Digital wallets, mobile payments, and AI: corporate payments are changing

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AirPlus International UK

31 August 2023

Read Time: 17 Mins

The future of digital and mobile payments

We’re in the midst of a digital payment revolution.

New ways to pay are rapidly becoming the norm in the consumer world, with travellers and shoppers quickly realising the obvious benefits of digital wallets and mobile-first transactions.

But those in the slower-moving corporate world had a sharp wake-up call. While they had to jump on the tech revolution bandwagon, they also had to find sustainable ways to meet their security, compliance, and accounting needs.

Business travel management, in particular, found itself on the frontier of this changing landscape. From booking tickets to paying for accommodation, every payment touchpoint was potentially a new challenge. And while the revolution was well underway, there was still plenty of need for traditional payments to somehow co-exist happily alongside the new norms.

For consumers, digital payments are no longer a novelty – they’re simply the way they pay.
With this shift, other factors are beginning to enter into the mix and drive innovation. In the coming years, we’ll see even more alternative payment methods grow in popularity while existing digital payment technology will continue to evolve.

And the question is, how can we keep up with that?

Here’s the dream: You’re going on a business trip and all you need to take with you is your phone. No paper ticket. No physical wallet. It’s all digital.

It’s clear that digital payments are the future, but how can we as payment providers fulfil these expectations?

Let’s take a closer look.

WHAT’S DRIVING THE SHIFT TO DIGITAL?

Consumer behaviors

For the consumers of today, paying is no longer merely a transaction – it’s an experience.

The digital payment choice is growing, and with it come high expectations. People don’t want to pay by physical card - they want to tap on and off with their mobile or their watch.

According to MoneyTransfers.com, the top 10 mobile payment apps in the world have 3.37 billion users combined.¹ That’s the digital world we’re living in, and consumers are now asking the question: Why can I not enjoy the same payment experience when I’m working?

It’s vital to remember that our employers are consumers too – and consumer behaviour is now driving corporate experience. With that comes a growing necessity for corporate payments to measure up.

So our clear aim for the future is this: to offer the same level of experience to our corporate users as consumers get.

Convenience, not COVID, is now driving innovation

You’re running late.

You’re doing all you can to be on time. But the problem is you’re travelling on the London Underground, with a suitcase, and it’s rush hour.

The last thing you want to do is queue to pay for a ticket. You want to use your mobile to tap the gates, to make things as quick and convenient as possible.

It’s true that when it comes to the appeal of digital payments, convenience is a major factor, with people wanting the same experience whether they’re travelling for work or leisure.

And there’s no doubt that mobile payments have significantly increased the rate of convenience. We’re using mobile payment systems all the time in our everyday lives. Tapping our phones when we’re at the supermarket, on holiday, shopping for clothes, etc.

Convenience is a key component of what our corporate travelers want – and it’s time for corporate companies to get on board.

Card or digital payment only

The Bank of England estimates that a little over decade ago, around 60% of all payments were made in cashin the UK.²

Fast-forward to 2020 and cash accounted for a mere 17% of all payments made.³ The use of cash was already well on the decline, but the pandemic was a big driver in accelerating this trend, as practical concerns about virus transmission saw most retailers and consumers opting for contactless during the outbreak.

And in truth, cash has never recovered. In fact, UK Finance expects cash payments to account for just 6% of all payments by 2031.⁴

We’re now living in a world where “card payments only” is becoming more commonplace, and soon we may not be able to pay in cash at all.

WHAT ARE THE CHALLENGES WE’RE FACING?

1. Company rules around corporate cards

Behind every corporate traveller lies a company.

And behind every company lies a certain set of rules and regulations that need to be considered. Especially when it comes to replicating the consumer experience in the corporate payment space.

Compliance, security, safeguarding – these are all important factors that have corporate boxes to be ticked.

Because of this, corporate travellers may find themselves coming up against restrictions on card use and the sorts of transactions they can use their cards for. For example, when it comes to the use of certain digital devices the company will need to follow security and compliance tests to be approved for corporate payments.

Which means that not every new digital tool and gadget available to consumers can be used in the corporate world at the drop of a hat.

Ulrich Danz from AirPlus said: “There are certain rules that need to be considered. But I don't see them as a restriction. I see them more as a guideline to support how processes need to be managed. And I’m sure digitalization will drive us in a direction that will remove any hassle or disruption when it comes to travelling or any challenges that can occur during a trip. I think digitalization will make corporate lives easier here.”

