on this with a view to launching it in the short term."
Not yet mobile
Far from being as commonplace as contactless, mobile payment is still in its infancy.
is still in its infancy, but it too is destined to develop sooner or later in the professional sphere. "Since the end of January, Societe Generale has been offering its contactless Paylib service, enabling customers to pay for everyday purchases using their smartphone.says Élodie Trouillaud. For the moment, it is limited to private customers, but with the development of mobile payment it may one day be offered to businesses."However, there's no need for banks to rush too quickly: at a conference with its customers, Citi surveyed them about mobile payment. "A majority no votesays Jean-Charles Sarrasin. However, we are keeping a close eye on the development of this solution, which is expanding rapidly in Africa and China and could be of interest to travellers who frequently visit these countries. We believe that this solution will not replace the plastic card in the short term, due to relatively limited acceptance, but will be used in parallel."Will the emergence of mobile payment go through emerging countries?
