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Virtual Commercial Cards May Guide A New Future For Business Travel

Corporate spend is in a slump, and business trips remain off the table. For the many business travel and expense management FinTechs in the space today, the current market is far from favorable.

But companies large and small are still making purchases, and with the pandemic fueling the need for contactless payments, commercial card technology adoption is on the rise. T&E company TravelBank is taking this period to focus on innovation and address the employee spend pain points that continue to plague companies, even amid a business travel downturn, says the firm’s Co-founder and CEO Duke Chung.

Speaking with PYMNTS, Chung discussed the importance of organizations being able to consolidate card spend data even when working with multiple issuers. Plus, he provided his outlook for the market ahead, including when business travel may recover, and how that post-pandemic trajectory could alter the commercial card landscape for the foreseeable future.

Consolidating Spend Data

With commercial card adoption growing even before the pandemic, an increasing number of T&E technology firms began to step into the world of card issuing. That strategy wasn’t right for TravelBank, however. According to Chung, collaborating with card issuers presents a larger opportunity to support a range of commercial card products for business customers, rather than committing to a single issuer partnership.

One of those partners is Brex, which targets startups with its commercial card product. For many young businesses, cards are key to streamlining employee spend — but as businesses grow, the doors open for more corporate card products from other issuers like U.S. Bank, another TravelBank partner.

While access to a wider range of card products can be favorable, Chung noted that managing commercial cards across multiple issuers is a challenge. Businesses are forced to manually log onto each bank’s web portal and manually pull that card transaction data into their expense management systems to understand which employees spent what — and on which cards.

“We’re talking to one client that has 12 different corporate cards,” said Chung. “We discovered that one of the big problems for these companies is that it’s very difficult to bring all of that data into one place.”

Tackling this issue, TravelBank recently announced upgrades to its platform that allow users to integrate their bank issuer accounts into the TravelBank platform, pool that spend data within TravelBank and automatically ensure that those employee transactions adhere to spend policy.

With U.S. Bank, the integration goes a step further, in that users are able to generate virtual U.S. Bank commercial cards directly within the platform. Chung said the company hopes to expand that feature with other card issuers moving forward.

The Future Of The Commercial Card

The focus on card issuing collaborations intensified as a result of the pandemic, Chung noted. While business spend may be down, the lull presented the opportunity to think about where the T&E and spend management market is headed. And, as Chung predicted, there are some massive changes ahead.

The most immediate change is the shift to contactless payments as a result of the pandemic. While plastic cards have integrated contactless payment technology, Chung forecasts that virtual cards and mobile wallet payments are the way of the future – for consumers and employees alike.

But the business travel arena is months, if not years, away from returning to pre-pandemic levels, and that will continue to have massive implications on company spend – and the technology solutions that help businesses manage it. According to Chung, while business travel may start to see some recovery within about six months, when factoring in the time it takes to plan conferences and events – which make up the majority of T&E spend – a return to some form of normalcy isn’t likely until early 2022.

By that time, commercial card adoption will have grown even further, and the ability to seamlessly generate virtual cards and send them to employees’ mobile wallets will be a must-have.

“We think contactless payments are going to be huge,” said Chung. “The pandemic has singlehandedly accelerated the roadmap for contactless payments by two to three years.”

Not only does this affect the way companies and their employees use card technology, but there is evidence that a surge in virtual commercial cards and mobile business payments may further accelerate dramatic changes in the travel space.

Today, for example, hotels still rely on paper and manual processes to obtain lists of professionals checking in for corporate events. But increasingly, the same mechanism of paying with one’s phone can be used to verify identity at check-in – a feature that Chung said could also apply at airports for flights.

These trends are driving TravelBank to strengthen its position in the virtual card space and collaborate with more issuers, which Chung believes will become controllers of the travel industry and digital identities at large.

“Not having a lot of travel in our industry right now gave us a lot more time to innovate and think about where the future is,” said Chung. “I think we will re-establish ourselves as a very new company. We would never gave gone into the card business to work with card issuers at this level, but it took the pandemic for us to really see this.”

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