The VC revolution
VIRTUAL cards (VCs),
also known as Virtual
Card Numbers (VCNs)
and Virtual Account Numbers
(VANs) are revolutionising travel
payments for travel agents and
their corporate clients in South
Africa.
The use of the VC in the
South African travel space has
seen a significant reduction
in fraud as a result of its
salient features – a virtually
produced credit card with a
VAN that is generated at the
time of payment or booking
guarantee that can only be
used for a single transaction.
The amount, supplier to be
paid and date range the VAN
is valid for are all stipulated by
the purchaser.
Lidia Folli, BidTravel ceo,
says the major benefit of a
VC is that it offers a secure
way of paying. “The biggest
risk we run as travel agents
when it comes to payments is
fraud when settling on behalf
of clients. Almost every travel
business has been exposed
to it in some form or another.
Virtual cards eliminate fraud
because one issues a single
fixed value VC for every
transaction or a batch of
transactions.”
Marthie Moore, BCD Travel
cfo, explains that the amount
on the card is matched to
the invoice, so if an agent
stipulates a payment of
R1 000 for the VAN, the
supplier can only ‘swipe’ for
R1 000. The supplier cannot
charge R999 or R1 001. “It
puts the control in the hands
of the buyer.”
VCs not only allow travel
agents to define a spend
limit, says Dan Greaves of
Amadeus’s Travel Payments
Business Unit, but also the
expiry date for each card,
which significantly limits the
fraudulent risk of the card. If a
supplier does not ‘swipe’ the
VC within the stipulated time
period, the money is returned
to the buyer’s account.
eNett VANs, which are
widely used by travel agents
in South Africa, have been
designed to maximise
protection against supplier
default, says Anthony Hynes,
ceo of eNett International, in
which Travelport is a major
shareholder. “As well as
generating unique MasterCard
numbers for each transaction,
agents can include payment
parameters such as amount,
currency, date and merchant,
making it a more secure way
to pay and be paid. eNett
VANs are also backed by the
MasterCard guarantee, giving
additional peace of mind when
dealing with new suppliers.”
VCs also offer additional
benefits over other forms
of payment. “The fact
that payments are cleared
immediately is a huge
opportunity for travel agents
as it creates operational
efficiencies and enables us to
provide better service to our
clients,” says Lidia. “They are
quicker to issue and release
for processing, with no time
limitations as one has in
traditional banking.
“With VCs, the supplier is in
control of settlement, which
means they don’t have to wait
for proof of payment and for an
EFT to clear before actioning
a booking. VCs also reduce
operational costs, for example,
in instances where we can
replace costly cross-border
telegraphic transfers with a VC
card payment.”
According to Kevin Lomax,
Diners Club SA head of
Corporate Card, VCs are also
a better cash management
tool for travel agents. “In the
case of the Diners Club Virtual
Card, which is linked to our
corporate clients’ credit facility,
the extended repayment period
means no cash outflows for
agents or delays in the cash
conversion cycle.”
Marthie adds that VCs
are also useful for dealing
with currency fluctuations.
“We use eNett as our VANs
supplier. Built into their VCs is
a tolerance level that one can
add on to a specific payment
that takes care of currency
fluctuations. If, for example,
we add a 5% tolerance level
to a US$1 000 payment
for a hotel booking in the
US, the VAN will take into
consideration movements in
the rand between the time
payment is made and the time
the supplier ‘swipes’ the card,
and we will then be able to
charge the client the correct
rand value for the US$1 000
at the exact time the supplier
‘swiped’ the card.”
More product choice
THE growth of eNett’s
global business is a good
indication of the increasing
use of VANS in the travel
industry.
According to Travelport,
eNett’s revenue grew from
US$2m (R27,3m) in 2011
to US$150m (R2bn) in
2016 and expectations are
that between 2016 and
2020, the business will see
compound annual growth of
more than 25%.
According to Robyn
Christie, Travelport South
Africa country manager,
there has been fantastic
take-up and growth of its
eNett business, making
excellent progress with both
existing customers and new
business.
eNett VANS integrate
seamlessly with Travelport’s
Travel Commerce
Platform, and have also
been integrated into the
Sabre and Amadeus GDS
platforms.
Agents must have funds
in the eNett account, for
a pre-paid solution, before
they can generate a VAN –
an automatically generated
16-digit MasterCard number
used to pay their suppliers.
