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10 months ago

Virtual card numbers have only scratched the surface so far

Virtual Card Numbers (VCNs) are a commercial payments solution revolutionising corporate payments, most notably in business travel.

NB This is a viewpoint by Simon Barker CEO for Conferma.

With leading VCN suppliers reporting triple digit year-on-year percentage increases in transaction volumes, it is a popular and fast growing payment method.

Yet research shows that there is still an addressable market of $810bn for the VCN. We have much more to gain from the VCN in 2016.

Professionals in the world of corporate payments are increasingly demanding flexible, secure and convenient ways to make payments. A combination of combating fraud and a desire to streamline the corporate accounts process means that banks have to start thinking about how they meet these demands in the drive for automation.

In this article, I will explore how the VCN has impacted upon the travel industry and what we can expect to see in 2016.

What is a VCN?

The term ‘virtual’ can be misleading. A virtual card number is a normal 14, 15 or 16-digit card number which banks issue from their standard Bank Identification Number ranges.

Just like physical payment cards they also carry an expiry date, the cardholder name and a three or four digit CVV or security code. However, instead of being stamped physically across a plastic card, the number is:

  • Generated digitally at point of sale
  • Used for that single payment only

VCNs don’t look any different to merchants and are processed as standard Cardholder Not Present transactions. Restrictions can be placed on how the VCN is used – including the merchant category code, amount and date range in which the VCN can be charged.

A traditional centrally billed account has just one card number which is used over and again for multiple payments, made by multiple employees to multiple different suppliers, which poses a major security risk and is open to abuse. With VCNs, a unique, one-time card number is generated for each transaction but all the numbers are billed back to the same account.

How the VCN works for travel

ONS figures show that, post the 2009 crisis slump, business travel figures continue to rise in the UK, confirming that travel is an important, critical, part of business life.

Employees regularly have to book travel, accommodation, car hire and subsistence when on company business. Only senior employees tend to have company charge cards so many employees have to pay for travel and accommodation themselves and then claim back on expenses.

It’s an inconvenience for the employee, not everyone has access to credit and it is time consuming for the accounts payable departments who have to make the payments and reconcile against cost centres.

In other instances, it can mean a Travel Management Company (TMC) handling the booking and using either the traveller’s credit card or the company lodge card. Yet with increased concerns about the security of the lodge card, something we will touch on later, neither of these are ideal scenarios. Here is an example of how a typical travel purchase works with a VCN

1)    The TMC books the flight as normal using their preferred method. So far, exactly the same as usual.
2)    Step two is where we see the change. Traditionally, the consultant will copy and paste either the traveller’s credit card number or their employer’s lodge account number. With VCNs, the consultant first keys in employee information. Critically, payment cannot take place until required fields such as employee number and client code are completed.

The consultant then clicks an option on their booking screen to generate a VCN. The process takes less than one second.

The VCN providers then apply the parameters required for the VCN, such as the credit limit, valid from and valid to dates and the merchant category group. These are usually driven by the booking rate, start and end date of the booking and the merchant type. The merchant accepts the number as a Cardholder Not Present transaction.

Why now for the VCN?

The market for the VCN is growing exponentially in business travel but there is more to play for. VCNs automate what can be a cumbersome process of booking travel. There is far less manual processing of expenses and they remove what can be a time consuming, and potentially inaccurate, reconciliation process.

But, more than this, they also address some of the biggest concerns businesses face over the next twelve months.

1)    Cybersecurity

According to the Chartered Institute of Management, one of the top three issues for CEOs in 2015 was cybersecurity. This is hardly surprising. A survey by IBM showed that in the UK alone, there was a 38% rise in loss and theft of personally identifiable information over the last year.

At a personal level, think how many places your payment information is stored: airlines, train companies, online retailers, app stores, software providers, fast food delivery services… the list is endless.

Now expand that to a corporate level and the extent to which a business is exposed to a data breach is considerable.

