Virtual payment: Do you know what you're (really) missing?

What happens when companies miss out on a smart solution? They get left behind. On this episode, Chad and Miriam reconnect with Alissa Merlino, Sr. Director, Global Solutions Engineering, about spend management strategies. Alissa is passionate about payment solutions and, as a traveler who experienced much anxiety when it came to payments and reimbursements, she illustrates how virtual payments could have elevated her own travel experience, why companies need to revamp their payment strategies to include virtual payments, and how easy the virtual payment process has become over the last 15 years. 

Have a comment or suggestion about this episode? Visit www.BCDTravel.com/podcast to connect with us! 

Learn more by visiting https://www.bcdtravel.com or https://www.linkedin.com/company/bcd-travel/

Transcript

Miriam Moscovici:

No navigational support on how to download a PDF version of one of our research reports off of it.

Chad Lemon:

Oh, you just click literally the word download. That's funny.

Miriam Moscovici:

I know. I just...

Intro:

Welcome to Connections with BCD Travel. An ongoing conversation about the modern day travel program, the impact of technology, and how travel buyers can take control and drive change. What are we waiting for? Let's start connecting.

Chad Lemon:

Welcome back to Connections with BCD Travel. I'm Chad Lemon and I work in Digital Strategy and Advancement.

Miriam Moscovici:

And I'm Miriam Moscovici, I lead the Partnerships and Intelligence team at BCD Travel. So what did you do this weekend? What are you cooking for dinner tonight? I want to hear from you. And who knows, maybe your comment will make it onto the podcast. So go to bcdtravel.com/podcast to connect with us.

Chad Lemon:

Well, let's kick things off with our news segment Miriam, the Quick 60 in Business Travel.

Miriam Moscovici:

Okay.

Chad Lemon:

So just a reminder for everyone, 60 seconds of interesting tidbits about business travel as published by the BCD Research and Intelligence team and what Miriam Moscovici has to say about it. Okay. So your team published a great sustainability in business travel report, and for me it was interesting visualizing the differences in sustainable travel behavior by global region. For example, when travelers in North America rated avoiding frequent towel changes and not using daily housekeeping services and hotels as high, travelers in the APAC region led in avoiding single use plastics, conserving energy and resources like water. So what do you have to say?

Miriam Moscovici:

So that was probably one of the more interesting parts of the research when we started looking at these sustainability behaviors by the different regions. And I'll give you a quick summary. Depending on the region, travelers are going to demonstrate really different behaviors at business destinations. NORAM type travelers tend to support local vendors and recycle and refrain from daily housekeeping more than their counterparts in EMEA and APAC. At the same time, they're less focused on saving resources or avoiding single use plastic. Travelers from EMEA where possible are walking around destinations rather than taking public transport. And two-thirds say that they do. A bit over half in NORAM and APAC say the same. So they're more inclined to travel with hand luggage as well in EMEA.

APAC respondents, they pay more attention to minimizing the use of energy and water at business destinations. On the other hand, avoiding daily housekeeping and towel change, recycling and supporting local restaurants are less popular among this group of travelers. They also, in APAC try to reduce the weight of their suitcase rather than giving up unchecked luggage. So lots of differences in behavior depending on where you live in the world.

Chad Lemon:

Yeah. What I thought was really cool is that report really showed how it takes everyone globally with all their different behaviors to make a difference.

Miriam Moscovici:

Yeah. That's right. But we're not just talking about sustainability today. We're talking about payments and more specifically virtual payments in business travel.

Chad Lemon:

And today's guest is not only well-educated on the topic, she's also pretty passionate about it. So we are going to bring back Alissa Merlino, senior director in our Global Solutions Engineering team. Some of you might remember her from the season one of this podcast.

Miriam Moscovici:

Alissa is such a wealth of information on this topic, how it's evolved over the last 15 years, and I know she's prepared to share some exciting advancements with us.

Chad Lemon:

Welcome back, Alissa. Let's kick things off by talking about why payment, and specifically Phe BCD pay platform is such a focus for us right now. Why are we investing so heavily in this?

Alissa Merlino:

Hi, Chad. And it's great to be back. So I just wanted to talk a little bit about, we've been talking to travel managers and we're trying to find something that really has a high return, but low change management. So when you look at digital payments, what you can find is increased savings, increased efficiencies, and overall increased visibility. Now you all know that I love a stat, so I'm going to go over some statistics on how this is affecting each stakeholder within the travel manager's organization. So first, the travel manager, how is this affecting them? If you have a simple way to manage payment and include policy, you are going to save over 8% of your budget.

For travelers, if you have automatically applied payments during that booking process, you're going to save two hours in expense management and submission. Then we travel out to not just the people who are in the travel business or affected by travel, but also the accounting department. If you look at automated reconciliation, what we're seeing is an 80% reduction in monthly processing time, and then overall 90% improvement on mismatching. And then finally are their finance teams. So typically about 40 to 80% of your entire spend is on T&E. And if you have increased visibility over the majority of your spend, it won't only make your travel program more efficient, but also it'll make your CFO happier to see exactly where that spend's being allocated.