The Diners Club Virtual
Card was launched in 2015
and became available
for use by Diners Club
corporate cardholders in
2016, when its development
was complete. It is available
to all companies that have
corporate agreements with
Diners Club and is linked
to the corporate’s credit
facility. That means agents
generate a VC as a ‘subset’
of clients’ corporate lodge
cards. Only suppliers that
are Diners Club merchants
can accept payments. The
Diners Club Virtual Card will
be integrated into GDSs in
2018.
ABSA launched its VC
solution, Virtual Pay, in
the SA market in April. It
offers all the benefits and
guarantees of a MasterCard
product. To use Virtual Pay,
TMCs or their clients open
a Virtual Pay account with
ABSA. TMCs and ABSA
clients can either choose
a pre-paid option or have a
credit facility on the account.
No fees are charged by the
bank for raising a VC.
ABSA’s Virtual Pay
Business Travel (VPBT)
solution is fully integrated
into GDSs through global
travel integrator Conferma,
while Virtual Pay commercial
payments can integrate into
a client or TMC’s Enterprise
Resource Planning (ERP)
system.
The VPBT solution enables
suppliers to upload their
invoices into an invoice
repository within the
reporting tool, which agents
can then access.
Virtual Pay is currently
fully integrated with Sabre
which means agents can
use the ABSA VC for airline,
hotel, car-rental and rail
bookings within Sabre.
Payments through Travelport
and Amadeus are currently
limited to hotel payments.
TRAVELPORT, Amadeus
and Sabre have all signed
agreements with Conferma,
the global payments and
reconciliation technology
company that specialises
in the settlement and
reconciliation of corporate
travel expenses.
Conferma offers GDS and
non-GDS solutions that
enable corporates and travel
agents to generate VANs
through their online booking
tools and, in the case of
agents, through GDSs as
well.
Besides ABSA, Conferma
also has partnerships with
Citibank, payment solutions
provider Wex and eNett.
When an agent requests a
VAN, Conferma ‘pulls’ the
VAN from the merchant, in
this case MasterCard, and
delivers it to the TMC and
GDS.
Amadeus plans to launch its own virtual card solution for South Africa
THE introduction of a virtual
card solution in the South
African market is a top
priority for Amadeus in the
months to come, says Andy
Hedley, Amadeus South
Africa gm.
“Virtual cards are an
excellent way to combat
fraud, as well as reducing
the time spent on
reconciliation. They are
widely used around the
world and will definitely be
a winning solution for travel
agents in our market,” he
says. Amadeus offers a host
of virtual card solutions in
a variety of markets globally
that are fully integrated with
the Amadeus GDS.
Pros and cons
DINERS Club’s Kevin Lomax
says a significant benefit
of using virtual cards (VCs)
is that there is no sharing
of card details that could
be reused fraudulently. He
adds that VCs can reduce
operating costs of TMCs. “If
a TMC is paying a supplier
using their own cash and
collecting later from the
corporate, they have a cost
of capital that is removed
when using a VC.”
Scholtz Fourie, cfo of
Tourvest Travel Services
(TTS) says no client
information is displayed
on the card. “No traveller
details appear on the card,
only the amount of the
transaction, card number,
CVV and expiry date in
order to process payment.”
Another advantage
of using VCs is that
they provide automatic
reconciliation of purchases
and payments, removing the
tedious and time-consuming
task of having to reconcile
bookings against invoices
and payments.
Although VCs such
as eNett offer agents
rebates on payments, one
disadvantage of using
prepaid VC solutions is
that travel agents have to
preload funds into their
VC accounts held by the
VC provider before they
can generate a VAN, says
XL Travel ceo, Marco
Ciocchetti. “So although
these cards are great
for reducing fraud and
providing greater protection
to customers, some
agencies may find it difficult
to constantly preload money
into their VC accounts and
may prefer the option of
credit facilities offered by
‘plastic’ credit cards, or to
use a VC supplier that links
its VC to credit facilities.”
Themba Mthombeni, ceo
of Duma Travel, says the
main reasons for using
VCs are for security and
to monitor expenses. “We
prefer to use only one VAN
supplier so that it’s easier
to reconcile expenses and
to top up funds on one
card. With normal credit
cards, reconciliation can
sometimes be a nightmare,
especially when suppliers
have a different registered
company name to the
one they use as a trading
name.”
