U.S. Bank has launched a travel payments engine that provides unique identifiers for each transaction instead of a centralized billing umbrella.
Called Travel VirtualPay, the U.S. Bank product provides a one-time-use virtual account number for each purchase. The product is designed to give corporate clients a way to manage waste in corporate spending by viewing a larger set of payments information that can be retrieved and organized quickly.
"What tends to get lost with corporate cards is detailed booking data. There isn't a mechanism to capture information such as 'I booked this room at X rate for X number of nights.' All you get is a general transaction," says Mary Miklethun, travel product manager at U.S. Bank.
"With existing centralized systems, you are not capturing payments data up front, so you have less control," particularly with one-off travelers, she says.
A company's travel manger can use Travel VirtualPay to identify and track a booking from the time of a reservation through a final settlement and audit. The product integrates with the company's travel supplier or agency, which requests a virtual account for each booking, then consolidates the transaction data in a single location. When the travel agency charges the account, Travel VirtualPay electronically reconciles the transaction to match the traveler and the transaction, triggering payment.
The process is designed to reduce errors and paperwork, because transactions, users and payment data can all be viewed simultaneously by the company and the travel agent.
U.S. Bank, which began developing this technology last year, currently has about a dozen clients for Travel VirtualPay, with the first beginning earlier this year as part of a pilot. Several users in the retail space have deployed the product to manage hotel spending when large teams of workers are dispatched to a specific location to open a new store.
"These retailers have a lot of people who are contractors working on these projects, and they travel less often than other workers for the retailer," Miklethun says.
Direct billing for hotels, the most common use case for Travel VirtualPay, is about 2% of corporate travel spend. However, the manual labor required for reconciliation and the possible losses from incomplete data should make U.S. Bank's model attractive, Miklethun says.
"It's a niche spend but a pain point for travel managers," she says.
MasterCard is also interested in the model, and is testing a product called Travel Controller, which uses individual account numbers to identify travel payments. MasterCard, which built Travel Controller out of the card network's inControl corporate spending product, also views individual account numbers as a better way to manage payments data than lodge cards or the centralized corporate cards.
There hasn't been widespread adoption of decentralized travel account numbers so far, but there are benefits for corporate travel expense, which can be complex for larger companies, says Steve Murphy, a research director at CEB TowerGroup.
"Travel involves information going through travel suppliers, hotels, bookers there's a lot of data and it can be made a lot more convenient and easier to control," says Murphy, who likens the model used by MasterCard and U.S. Bank to the individual account numbers often used for corporate procurement as a way to manage supply chain expense.
"It's a natural flow to embed a single-use account into a travel system," Murphy says.