Chad Lemon:

Since you went through all of those, let's clarify. Who is making the decisions regarding travel programs payment strategy these days? Is it the CFO? Is it the finance team? Are travel managers just acting on their own? Who are you and the team talking to during these meetings?

Alissa Merlino:

It's interesting that you're asking that question because what we've seen is a change from having the travel manager and their team be fairly siloed when it comes to T&E expense management, to now we're seeing larger cross-functional teams being invited to those conversations. So anywhere from the accounting team to the finance team to the CFO of that organization, are part of the initial conversations and some of the configuration and even onto implementation.

Miriam Moscovici:

So Alissa, we're a few weeks now into 2024, so I'm curious to know what are those conversations that are happening regarding payments with the stakeholders?

Alissa Merlino:

Well, I'm glad you asked Miriam because I think they've changed significantly. So it's no secret that virtual payments have been around for over 15 years, but the way that we are applying policy at the point of sale has changed. So you look at it again with statistics about 50% year-over-year growth in 2023. In addition to that, we're seeing an 80% rate and acceptance for hotels, which again, for those who are in the business and in business travel, will notice that that's a huge statistic. And then overall, if you look at it, 59% of a financial department's resources are spent on managing those transactions.

But with all those statistics and the growth, there's still a significant amount of confusion. As an example, we were on a call last week with one of our clients that has recently just signed on, and they're looking to create a virtual card program. But not only did they have some confusion around it or questions on how to implement, but also their bank provider. So this is one of those examples where we use our cross-functional team with their cross-functional team to provide additional support, and we were able to connect our partners with that bank organization to basically tell them how they could implement for the client. So it's not just making that account available and easily implemented, but also guiding even our banking partners.

Miriam Moscovici:

I think you hit the nail on the head by saying that there's still a lot of confusion around virtual payments right now. But what are the other challenges that travel managers are facing? Because I know that you've said in recent years there's been a lot of simplification in virtual payment and it's easier than ever.

Alissa Merlino:

And this is probably where I'm the most passionate. So our workforce is changing, and recently I was even reading something about evolution of leadership. So there were acceptable behaviors and styles in the '80s and '90s that just don't exist anymore. And it's the same thing with payments. So in our personal lives, in our personal travel, we're using virtual payments, we're using tap to pay. And truly business travel needs to follow a suit. So it's basically evolved to survive.

Chad Lemon:

Well, I want to dig in a little more on that generational viewpoint that you just talked about when it comes to payment in business travel specifically. And I know you have an insightful point of view here, because we're not just advancing payment, virtual payment, those strategies just to do it, there are changing viewpoints about that younger workforce, and it's happening at a much faster rate than what I think some people might even be prepared for.

Alissa Merlino:

And typically what organizations want to be is the organization of choice. So there are a lot of different companies out there that you could potentially work for. But it's not just about compensation anymore, it's how they take care of their employee. And part of that is if you look at the economy as it is right now, you have an incredible amount of inflation. You also have younger generations have decreased access to credit. So if you're asking them to use a hard card or their personal card to have those incidentals or charges and then basically expense those back, what you're doing is you're creating maybe at some level, some anxiety about how they're going to be able to front that initial financial payment.

And what you truly want to focus on is why have I hired this person? What are they good at? And how do I free them up to be good at what they're good at? So if they don't have that anxiety around travel and around those expenses, you're now providing them additional, in my opinion, duty of care. You're looking out for them not only as a traveler, but as an employee.

Miriam Moscovici:

Alissa, talk to us a little bit about control. What checks and balances are there? And I ask you this because when I'm booking travel, I still feel a little bit of visual guilt when I'm booking a hotel room. I see the price listed in front of me, and I make a smart choice. Chad, who's in a different generation of travelers, likely doesn't. Are you that much younger than me, Chad? Yeah, exactly. That was totally scripted, and you should leave this in the podcast.

Chad Lemon:

We're in different generations. We are.

Alissa Merlino:

Chad just like to be called young and handsome all the time.

Miriam Moscovici:

Whatever.

Chad Lemon:

Hold on, don't answer Alissa. She needs to ask that again.

Miriam Moscovici:

Yeah. I needed that again. But Chad, who's just a...

Chad Lemon:

Just a spring chicken really.

Miriam Moscovici:

Yeah. You're a duck. Alissa, talk to us a little bit about control. What checks and balances are there? And I ask this because when I'm booking travel, I still feel a little bit of visual guilt when I'm getting search results and I'm seeing the prices out there. And when you're using a virtual payment method, you're taking the booker out of that experience and insulating them a little bit from the total cost potentially. So what are your thoughts on that in terms of still influencing real smart choices and maintaining control of the spend?

Alissa Merlino:

Yeah. So let me address that first part of visual guilt. So we had an interesting conversation a couple of days ago about how generationally we feel different about that. And part of that is because the changing workforce. Most of our workforce is hybrid, if not totally virtual. So the sense that if you're pulling me out of my main location to travel, the generations that are a little bit younger aren't necessarily feeling guilty about what they're charging. There's not that sense of I need to be a good corporate citizen. Not because they don't want to, it's just not who they are. And that goes back to evolving to survive. We can't assume or put our values onto a different generation that has a different culture. So I think that's also where you're able to control.

