Diners Club South Africa has launched the Dynamic Virtual Card (DVC) – a revolutionary solution to the challenges of billbacks.
The Dynamic Virtual Card is a complete closed-loop travel supplier payment solution that facilitates immediate supplier settlement, enabling cost-savings and improving cash flow. By providing additional transactional reference data, the DVC enhances reporting and simplifies reconciliation. Furthermore, the DVC vastly reduces the risk of fraud as it limits the need to store and distribute card information to third parties/suppliers.
Billbacks are land arrangements, ie accommodation and car hire, that are ‘billed back’ for payment by a supplier to the corporate or, in most cases, to the Travel Management Company (TMC), after the completion of the service.
Supplier invoices are frequently sent and received well after month-end and, in some cases, as long as six months later, causing chaos with travel accounting, reconciling and reporting processes, and further delaying the settling of supplier accounts. The process is extremely labour-intensive and therefore costly to all parties, due to the number of cross-checks that are required to facilitate the payment process.
Many companies have tried to introduce billback solutions but none have been truly successful, having not accounted for the multiple challenges accompanying the billback process. For example: the Rand value of the vouchers issued to suppliers by TMCs (used to secure the reservation) may vary from the final bill incurred by the traveller, and systems have not been able to manage this variable.
Adding fuel to the fire is the Merchant Discount Rate (MDR) or merchant commission, which is normally carried by the TMC when billbacks are charged to the card, not to mention the potential fraud risks that arise as a result of distributing card information to numerous third parties.
Delayed payment results in additional direct and indirect costs and causes TMC cash-flow issues. These additional costs are also passed on to the Corporate via increased service and/or management fees. Hence the traditional billback process does not work for the corporate, the TMC or the supplier.
How does the Diners Club Dynamic Virtual Card work?
TMCs and Corporates are pre-registered and given access to an online platform that makes the DVC information available to the supplier for inventory bookings.
At the time of booking, the TMC or Corporate inputs the existing Diners Club-lodged card or corporate card information. An automatic request generates a unique DVC for once-off use and to settle a specific amount, to a specific supplier, for a specific period of time. This virtual card information is linked to the card information input at the time of the booking in the background when payment is processed by the supplier.
Once a booking is confirmed, a travel voucher is issued, which the business traveller presents at the time of check-in or when renting a vehicle.
On conclusion of the service, the supplier accesses the online platform to redeem the travel voucher, and only once the supplier has provided the additional reference information required to facilitate the reconciliation and payment process, is the full card information disclosed to enable the supplier to process payment.
Should the Rand value of the voucher differ from the final bill, the existing DVC is cancelled by the TMC or corporate. A new DVC is requested, voucher issued and the process resumes, all of which is done in real-time. By allowing the supplier to charge the card directly, the MDR is carried by the supplier as opposed to the TMC, which the supplier is happy to carry in lieu of immediate settlement. The corporate is able to view the transactional reference information on the Diners Club invoice (statement), which can also be downloaded into an Excel spreadsheet. This not only simplifies the reconciliation and payment process, but also enhances reporting for better decision-making.
Once again, Diners Club has demonstrated its unsurpassed commitment to the business travel industry and finding solutions that address key challenges. The DVC will be a welcome addition to the existing Diners Club range of products and services currently offered.
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*This article was paid for by client