Financial Technology UK

A recent article in the Sunday times (1 December 2013) shone a light on the UK Government's desire to grow the Financial Technology industry. When launched in early 2014, FinTech UK will bring together start-ups, small firms and large companies from the financial and technology sectors to share ideas and promote the UK as a centre of excellence.

Following six years of strife in what was one of the star sectors of UK PLC (Banking), it will be interesting to see if FinTech UK can help repair reputations.

Conferma is already at the forefont of FinTech UK innovation and our payments ecosystem is being embraced by world class institutions from San Francisco to Singapore. We are living proof that British finance innovation and technology is highly regarded around the world and we look forward to seeing our sector receiving the help and recognition it deserves.

Combatting Fraud with VCNs

Conferma Virtual Card Numbers (VCNs) provide not only provide better control, process efficiencies and data to corporates, Travel Management Companies and technology partners, but also tanglible benefits to our financial partners - the banks and card schemes. You often hear that VCNs or Single Use Accounts (SUAs) can optimise payment processes thanks to automated reconciliation and tighter controls, however that's only one side of the story.

In travel and expense (T&E), the norm is to lodge a single credit card against a company where the card is passed around the office and used for hundreds, if not thousands of bookings every month. The card numbers is circulated and stored everywhere: websites; faxes; memorised by individuals; they are even on Post-it notes stuck to travel agents' computer screens. Often the card has a high credit limit and can be charged by anyone. Sound susceptible to fraud? That's because it is.

According to the Nilsen Report, card fraud in the US rose last year to a whopping $5.33bn. The US also acccounted for 47% of global card fraud. This is obviously of grave concern to US-based card issuers who are committed to working together to implement EMV (Chip and PIN) in the not too distant future. EMV has been an unboubted success in parts of Europe, where some countries boast a merchant adoption rate of greater than 95%, according to EMVCo. The European Central Bank has seen a reduction in card fraud by 7.6% in the Eurozone, whislt overall card usage continues to climb.

Security and control is integral to reducing card fraud and we fully support the rollout of EMV, ensuring a reduction in the cost of banking. However, the downside is the upfront investment required to implement EMV, which is neither simple nor cheap. Before you even reach market, consider the cost of card issuer scoping, nationwide card rollout schemes, merchant adoption, consumer education and PDQ equipment. There is no quick fix. Moreover, EMV is irrelevant in a Cardholder Not Present (CNP) environment such as e-commerce. In the United Kingdom, 63% of card fraud occcurs in a CNP environment according to Financial Fraud Action (http://www.financialfraudaction.org.uk/Publications/#/20/zoomed)

In B2B spend, VCNs or SUAs are a strong player in the reduction your fraud risk profile and do not require merchants to change their existing e-commerce practices. VCNs are generated for a specific purchase, allowing restrictions to be applied to the VCN such as the total amount, merchant category, validity dates when the card can be billed and the number of times the card can be charged. Access audit logs are also associated with VCNs to provide full transparency of who has spent what. Valid merchants can simply bill VCNs as a cardholder not present transaction using their standard POS terminal.

The reduction in card fraud enabled through the adoption of VCNs isn't simply calculated by the transaction amount. It's calculated through efficiencies gained thanks to fewer calls to the card issuer which saves time and money for both the corporate customer and the card issuer. A UK-based issuer that we work with has estimated their process efficiency to have improved by 90% since operating a virtual travel card program rather than a traditional single card payment.

Next time you think virtual cards, think beyond automated reconciliation and reduction of maverick corporate spend. Conferma's VCNs also provide reduced fraud risk profile and operational efficiencies for major financial institutions. 

Embracing New Technology

You could argue that being averse to change is a stereotypically British trait. There is always going to be reluctance, reticence and even resistance when embracing not only a new supplier but also a change of culture, especially amongst larger organisations, where existing practices are so heavily embedded in that culture.

Well, organisations don’t come much bigger or British than the Government. Yet when HMRC appointed Redfern to manage their UK-based travel with a clear mandate to progress the volume of online bookings from 50% to 95%, here was no better indication of an organisation willing to embrace new technologies to render processes more cost-efficient.

Indeed, with the ink on the contract barely dry, Redfern had already increased the number of online bookings from 50% to 95% within a month, 11 months ahead of schedule. In some departments this figure was over 98%. All equating to an estimated saving of £140,000 per year for HMRC and consequently the taxpayer. Current projections suggest that HMRC will achieve an estimated £3 million in savings across accommodation spend this year, and savings of over £20 million over the length of the four year contract. This is an improvement of 70% compared to previous costs.*

So how exactly did Redfern effect this saving? ‘Integrating technology from multiple suppliers’ was cited as one of, if not the main catalyst. Conferma was one such supplier, providing the comprehensive hotel inventory at Redfern’s disposal in tRIPS via our Booking API, which has been integral to HMRC maximising savings across their accommodation requirements. However it is our Virtual Card Number (VCN) technology, available through our Payment API that has delivered tangible savings for the settlement of hotel transactions.

