{"id":29795,"date":"2013-01-15T13:09:55","date_gmt":"2013-01-15T12:09:55","guid":{"rendered":"https:\/\/www.voyages-d-affaires.com\/frais-professionnels-quand-le-paiement-devient-virtuel-20130115.html"},"modified":"2016-02-10T10:07:31","modified_gmt":"2016-02-10T09:07:31","slug":"business-expenses-when-payment-becomes-virtual","status":"publish","type":"post","link":"https:\/\/www.voyages-d-affaires.com\/en\/business-expenses-when-payment-becomes-virtual","title":{"rendered":"Business expenses: when payment becomes virtual"},"content":{"rendered":"

Dematerialisation is an inexorable process in the field of business travel expenses, and has been for decades. Cheques once replaced cash, before being overtaken by payment cards. And, as progress never stops, these famous plastic rectangles are now being challenged by virtual cards, and no doubt tomorrow by smartphones, transformed into electronic wallets by NFC (Near Field Communication) technology.<\/p>\n

Everything points in this direction. In 2009, American Express launched its Vpayment, a platform for generating single-use virtual payment cards. \"Even though virtual payment is currently the talk of the town, it should be remembered that this process is not really new. Its beginnings date back to the arrival, on the business travel market, of the payment card hosted by a service provider, in this case the travel agency. This dematerialised payment model enables a flow of information between the various parties involved: the client company, the payment card supplier and the agency\".<\/em>explains St\u00e9phanie Laroque, Marketing Director at American Express.<\/p>\n

Configurable rules<\/h2>\n

Unlike business cards, which are designed for employees of SMEs, or corporate cards, which are aimed at travellers from large groups, virtual cards have the distinct advantage of being completely paperless. At BNP-Paribas, for example, which offers both an Internet solution and an integrated solution, this method of payment takes the form of a bank card number with characters, an expiry date and a visual cryptogram. \"The virtual card is accompanied by systematic authorisation. It can be used only once, or it can be reused a number of times. And of course, it can be limited according to the rules set up when the payment method is created\".<\/em>says Philippe Quillien, Director of the AS Voyages business travel sector.<\/p>\n

More specifically, there are three dimensions to this usage limit. Firstly, a spending limit. The company could, for example, authorise its technicians on an assignment not to spend more than x euros per day. Secondly, there is a time limit, with the payment authorisation being granted for a very specific period, ranging from one day to 365 days. Generally, the period of use corresponds to the duration of the mission or event that triggered the issue of the virtual card. Finally, a third limit may relate to service providers and suppliers. The company may wish to restrict them according to their activity and\/or location.<\/p>\n

Technically, the virtual card is issued by a publisher - Visa, Mastercard or even Amex and Diners Club - and meets the needs of companies managing large numbers of orders through several suppliers. Corporate travel cards, now a well-established part of the business travel landscape, are mainly used to pay for air and rail travel. However, it is less widely used to pay for accommodation and car hire.<\/p>\n

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Ideal solutions<\/h2>\n

The virtual card is a complementary solution to the stored-value card, enabling you to make reservations and then pay for hotel rooms, car hire or low-cost airline tickets. \"The virtual card is an ideal solution for occasional travellers who don't have a business or corporate card to pay for expenses related to their business trips.<\/em>says Philippe Quillien.<\/p>\n

The virtual card can also be used for events, a relatively recent extension of their area of expertise. It's a topical subject, too, because when economic growth is sluggish, companies tend to bring their staff and influencers together more often. From meetings designed to stimulate sales staff to incentive trips aimed at boosting sales, the market for professional events remains buoyant. Visit \"buyers\"<\/em> of these services have become specialists in negotiating and obtaining competitive prices. Budget-conscious and keen to make savings, they handle these events either directly or through a specialist agency. In both cases, using a virtual card to pay for expenses relating to business meetings allows the company or the specialist agency to centralise the booking.<\/p>\n

For example, a player like American Express has launched a specific product for this type of transaction: the \"meeting card<\/em>. In practice, when an event agency is paid using a virtual card, it receives payment more quickly than with a traditional invoice. In the first case, payment is made within approximately one to two weeks, and in the second, payment is generally made within 45 days of the end of the month on receipt of the invoice.<\/p>\n

