Virtual Cards Gear Up For The Business Trip’s Return

Virtual Cards Gear Up For The Business Trip’s Return

May 31, 2021 at 09:01AM

Between ongoing health concerns and the vaccine rollout, an embrace of telecommunications tools and a preference for face-to-face meetings, nobody knows what the future of corporate travel will entail. But the industry appears optimistic.

JetBlue said during its quarterly earnings call last month that its corporate travel volumes were about 80 percent below average for the airline — an improvement on the 95 percent drop in corporate travel bookings it witnessed in January. According to David Clark, JetBlue’s vice president of sales and revenue management, the “September-October timeframe” could see an acceleration of business travel bookings, but “when that returns and how robustly they come back is something we’re still looking at very closely.”

The payments industry is watching it closely, too, as organizations continue to prioritize greater control overspend.

While the sector may have a few months before employees begin to take those business trips once again, corporate payment technology providers — particularly those in the commercial card industry — are already bracing for not just a return in business spend volume, but also a possible shift in payment habits as the virtual card embeds itself in the business travel workflow.

A Gradual Return

JetBlue isn’t the only travel industry player expecting a business travel recovery as the year progresses.

Flight Centre Travel Group, which provides corporate travel management services via its FCM division, said earlier this month that it expects corporate travel sales will recover by 50 percent by the end of the year, citing vaccine rollouts and the reduced health risks of traveling.

“In the absence of disruptions such as new strains, this should lead to an easing of government-imposed restrictions on domestic and international travel, and a partial rebound of the global business travel market by year-end,” stated Marcus Eklund, global managing director of FCM, in a press release.

FCM pointed to the mining, construction, pharmaceuticals, energy and resources industries as the ones that have contributed the most regrowth of business travel so far. But while recovery is expected to climb, Eklund did predict that remote working could create a long-term reduction in volume — and may lead to a consolidation of the market.

Travel suppliers and service providers might be showing more muted optimism about the rebound of business trips, but it’s the corporate payments arena that may be the most confident in the months ahead. Reflecting this dynamic is the recent purchase of corporate travel management platform Egencia, which was sold off by its creator Expedia Group and acquired by American Express Global Business Travel.

The Virtual Card Opportunity

While it cannot be certain that Expedia’s decision to offload Egencia is a reflection of expectations for a struggling sector (Expedia Business Services President Ariane Gorin said in a statement that Expedia is confident in business travel’s return), Amex GBT’s purchase signals renewed energy for payment technology providers to strengthen their offerings to help corporates and their travel management companies more digitally and efficiently pay travel suppliers.

“Over the last year, we’ve heard from our clients, which range from small and mid-sized businesses to large and global corporations, that in-person connections cannot be replicated,” said Gunther Bright, executive vice president of global commercial services at American Express, in a statement earlier this month releasing new data on business travelers’ sentiment.

The return of business travel would coincide with a continued climb in corporate card adoption, which has presented new opportunities for commercial card innovators to provide value-added features designed for employee travelers. Tools like automated and integrated spend management and controls are now key for managers who need to ensure that business travel spend is within policy and on budget.

The virtual card in particular is finding a greenfield opportunity in the business travel space. In a recent conversation with Karen Webster, TripActions Liquid General Manager Michael Sindicich said the ability to generate a new, single-use virtual card for each new travel booking “eliminates expense management” and “eliminates fraud” while automating the reconciliation of those transactions.

TripActions said it has seen a steady increase in business travel activity, averaging 13 percent growth each week since the first week of January.

Investors seem confident in virtual card innovators’ embrace of the business travel market, too, with Ramp announcing a $115 million fundraise last month — one of the largest for a B2B FinTech this year so far — valuing the firm at $1.6 billion. Its technology marries corporate cards, both physical and virtual, with embedded expense management technology.

Most recently, AirPlus revealed a revamp of its corporate virtual card strategy, reintroducing what had formerly been known as AIDA cards, which were a part of AirPlus company accounts. Now known as AirPlus Virtual Cards, the solution offers three types, two of which are designed specifically for business travel use cases: Classic, for corporate users to use while on business trips, and Travel Agency, available for travel management companies making payments on behalf of their corporate customers.

Amid the varying hypotheses about the eventual return of corporate travel, what seems to be clear is that the industry is poised for some kind of comeback. As travel suppliers prepare, corporate payment innovators are also gearing up, and the virtual card could be riding on the tails of an eventual business trip booking surge.