At Conferma we pride ourselves on being revolutionary. We have set the new standard in payments technology without compromising on the usual benefits that people have come to expect from us, not least the highest standard of payment security.

Our automated solutions mean that the payment process not only becomes touchless for the TMCs but also has minimal impact on their existing workflows and procedures, negating any effect felt by the change of culture I mentioned earlier.

This increased efficiency has allowed Redfern to quadruple their turnover and manage eight times more transactions than others in the sector. Yet the number of staff has only increased twofold to cope with this increased volume.

At Conferma, it’s not the change to working cultures that is revolutionary or radical, it’s the end result. The savings made by the British Government are testament to this. So if you’re hesitating over embracing new payments technology, look no further than the new standard:  Conferma.

*Figures taken from the article How Redfern Travel smashed targets by making online booking simple from Travolution, 17 April 2013

Corporate Travel: 2013 in figures

I would like to begin this blog by wishing all our partners, customers and blog readers a Happy New Year on behalf of everyone at Conferma.

The turn of the year marks an opportunity to reflect on another successful year for Conferma and in particular the trends emerging in corporate travel. 2012 saw us extend our virtual card technology into the US for the first time, and it is a study from the other side of the Atlantic that I’ve chosen to look at, in the form of PhoCusWright’s U.S. Corporate Travel Report.

In 2012 there was over $100bn of corporate travel booked in the US. That’s a mere £62.1bn. Or €76.3bn.

Since gross bookings fell 26% during the recession in 2009, the corporate travel industry has been revitalised; figures have now surpassed pre-recession levels. That’s in stark contrast to other sectors who continue to suffer from the economic downturn. Business travel now represents 33% of the total travel market share, with the remainder accounted for by leisure travel and unmanaged business travel; a ratio that is edging gradually closer to 50:50.

Respondents to the survey cited ‘increased cost savings, enhanced spend under management and increased use of online corporate booking tools’ as their top three strategic priorities for 2013, whilst the top technology priority was the ‘automated capture of travel expense.' At Conferma, our innovative settlement and reconciliation products are fully automated to ensure our TMC and banking partners can reduce their administrative and operational costs significantly. Similarly, our state of the art virtual card technology enhances spend visibility and provides corporate clients greater control of variables such as credit limits, payment card validity dates and even the merchant category code.

The study hints at an ‘online penetration.’ Not something you’d want to Google. No, it refers to the increasing tendency to book travel online. This was one of the few metrics that did not decrease during the recession, instead hovering at around 50%. By 2013, 56% of gross travel bookings are now booked online. Early indications in January suggest Conferma is on course to record unprecedented levels of bookings made via Hotel Booker, our corporate hotel booking tool, whilst our virtual payment solutions are embedded in some of the world’s largest online booking platforms. Our virtual cards cover hotel, air and car rental, which were voted as the three largest areas of corporate travel expense. Indeed, air and hotel bookings account for more than 70% of corporate travel dollars spent.

96% of travel buyers indicated that their companies now use one or more online booking tools. The primary reason? You guessed it; cost. Corporates cited online booking platforms as the least expensive booking method, whilst also ‘facilitating integration with automated expense processing.’

I’ve already mentioned the corporate desire to automate capture and visibility of spend. The report revealed that miscellaneous expense now represents 21% of all corporate travel expense. Hotel extras, meals, excess baggage. In our experience, this significant chunk of ancillary spend is often unaccounted for, ultimately costing money and leaving companies’ spend policies susceptible to employee initiated fraud and misuse. Our fully automated solutions allow travel managers to rein in ‘rogue’ purchases, whilst rendering the data reconciliation process far more time and cost-efficient than chasing invoices from hoteliers and manually collating receipts.  

A quick word on our TMC partners. We continue to value our partnership with some of the industry leaders in travel management, especially in light of the fact that intermediaries now handle more than 75% of all corporate travel bookings. The dominance of intermediaries is particularly pronounced in the online corporate arena, where TMCs rely increasingly on the use of online booking tools and payment methods to further reduce costs.

Your list of New Year’s resolutions may be populated by the usual suspects. However if 2012 is anything to go by, make sure you place automated, virtual card technology for settling and reconciling travel expense at the top of your list.

*All figures from PhoCusWright’s U.S. Corporate Travel Report: Market Size and Technology Trends