So much for the good points of the virtual card. However, the problem lies in the bank charges it incurs. At around 2 to 4?% of the total amount paid, they are borne in some cases by the user of the payment, for example the agencies, which ultimately deducts them from their fees. This important issue is currently the subject of intense debate within the ANAE (national association of event agencies). \"As an intermediary, should and can the agency bear bank charges on all purchases?\"<\/em>asks Micha\u00ebl Cleva, Managing Director of MCI France. To date, there is no answer and no formal solution. We can only anticipate that end customers and\/or suppliers will eventually have to contribute to the payment of these bank charges. It should be noted that the \"meeting card<\/em> can also be used by the event agency to pay suppliers. This scheme is used by Le Public Syst\u00e8me (see interview)<\/em>.<\/p>\n

Simplified processes<\/h2>\n

Depending on the size of the company and the volume of expenditure to be processed by the virtual card, there are two operating modes. To process a small number of orders, the card can be issued from a website. \"With an Internet solution, when the transaction is validated, the employee generates a single-use card number, which he or she then communicates to the merchant site by filling in the various fields on the card payment form\".<\/em>explains BNP-Paribas. Then it's up to the administrative departments to manually re-enter the financial data and data relating to the mission order.<\/p>\n

If you need to process a large number of orders, on the other hand, it is advisable to integrate the virtual card into the company's automated processes. This more streamlined approach eliminates the need to re-enter financial and job order data. However, the time and installation costs involved in developing this interface with the company's own tools need to be assessed.<\/p>\n

For suppliers, the virtual card will simplify their lives by providing a guarantee of reservation and payment for the service. It also reduces the cost of administrative invoice processing. For companies, as we have seen, this method of payment enables them to set a spending ceiling. This improves control and traceability of the expenses incurred by their employees. \"With the purchase card, the hosted card or the MICE card, the company controls its spending after the event. With the VPayment solution, on the other hand, they control their spending in advance. This single-use payment solution makes it possible to secure the amount and the transaction date in advance, to reconcile invoices more easily by limiting disputes, and to simplify expenditure control\".<\/em>adds St\u00e9phanie Laroque. As all virtual payments are subject to prior authorisation, it makes it much easier for a company to comply with its travel policy.<\/p>\n

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Still room for improvement<\/h2>\n

\"When it comes to business travel, v-payment complements the usual payment solutions. Technically, the expenses incurred by an employee will be charged to his or her company card\".<\/em>explains Paulo Fernandes, Purchasing and Supplier Relations Manager at BCD Travel. Depending on their category, expenses can also be charged directly to the company's account. This is the complete opposite of the business card process, where the cardholder's bank account, in this case the employee, is debited. It is then up to the employee to draw up expense claims for reimbursement by their employer.<\/p>\n

Centralised payment, optimised control, detailed tracking, security of use: these are the main advantages offered to companies by the virtual card. However, some of the companies that use it point to a number of disadvantages. One of the current obstacles to the development of v-payment as a solution for accommodation expenses remains the company's need to recover the bill for its employee's stay. Indeed, some hotels send the bill to the company for which the employee works, and if this is not the case, it is up to the traveller to collect the bill at check-out and give it to their personnel department. So much for theory. In practice, however, the traveller may end up leaving the hotel without having taken a receipt. Another weak point: with virtual payment, the administrative departments are forced to manage an additional card involving new data to be consolidated with the reporting of other travel-related expenses.<\/p>\n

As part of their drive to dematerialise payment methods, publishers are currently considering the deployment of NFC (Near Field Communication) technology. In France, this technological innovation is currently being studied, using a smartphone or other mobile device to authenticate, authorise and make payments. \"We are currently testing a mobile payment solution that will eventually enable travellers to pay their business travel expenses using a smartphone. This tool will make it easier to pay for various services, such as hotels, restaurants, taxis and ancillary expenses. The smartphone thus becomes a mobile wallet that can combine different payment methods,<\/em> explains Nicole Flory, Head of Marketing & Communications at AirPlus France. The application will be able to generate reports and synchronise data with the company's corporate card for complete visibility and reconciliation of travel expenditure\".<\/em>.<\/p>\n

Mobile payment coming soon<\/h2>\n

Could virtual payment one day replace physical payment? Observers note that there are still more tangible corporate cards than virtual ones. These e-payment solutions primarily address sector-specific issues (hotels, MICE, etc.), providing a certain level of convenience for both users and companies. So corporate cards will certainly continue to exist in the future, if only because they offer a distinctive, status-linked symbol - Gold or Platinum - to their holders. But while real payment still has a bright future ahead of it, dematerialised exchanges are now making a growing contribution to the business of card operators.<\/p>\n