So if you have virtual cards or virtual payments, you're able to really affect that policy at point of sale. So that means that you could affect how much they spend before they even spend it, versus assuming that they could have some visual guilt and charge less on their card to be reimbursed. Because again, from my personal perspective, if it costs $3,000 for a hotel because it's close and walking distance for a conference, I'm going to do it just because that seems the most convenient. Whereas if I was using a virtual payment and there were limits placed on that card, I probably would stay in the boundaries a little bit more.

Chad Lemon:

Now, Alissa, I don't want to scare our listeners with this next question, but what do you see happening if travel programs push against this or the concept of virtual payments and expanding their payment strategy? Where will that leave them?

Alissa Merlino:

Well, I think the three areas you need to consider are retention, savings, and then ultimately what's your competitive advantage. So if there are other organizations out there that are providing these tools and services for those who are in the marketplace looking for employment, you're not going to have access to the employees of choice or retention. And then ultimately, you're going to be able to save money if you are controlling the program at the point of sale, which is a digital card or digital payments. And ultimately, that gives you a competitive advantage because if you have those folks who are a little bit more innovative that have signed on to work for your organization and you're taking care of them in a way that feels like they should be taken care of, you're going to be able to retain that talent and continue to grow with that talent. So you'll always see there's going to be a friction between what exists now and what could be, and you need those in some ways, disruptors within your organization to continue to push you forward.

Miriam Moscovici:

Hearing you talk about all this, I can tell you're really passionate. What is that all about?

Alissa Merlino:

Well, truthfully, I think a lot of it goes back to I am a traveler. So when you look at it, inflation has not just affected those who are in the marketplace for a job or those of us who are on the call. But for me personally I travel a significant amount. So when we're looking to pay for those or front that financial commitment, it's not just hotels, it's incidentals, meals. And it really does put you at a disadvantage. And then truthfully, and for me, it creates a lot of anxiety. Did I pay my credit card bill this month? Is there enough room on my credit card to host this next trip, like the three trips out of a month that I'm taking? And then ultimately, my background has always served its purpose within technology.

I was a meeting planner for over 10 years, and I saw the struggle, not just from a payment standpoint, but as you get into payments and being able to look at a digital spend model is the automated reconciliation. We would spend hours, if not days, reconciling one statement. And then if you think about that and you're having multiple different cards or personal cards being used and then expense back, you're now reconciling multiple statements when you could just be reconciling one statement that has multiple digital identities for each of those who are traveling.

Miriam Moscovici:

A big source of stress for some travelers is around what's available on their credit card, and can they float this amount for as long as it takes to get back from three weeks of traveling, that type of thing. But in the past, most corporations had a corporate charge card program where you would just get a credit card. So you didn't really have to worry about your personal liability. There's been a shift though in corporate card programs. There's few of them, I mean, is that why this is more of an anxiety source for some folks is they're not getting corporate cards when they join the employer they work at?

Alissa Merlino:

Yeah. That's correct. And part of that too is you look at it, they're also trying to move from the different generations of how you handle payment. But if you think about it, one in six card holders was experiencing fraud. Now this could come from a lost hard card or their wallet was stolen even. You could have left your purse on the flight. So what we're finding is that digital card program really does solve for some of those key issues in duty of care, like safety, security. And we've often talked about a lot of the developing markets are carrying cash. And in that respect, once that hard card is gone or that cash is gone, it's gone. The digital imprint or digital payments are easier to control, to cancel. So I think that's where you're seeing a movement away from a company corporate card. But then if we're moving away from that, then the responsibility now becomes the individual's responsibility, which creates, again, a lot of pressure on that one employee, when truly, I do think the organization could take on that responsibility without taking on the increased risk with digital cards.

Chad Lemon:

Alissa, before we wrap up with you, what is the one thing you want our listeners to know about virtual payments?

Alissa Merlino:

Well, developing an overall spend management program can be overwhelming. But the first step really is to look at a foundational digital payment, and that can be very straightforward and simple.

Miriam Moscovici:

Chad, hearing her speak about being that traveler that needed something like virtual payment and how the workforce is changing and companies need to prepare for all that, that was some really interesting and powerful stuff.

Chad Lemon:

Yeah. She's so good at illustrating the points and really giving the insight to why this is so important and so relevant to business travel today.

Miriam Moscovici:

Well, that's all for this episode. But like I said, we want to hear from you. So visit bcdtravel.com/podcast to leave us some feedback. And don't forget to download and review the Connections with BCD Travel podcast today.

Outro:

Thank you for connecting with us. BCD Travel helps companies travel smart and achieve more. We drive program adoption, cost of savings, and talent retention through digital experiences that simplify business travel. Learn more about the topics you heard on this episode by visiting bcdtravel.com/podcast.