Citi’s Curtis and HRS ‘Knackstedt discuss:
- Data benefits of new alliance
- Role of virtual cards in post-Covid workplace
- How payment strategy can help achieve sustainability goals
Corporate lodging platform HRS in recent months announced a global partnership to integrate Citi’s virtual payment product into its travel booking process. The agreement enables HRS to provide audited hotel invoices with line-item data to its corporate clients, with Citi providing billing and data capabilities. Trudy Curtis — a longtime Citi executive who last year became head of Citi’s commercial card business in Europe, the Middle East and Africa — and HRS payment solutions chief growth officer Kurt Knackstedt both spoke recently to BTN executive editor Michael B. Baker about the new partnership and factors driving more corporate use of virtual payment tools due to the Covid-19 pandemic.
BTN: Why did Citi and HRS decide to partner?
Trudy Curtis: Our commercial cards business works very closely with the travel industry, so we definitely felt the impact the pandemic had on this industry. However, it is clear that we are now coming out the other side. Corporate travel is what we have built our business on, and we already have a massive existing client base, so we need to look at how best to continue to advance our product to make sure we are competitive and superior in the market. We are always looking at ways we can partner with companies that are integrated into the travel ecosystem in which our clients operate. We’re looking to ensure we can insert cards into processes that already exist for a consistent end-to-end process.
When we come across a company such as HRS — who are global in nature like we are, who have specialized in the hotel reservation space and have their own partnerships, and who also focus on client-centricity and using data and data platforms to make a frictionless experience — we really believe a partnership makes sense. We have a client advisory board comprised of select clients around the globe, and one of our key members told us they also worked with HRS and wanted us to collaborate. There are a bunch of other clients who have raised the same request. So, the partnership decision was really a result of the combination of HRS being a good match for us organizationally and culturally, and also that we have respected clients asking us to partner with them. For that reason, it was a bit of a no-brainer.
BTN: Have you had any client feedback since the announcement?
Curtis: We have a handful of clients already live, and we have received very positive feedback. In addition to that, we have a growing pipeline, as everyone is working on their return-to-travel strategy and moving more toward centralized payment.
BTN: In what markets is it available?
Curtis: There are 46 countries including China and Russia that overlap with Citi and HRS ‘issuing footprint.
BTN: What data insights will companies be able to get that they could not before?
Curtis: At the time of virtual card requests, HRS is able to pre-fill the information, such as the cost center, trip booking ID, etc. Historically, this type of information would not have been available with the card payment. But now, Citi is able to provide financial data alongside booking information reconciliation and cost allocation, making processing so much easier for accounting departments.
Then, when it comes to the overall bigger picture of travel, Citi and HRS both provide different parts of the data. We have our own reporting tools, which allow clients to look at their travel spend globally, and in its entirety, with an additional level of granularity they did not have before.
We’re also introducing advanced reporting that leverages artificial intelligence. For example, clients can now, based on their seasonality trends, predict how much of a credit line they are going to need in a certain month.
Kurt Knackstedt: From our perspective, it’s about making sure our customers have visibility into all the categories of spend that go into a hotel stay. Line-item detail is critical but has traditionally not been consistently accessible. Little things like, Are we getting charged for meals, parking and incidentals, and VAT reclaim and tax reclaim? Every dollar counts, especially when you have longer stays now.
The hotel invoice is already complex. I’ve been in Cologne for two weeks, and I do not have to look at an invoice. I had a team dinner at the hotel and a number of dinners at the hotel, and I’ve done laundry, and you do not want to have to deal with all of that. The complexity when you take that out, the corporate visibility into all this travel dynamic, it’s making that reconciliation process flawless.
The [other] piece is the more complex invoicing we’re seeing with lengthier stays. The tax implications are even more complex. If you’re overnighting, you might not bother eating at the hotel, but if you’re there for two weeks having multiple meals, meals are treated differently for tax purposes by different jurisdictions.
A few years ago, we had clients saying best practice was to put all of the transactions for a trip onto a walking card, to encourage the individual to feel accountable. I think we’ve moved away from that, to wanting the individuals to focus on their real job and remove as much friction and backend expense processes as possible. ”
Citi’s Trudy Curtis
BTN: What is driving interest in central pay solutions?