All it takes is a breach at just one of the many suppliers and vendors your businesses payment details are registered with and the whole firm is exposed to large scale fraud.

It is happening already. In November this year, both Starwood and Hilton hotel chains reported data breaches, joining an expanding list of big names such as Marriot, Sheraton and Trump Hotels who have suffered such breaches.

With the VCN, this fraud exposure is virtually eliminated. A VCN is generated for a single use and a designated purchase. It cannot be used for any other purpose. A VCN in the wrong hands is pretty much useless to them.

2)    Employee fraud

No employer likes to think that their employees are fraudsters and, in the vast majority of cases, employees are honest and hardworking. Yet, figures obtained by PwC showed that in 2014, 56% of all corporate fraud was carried out by insiders.

Detailed research by the University of Portsmouth into 45 separate instances of employee fraud showed that the average cost of each of these instances, including costs of investigation and repair, is £483,000. A staggering figure indeed.

Cifas’ 2015 report into employee fraud shows that, with a rise of 57.1%, the fastest growing form of fraud is false expenses claims.

Business travel is, sadly, awash with fraud, with plenty of known scams. For example, train receipts don’t say which class you travelled and train prices vary widely in cost. So, you could travel first class (in breach of your corporate travel policy) hand over your receipt and claim it was standard class. Or, employees could claim for alcohol by doctoring receipts or even claim for an expensive hotel room, stay in a cheap one and pocket the difference.

By utilising VCNs, the expenses claim is a thing of the past. Firstly, they are issued for a designated use in a designated timeframe. So they can’t be used for anything they are not intended for. Equally, no employee is paying out of their own pockets so there is no scope for inflated expenses claims.

Finally, the VCN negates the need for a company charge card, closing off another avenue of fraud.

3)    Aligning technology to business needs

A recent article in Forbes claimed that one of the biggest concerns business had for 2016 was that technology wasn’t aligned with business needs

Anyone involved in fintech will know that this is a common theme. Ours is an industry plagued with gimmicks, gizmos and gadgets. But how many of them actually solve a genuine business problem? How many of them make business life easier and more profitable?

I believe that the VCN is aligned with business needs. I know it because Barclaycard have told us that Precisionpay, their VCN service, is the fastest growing product set in commercial payments.

Where businesses have the opportunity to use the VCN, they embrace it. They embrace it because it is absolutely aligned with their business needs and frees up admin time and allows more concentration on core business functions.


Understandable security concerns and a desire to economise and simplify processes at a time of increased business travel are perfect conditions for the VCN to continue to thrive and grow in business travel.

Yet more than this, I also firmly believe that the VCN will break out of business travel in 2016 and become more widely used and adopted for all corporate purchases.

NB This is a viewpoint by Simon Barker CEO for Conferma.

NB2 Image by Shutterstock


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  1. Kurt Laes

    The concept merites some thought. I don’t see it as a solution for all transactions however: what about meal expenses (client lunches in a restaurant could become embarrassing if the waiter tells you to find “another form of payment” because VCN’s are not possible/recognised). I’ve done sales missions from a week in different cities and not all meals are always in fine restaurants… I don’t see Tesco (let’s do some product placement as well 😉 or the bar buffet car in a train accepting VCN’s anytime soon. Another issue I see on the horizon are unexpected changes that require additional payment (changing a ticket when travelling = fees + differences in fare to be paid). The TMC is not always around to do that when the traveller is having in issue at the airport or station. Reimbursements (compensation) in case of delays might become a challenge as numbers are unique and single use …

  2. Mario Kriebel

    Great article and I agree that virtual cards bring a massive benefit in the security area. What should be mentioned as well is that the use of the virtual cards can create some challenges especially when you use it for hotel/car… 1st the hotel has to accept the cards as form of payment and 2nd companies in Europe usually need the original hotel invoice for accounting and tax purposes and even if the hotels get clear instruction to send this (with the correct company name etc.), often the invoice doesn’t come automatically and create massive manual workload.


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