Virtual credit cards define future corporate travel

As virtual credit cards increase in popularity among business travelers, hoteliers need to offer virtual payment to meet growing demand. With virtual payment solutions, hotels can bring themselves directly into the focus of valuable business travelers. But just how easy is virtual payment for hotels to install and how exactly does it work?

Text: Lois Hoyal // FOTOS: iStock

Have you installed virtual payment in your hotel yet or are you still somewhat confused by this growing new trend? Well, don’t be. Virtual credit cards are nothing more than digital versions of plastic credit cards, offered by all major card issuers.

The advantages are numerous. And of key importance for hotels: according to a GBTA study, 88% of business travelers say if their company offered a central payment solution with a hotel, they would book this property over one that does not offer that payment method. In addition, compared with issuing invoices, virtual credit cards provide faster payments with enhanced security. They potentially improve hotel cash flow. What’s more, virtual credit cards streamline the check-in process for customers thereby boosting loyalty. And they provide full transparency in terms of travel expenses and can be customized for specific purposes, for example, by defining a maximum amount or expiry date.

Sound appealing? You’ll be pleased to find out that potentially all hotels can accept virtual credit card numbers as means of payment if they have entered into an acceptance agreement with a major card scheme.

It’s all in the numbers

So once you’ve decided to install virtual payment, how precisely does it operate? The process is in fact very simple. The booker who uses HRS for his bookings selects the respective HRS Payment Solution. The virtual card issuer generates the card number dynamically, which is valid for just one booking. The credit card details on the HRS platforms are tokenised in accordance with PCI DSS requirements by way of a third party service provider appointed by HRS. These are then provided in an online portal accessible to the hotels, within the HRS hotel portfolio called „Bookview“. Otherwise to charge payment to a virtual credit card, instead of swiping the card, you need simply enter the virtual credit card number manually into your terminal and confirm. Third-party authorization isn’t necessary as the identity of the person making the booking is verified when the card number is issued.

Now follow the instructions on the terminal. If the expiry date is required, enter the expiry date shown on the document provided. The process then runs the same as with any plastic card. If there is an issue with the card number, it will be displayed on the terminal.

Incidental charges may or may not be billable to the virtual card depending on the terms of sale. For example, companies typically do not allow hotels to charge additional fees, such as parking charges, to the virtual card unless specifically agreed.

It’s important with virtual payment cards to remember to review reservation details to understand all conditions of sale as the number may not be provided for purposes of guaranteeing, such as for OTA transactions. This is unlike traditional cards, where the number is provided as a guarantee, which hotels can use to charge for no-shows or late cancellations. 

Of course as with any payment process, they may be hiccups. Improperly billed charges may result in chargebacks. If an authorization isn’t properly carried out then a transaction will be declined. And hotels may struggle to identify when a virtual card is being used. After all, virtual card numbers look just like traditional card numbers. Basically though, virtual payment is virtually hassle free.

Interview with Constantin Rehberg, Chief Digital Officer, prizeotel

Why did you decide to introduce virtual card payment?

Since we set up the brand prizeotel, we have really focused on introducing the most convenient process automation and processes for clients. We were also driven by the idea to avoid any open bills. Hence our early adoption of virtual credit cards.

What have been the main challenges and key advantages to date?

The main problem with payment is that the payment environment is too fragmented. This means that there are too many partners involved in the whole process, which leads to high costs. It also means that the process is more complicated from the technical side than it should be. Normally a credit card payment should cost 0.1% of the whole value and not more.

Would you recommend that other hotels use virtual credit cards?

Yes. It is very valuable for process automation, to reduce international accounting costs and to increase security standards.

Will the hotel industry likely introduce more virtual credit cards in future?

Definitely, especially to optimize cooperation with sales partners. I expect to see far higher usage in future.

Helpful hints for hoteliers:

  • Establish proper authorization rules and procedures
  • Collect a form of payment for incidental charges directly from the guest, if applicable
  • If the guest calls after check-out to request a copy of the bill for the room and tax, advise him or her to contact the travel company that provided the card directly.
  • Only the charges not included within the virtual card transaction can be shared with the guest
  • Be careful to use the current and correct virtual card. Amended bookings may be accompanied by a new virtual card

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