Giant payment network MasterCard said today that it is piloting its own virtual card number technology to connect with travel management companies (TMCs).
To be released globally in early 2014, the Travel Controller creates virtual cards -- meaning that managers can set a unique 16-digit virtual account number for each transaction.
Payment and reconciliation processes are theoretically seamlessly in synch because booking and payment data are linked via the unique identifier.
Data is captured when each hotel reservation, plane ticket, and other travel transaction is bought, and that data can be integrated into the expense management and expense report processing systems, says MasterCard.
In another plus, the data can be filtered to pinpoint individual travelers, trips, or types of transactions. Purchase controls may be applied to each virtual account number based on a company's travel policies, and approval is granted via appropriate cost centers through a pre-configured routing process unique to each number's request.
Not as straightforward as it may look
The catch with Travel Controller and similar products is that they only work if corporate travelers book everything on corporate payment cards that are used to pay for travel for everyone in a company.
But the whole point of leakage is that some employees are booking travel outside of these company cards, often called lodge cards, because they're centrally billed accounts where payments are "lodged" with a TMC.
Some industry experts are skeptical about claims from MasterCard and other companies that virtual card identifiers somehow reduce leakage and other spend. They ask: "Won't the typical business traveler just use his or her own card (perhaps to earn frequent flier miles) and expense the transactions outside of the program?"
Travel Controller and similar concepts only work if a company can persuade its employees to put all of their travel expenses on a single card. Yet lodge and other corporate cards tend to primarily be used for booking air and rail, but not hotels or meals. And it's on hotels and meals where much of the "leakage", or unmanaged spending, tends to occur.
MasterCard and its competitors don't seem to have addressed the problem of individual business travelers not wanting to link a non-corporate card to reveal relevant business travel spending without showing other information. So the project continues to be a quest to push employees to use company-issued payment methods.
Competitive space for TMCs
Despite obstacles, there's been a lot of activity lately in the virtual/transaction specific account number space.
In early October, payment reconciliation firm Conferma acknowledged a deal to provide its virtual card technology to Visa Europe issuers, with a similar deal likely to be inked with Visa International.
Conferma also recently inked a deal with travel and expense tech specialist KDS to offer a virtual payment platform to that company's customers following a partnership with Conferma. And in 2012, Sabre launched travel settlement services powered by Conferma.
Similarly, AirPlus International, the business travel payment specialist, has been using virtual cards to provide TMCs with detailed breakdowns of travel spend, along with a simple payment capability.
For more on virtual card technology, see this Tnooz opinion piece: "Understanding payment pain points in the travel industry.
Fresh possibilities among TMCs
Since the mid-2000s, MasterCard has offered virtual card numbers by using third-party technology via issuers who use the MasterCard InControl processing platform.
What's new here is that MasterCard is rolling out its own virtual card tech, and it is making it available worldwide to track records via all MasterCard issuers and most lodge card solutions used by TMCs.
Says the company:
For larger TMCs, an Application Programming Interface (API) is available to develop integration from their platforms to Travel Controller directly.
For others, a complete package of applications will be available in the coming months to allow desktop integration with the Global Distribution System (GDS), as well as mid-office robotics.
Here's are two promotional videos from MasterCard
EARLIER: MasterCard has, along with eNett, recently sponsored a Tnooz webinar on how travel payments are transforming the industry.