The time has come for business travellers to forget about paying
From the February 2018 print edition
As 2018 gathers momentum, we are already seeing several impressive examples of innovation in a number of areas that bode well for the life of the frequent business traveller in the future. One of the most static and outdated areas of workflow in the corporate trip lifecycle is the process of payment, as it continues to evolve around the traveller presenting a credit card either in its actual, physical form or as a virtual card which still requires the presence of the credit card details in some way.
However, there is hope on the horizon. A combination of multiple new technologies has the potential to change completely how we pay for business travel services in the future. Most likely, the future means the next three-to-five years.
Imagine a scenario where the traveller simply walks into a hotel, goes to the room number designated by the arrival assistant bot about five minutes before entering the reception. Once the room door is opened a smart contract is informed about the room activation and executes an instant payment using a digital token representing the value decided by the smart contract. When the traveller leaves the hotel two days later, a similar action happens at check out. The smart contract executes the payment for the optional services used by the traveller in the hotel during the stay based on the agreed corporate rate, while sending a final update to the general ledger to complete the automated expense reporting process. By this point, the traveller hasn’t even reached the airport for the flight home.
The above scenario is actually possible from a technical perspective today, but there are no available solutions yet in the corporate travel technology universe. But this is bound to change, most likely before the end of 2018.
So what is a smart contract?
A smart contract is the default name for software running on top of a new type of database platform called blockchain. Unless you have been hiding under a rock or living on a deserted island for the past 12 months, you have probably heard about the most famous blockchain product, Bitcoin, and the many other crypto coins and tokens that have been launched recently.
The purpose of this article is not to go into the technical details of blockchain. Rather, it’s to outline some of the new services that can be developed using this technology. So please read on even if you are not a crypto developer.
The smart contract built on blockchain has two important characteristics that make it perfect for corporate travel buying. These characteristics are:
Furthermore, because the contract is self-executing it can process a large number of data set bookings) and reach different conclusions about the outcome (price) for each booking subject to the rules defined. In other words, a smart contract can provide dynamic pricing regardless of how a booking was made and assign the correct price without relying on a manual approval.
Using a corporate hotel rate as an example, this allows for the creation of a smart contract that calculates the correct hotel rate for each booking and then subsequently executes the automated payment once a booking is activated (for example, when the room door is opened) and transfer the relevant information directly into the general ledger at the same time.
The savings potential for both the hotel and the buyer is significant as the merchant fee for credit card processing, as well as the cost of loading and distributing rates into multiple traditional systems, can be eliminated completely.
Other new capabilities could include the ability for the hotel and the buyer to look at the exact same data set at any given time providing both parties with a single version of the truth in terms of number of room nights or total spend during a given period.