Curtis: A few years ago, we had clients saying best practice was to put all of the transactions for a trip onto a walking card, to encourage the individual to feel accountable. I think we’ve moved away from that, to wanting the individuals to focus on their real job and remove as much friction and backend expense processes as possible. Centralized payment is partly for the employee’s benefit and partly for the corporates themselves, who gain better visibility into the data to make more informed decisions. Clearly, there’s a duty-of-care aspect as well which is important. Plus, the products that we offer now are more mature and more attractive to the clients. Fifteen years ago, we would not have been able to have this same conversation.
Knackstedt: Systems are mature enough now that buyers and the finance and risk departments are confident enough that the technology can ensure a consistent process. That accountability pushed to the traveler made sense at the time, because there were still gaps in the system where there were inconsistencies in how central payment could run, but all of that has been eliminated now. You’re talking about rules engines that make decisions that benefit both the traveler and the corporate, so the traveler no longer has to worry about it, and the corporate no longer has to worry about hoping the traveler does the right thing. Friction goes away, finance teams are happier because they know it’s being done correctly every single time and travelers are happy because it’s less expense filing and all that other stuff.
BTN: Is the shift to hybrid and remote workforces a driving factor?
Knackstedt: What was a commuter is now a traveler, because they’ve moved three hours away from the office and have to come in twice a month. Now, that’s an overnight stay, whereas their job was not a traveling job. Now you have to accommodate those types of scenarios. Centralized payment can help with that, especially when you have a lot of roles that weren’t authorized for corporate cards, because they were not roles that would travel or buy goods and services. That’s where centralized payment is playing a completely new role.
Curtis: When folks are traveling, because of the increased environmental awareness, they are perhaps going on fewer journeys but staying for longer, so the hotel invoice element of the trip has become a bigger proportion overall of the trip expense than it was before, which makes this itemized breakdown and centralized payment of the hotel an important part.
BTN: What are the implications for potential fraud?
Curtis: With the virtual card, you can lock its usage down to the day it’s going to be used, the amount, the merchant category code or even the merchant ID, so we see considerably less fraud on virtual cards. That’s also perhaps one of the reasons to move to centralized payment. In the old days, if you had centralized payment, you had one card with a massive limit that was subject to misuse, whereas the virtual card is a single-use card tied to the exact transaction, so there should be no fraud on those cards at all.
BTN: Are there any plans for future cooperation opportunities?
Curtis: We have a substantial overlap of our existing client base, so in terms of commercializing our partnership, we’ve built the rails and the clients can immediately benefit. One area which both companies are focused on is [environmental, social and governance]. The joint proposition from Citi and HRS allows our clients to benefit from HRS ‘Green Stay initiative and also leverage Citi’s involvement in the Priceless Planet Coalition that we’re a part of with Mastercard.
Knackstedt: There’s the commercial and customer-facing things. How do we make sure we’re able to use a slower period in the travel space to deploy these solutions? HRS Pay, as a business unit within HRS, is moving into other categories of spend as well. Our payment technology is being deployed for meetings and groups, for car hire and a couple other niche solutions in the travel space, and all those will be enabled as well through Citi virtual card capabilities, so that gives us the ability to add more spend on to virtual and centralized payment.
BTN: You mentioned the Priceless Planet Coalition; what does that entail?
Curtis: This was a Mastercard-led initiative. Both Citi and Mastercard were looking at the card ecosystem and what we could do to benefit the environment in some way. The Priceless Planet Coalition was a coming together of like-minded companies to plant 100 million trees over five years. Citi was the only commercial card founding member of the Priceless Planet Coalition. We launched it just before Covid hit. Typically, we offer rebates to clients based on spend, and as part of the Priceless Planet Coalition clients are able to divert the cash rebate to approved reforestation initiatives instead of taking it into their organization. The idea is to help with the environmental impact of their travel program.
BTN: That brings up another benefit of virtual cards: the environmental cost of distributing the physical cards.
Curtis: Of course, we want to reduce use of plastic and credit cards are made of plastic. Our No. 1 priority is to continue to promote the virtual card functionality, which is by far more controlled and more convenient for most clients anyway. However, given we do still need physical cards for some face-to-face interactions and ATM withdrawals, we are moving to recycled plastic this year, so our cards are no longer made from first-use PVC but instead we are taking industrial waste and re-using it.