Corporate companies want to make their lives easier with digital payments. But they also want to do things by the book and make sure they're done correctly.

2. Countries have different digital adoption rates

The world moves at different paces in different places.

And when it comes to business travel, employees often find themselves travelling to the more remote parts of the world. Places that may often have no infrastructure, no telecoms, and at times, even no power.

So corporate travellers are facing situations where digital payments aren’t an option – and the plastic card is a much-needed way to pay. The physical corporate card possesses multiple interfaces in order to accommodate the different stages the world is at.

Typically, more general payments will be able to be covered digitally: hotel, flights, train tickets etc. But when it comes to being ‘on-the-go’ such as a taxi ride or a market stall, there’s definitely room for digital payments to grow.

WHAT DOES THE FUTURE HOLD?

Digital wallets now being used for storage

According to Mastercard, 21% of the UK is set to ditch physical wallets⁵ in the next five years.
Many digital wallet users are now using their digital wallet for storing non-payment details, too.
People can leave the house with just their phone. And in their digital wallet they have things such as boarding passes, loyalty cards, virtual cards, and even their house and car keys!
There’s no doubt that currently it’s more popular with the younger generation, but as people become more comfortable with the digital wallet as a storage point, the way we travel is going to be revolutionized by digital wallet storage.

Is the plastic card here to stay?

The short answer is, it’s not going anywhere anytime soon.

Especially for international corporate travel. It comes back to different stages of world development and infrastructure. And the physical card comes with the reliable benefit that you can use it in all sorts of different ways to pay.

While Covid has accelerated the trend of tapping for mobile, the typical rule with mobile is if you can’t tap you can’t pay.

This won’t change anytime soon — but the percentage shift towards virtual cards will continue to grow.

The role of AI

Artificial Intelligence (AI) is playing an ever-increasing role in our private and business lives. From Amazon’s Alexa to Cortana, AI has been thrust into the mainstream world.

Businesses are jumping on board and are beginning to use AI to make relevant responses to specific questions or requests. In fact, Grant Thornton’s 2019 LLP CFO survey stated that CFOs ranked AI among their top planned investments⁶ for the coming years.

And AI and travel are the ideal fit because of the volume and depth of data that travel companies hold.

Advanced analytics

The big idea for digital payments is that they should provide a seamless payment experience. The big question is: what role do we see AI playing in this?

AI can play a big part in gathering data to understand your employee’s preferences. Machine learning (ML) algorithms are built to analyse employee’s patterns, preferences and behaviours, based on the geographical location they’re travelling to.

It can use that data to predict the most suitable options for travel and accommodation, tailored to both the employee’s interests and the company's travel policy.

This feature saves a huge amount of manual search time for an employee looking for the best travel options. It can also be a great tool for business travel managers to keep an eye on booking patterns, particularly when it comes to evaluating vendor contracts.

Fraud detection

AI and ML can also be used to conduct automatic policy violation checks and provide alerts and notifications as necessary, based upon a predefined set of instructions and rules.

This level of analysis into fraudulent activity speeds up decision-making, helping businesses in their fight against fraud and creating compliance processes that make their jobs easier.

The technology will check information for accuracy and avoid processing any payments that don’t meet the company’s requirements.

Mike Cowen, Head of Strategy, Insights and Experience - Europe at Mastercard, says “One of the ways that MasterCard uses AI is through our decision management platform. It helps us to flag transactions that look unusual for a particular cardholder, maybe resulting in additional checks being performed to make sure that the transaction is entirely legitimate.”

Reconciling expenses

Companies are looking to use AI to support the processes of more mundane and time-consuming jobs such as expense reconciliation.

AI uses pattern recognition and image processing capabilities to capture data from receipts and automatically populate expense reports with the data. This speeds up the expense process for employees and eliminates the need to manage physical copies of receipts.

Key takeaways

Consumer behavior will continue to drive change for corporate behavior.
Plastic cards aren't going anywhere for a while yet.
AI is there to help guide businesses with processes such as reconciling expenses, fraud detection and advanced analytics.
Some challenges we face include companies having their own rules and regulations surrounding digital payments, and countries having different adoption rates.

Want to know more? Get in touch! And stay tuned for all episodes in our podcast series - The BIG Rethink.

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