The downside of using a
pre-paid VC, says Themba,
is that agencies constantly
have to check that there
are sufficient funds in
their eNett accounts to
make payments and have
to monitor their expenses
daily. “Some suppliers
also don’t accept eNett
payments.”
There are also suppliers
that add extra charges for
paying with certain types
of payment cards, says
Amadeus’s Dan Greaves.
“Travel agencies should
therefore look for a supplier
that can offer a range of
different payment options.
That way they will be able
to pay those suppliers who
charge extra for certain
cards with a type of card
that doesn’t attract the
additional charge.”
Will VCs replace billbacks?
VIRTUAL Cards
(VCs) theoretically
have the ability
to end the hotel
billback system in
South Africa, but
this will depend
on how much
the travel agency
community wants
to get rid of them.
Lidia Folli of
BidTravel, says VCs
provide agencies
with a different way
of settling billbacks. “It does
make the billback process
more efficient, because you’re
issuing a once-off virtual card
for every transaction and
dealing with any discrepancies
upfront, but it doesn’t replace
billbacks. We will continue
to handle billbacks as a
service to our clients where
they want us to deal with the
administration that comes
with hotel or any other service
bookings.”
Aldo Laubscher, ABSA’s
head of Commercial
Payments, Retail & Business
Banking: Barclays Africa
Group Limited/ABSA, says
travel agents are
eager to be rid of
billbacks as this
can reduce their
administrative
staff needs,
improve cost
control and reduce
risk. “However,
some TMCs are
reluctant to do
so as this may
affect the income
generated from
doing billbacks for
corporate clients.”
He believes elimination
of the billback is possible,
depending on how an agency,
its client and the supplier
structure their use of VCs.
Kevin Lomax of Diners
Club, believes VCs will, in
the short term, change the
settlement method after the
billback process is complete,
but in the longer term they
have the potential to replace
billbacks if the VC is sent to
the supplier at the time of
booking. He says for efficient
and effective use of VCs, a
change management process
is needed.
“This is where the card
company, the TMC and
hotel must work together to
ensure a smooth transition
to VCs and their successful
implementation.”
Ways in which travel agents
can use VCs to pay hotel bills:
Provide a hotel supplier with
a VAN for payment of the
costs the company accepts
as part of the traveller’s stay.
The corporate traveller pays
for any extras and claims
the costs back from the
company.
Guarantee the payment in
the GDS with a VC, then
send the VAN to the supplier,
who ‘swipes’ the VC when
the corporate checks out.
Use a VC to guarantee a
booking in the GDS, but then
the client pays the hotel with
their own or company credit
card on checkout.
Raise a booking within
the GDS, provide your own
voucher as guarantee, await
an invoice from the hotel
once the client has checked
out, and then raise a VAN
to make payment. This way
does not eliminate billbacks.
Travelex launches ordering site for corporates
FOREIGN exchange service
provider, Travelex, has
launched a new ordering
website for its accredited
corporate customers. The
website enables corporates
to place orders online
and track progress from
placement, to approval to
delivery.
Travelex retail manager,
Jacques Labuschagne,
says the new website puts
corporates in control of the
ordering process. “They
can decide on who can
process and release an
order, assign different levels
of authority for sign-off at
every step, appoint approval
rights to individuals or
TMCs who can help track
and manage their spend,
and the platform also
allows them to view a
variety of reports that will
keep them informed of their
daily, weekly or monthly
forex spend.”
Among the many
advantages is the absence
of manual completion
of forms, as everything
is done online. Once a
customer’s information has
been securely uploaded,
all the information is
pre-populated with every
transaction. Only airline
tickets will need to be
uploaded with each new
transaction.
The delivery facility is
open to all Fica-registered
corporate travellers and
travel managers who have
an account with Travelex. It
is not available to leisure
travellers.
“Convenience was the
key when designing the
system,” says Jacques.
“Orders can be approved
on the move from any
smart device. There is
no need to call or follow
up after placing an order
as the platform provides
access to real-time tracking
information on the online
dashboard, giving updates
on the progress of each
order.”
Besides purchasing
foreign currency, travellers
can also use the online
platform to sell unused
currency back to Travelex,
and order and load funds
on to a cash passport.
