SERTIFI GUIDE
Everything Hoteliers Need to Know About Virtual Cards
Virtual credit cards (VCC) are becoming increasingly popular – so popular in fact, according to Juniper Research, the number of virtual card transactions is expected to rise from 36 billion in 2023 to 175 billion in 2028. As with any emerging payment type, it’s important to understand what they are and how to use them. This guide covers what hotel merchants need to know to successfully accept virtual credit cards at their property and better manage payments with travel management companies (TMCs).
PART ONE
What are virtual credit cards?
What's the difference between a virtual and physical card?
Virtual cards are electronic versions of physical credit cards. Virtual cards come with the same details as traditional physical cards – a unique card number, expiration date, and CVV code – but in the case of a virtual card, these details are typically temporary. Virtual cards are often created for single or limited-time use (sometimes up to a year).
How are virtual cards created and distributed?
Virtual cards are generated digitally by banks, payment processors, or fintech companies. As part of the setup, companies can set a spending limit, expiration date, and other restrictions. Once parameters are set, the virtual card provider makes the card details digitally available via the cardholder’s account.
When is a virtual card preferred over a physical card?
Virtual cards are preferred over physical cards when payment security, convenience, and control are critical. Here are some common use cases applicable to hospitality:
Business Expenses
Many companies issue virtual cards to employees for specific expenses, such as travel. This makes it easy to set spending caps, limit card usage, and prevent unauthorized spending.
Travel Expenses
Virtual cards present greater convenience in the case of travel expenses. If card details are compromised while traveling, virtual cards can be canceled or replaced easily without the hassle of receiving a new physical card.
Temporary Expenses
For one-time expenses, such as travel bookings, virtual cards can be deactivated once the transaction is complete, limiting the risk of interception and security concerns.
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PART TWO
Why do travel managers prefer virtual cards?
"Virtual cards help make sure that each employee sticks with the playbook. They have to stick with preferred vendors, and they're more likely to obey company policy regarding extras." –Grasp Technologies, a Sertifi Partner
Bottom Line: Virtual cards can help streamline and enhance how travel managers handle business travel expenses. Below are some reasons they may opt for a virtual card.
Enhanced Security
Virtual cards offer extra protection against fraud since they generate unique, temporary card numbers that expire sooner than expiration dates on physical cards. For travel managers, this minimizes the risk of card details being stolen during online bookings or while employees are traveling.
Streamlined Booking and Payments
Travel managers can issue virtual cards immediately, enabling fast bookings and avoiding the delays associated with waiting for physical cards. This is especially useful for last-minute travel needs or remote employees who might not have access to company credit cards.
Better Control Over Spending
Travel managers can set spending limits on each virtual card, or even limit usage to certain merchants, ensuring employees stay within their budget and don’t engage in any unauthorized spending.
Simplified Tracking and Reconciliation
Virtual cards can easily be linked to a specific trip, traveler, or expense category. This simplifies the reconciliation process and provides clear, categorized data for reporting and analysis, which helps in budgeting and identifying cost-saving opportunities.
Easier Vendor and Expense Management
Travel managers often use virtual cards to manage multiple vendors, as cards can be issued to cover only certain vendor expenses. This keeps vendor spending separate and organized, reducing the complexity of managing hotel, flight, or car rental charges.
Lower Risk for Employee Mishandling
With no physical card on hand, there's no risk of an employee accidentally losing the card. This ensures sensitive payment information stays in the right hands and also eliminates the risk of an employee traveling without their card.
"Virtual cards satisfy travel managers’ demands for real-time data and for it to be rich in detail. A younger workforce more accepting of direct consumption will also accelerate adoption levels." –Corporate Travel Management, a Sertifi Partner
PART THREE
What benefits do virtual cards present to hotels?
Increase Number of Bookings
The use of virtual cards isn’t slowing down, and payment flexibility and frictionless experiences are increasingly important for guests. As payment preferences change, hotels must meet the demand to keep customers happy and stay competitive.
Fewer Delays in Payments
Because of how automated virtual card transactions are, hotels can receive funds quickly – often within a few days compared to lengthier billback processes. With fewer billbacks, in which adjustments are made to an invoice to reflect additional charges or credits after the transaction has been completed, reconciliation can also be much easier.
Lower Fraud Risk
There are a few reasons virtual cards are less likely to be misused or intercepted:
- Virtual cards are often generated for a limited time use and/or with a transaction limit.
- There is no physical card that could fall into the wrong hands.
- If a virtual credit card is compromised, it can be easily replaced or regenerated.
The Power of Digital Payments
Accepting digital forms of payment, whether it be virtual cards, ACH eCheck, or otherwise, is your best defense against fraud and chargebacks. These modernized methods allow you to take advantage of more robust security protocols and protections.
PART FOUR
How can hotels address common challenges virtual cards present?
It’s common practice for hoteliers to need a physical card present at check-in so that there is a chargeable card available for expenses incurred throughout a guest’s stay. Alternatively, in the case of business travel where an employer is paying for trip expenses, it’s common practice for hoteliers to obtain a card authorization ahead of time, which grants them access to charge the employer’s card without needing it physically present.
While virtual cards can transform these processes, it’s still possible for hoteliers to get what they need and conduct business effectively. Here are some recommendations.
Communicate Incidental Policies
Provide your incidental policy in advance to guests and/or their travel manager. This will help them understand what’s required at check-in and the options they have to ensure incidental expenses will be covered. For example, they can come prepared with a new virtual card with no expense limit or immediate expiration date that’s strictly for incidental coverage.
Consider a No-Incidentals Clause
If a guest cannot provide a card for incidentals, restrict access to services that could incur additional charges. For example, lock mini bar fridges, disable pay-per-view TV, and restrict room service.
Document Your Refund Policy
Because virtual card refunds can be complicated, it’s essential to keep clear records of all communication and refund attempts. This helps ensure accountability and provides evidence if there are disputes or follow-up questions from the guest or corporate client.
Collaborate with Travel Managers
Travel managers want to create a seamless experience for their clients – and a big part of that is ensuring their clients have a positive experience working with you. Be clear about the challenges virtual cards present so travel managers can address them.
Request Payment Instructions
Ask payers and/or their travel managers to provide payment instructions early, so you can understand the conditions the virtual card was created with. For example, determine how many days before and after departure you may charge the card.
Train Front Desk Staff
Ensure staff understand what virtual cards are and your policies around using them. For example, you may agree to charge the card as soon as possible from the departure date to lower your risk of it getting declined (as some cards are only active temporarily).
PART FIVE
How can hotels approach refunding a virtual card?
Check the Virtual Card’s Status
Before processing a refund, contact the guest or their travel manager to confirm if the virtual card is still active. Many virtual card providers allow refunds if the original transaction can be verified, even if the card has expired, but some virtual cards may reject refunds after a certain period.
Use the Original Payment Method
If the virtual card is still active, initiate a refund directly to it, similar to how you would refund a traditional card.
Contact the Card Provider if the Card is Inactive
In cases where the virtual card has expired or is no longer active, reach out to the guest or their travel manager to identify the best way to proceed with the refund. Often, they can provide a new virtual card number for the refund or route the funds back to the main account.
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AmTrav
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Hotel Engine
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Travel Incorporated
TravelPerk
World Travel Inc
