UK travel insurers paid out £472 million across more than 500,000 claims in 20241 - and every one of those claims ends the same way: a policyholder waiting for money they are owed. In most cases, that wait involves a bank transfer, a reimbursement cycle, or a manual process that has not changed materially in years. All dollar figures in this article are drawn from international research published in USD; sterling equivalents are approximate, based on current exchange rates.
The gap between what policyholders now expect and what most travel insurers, assistance companies, and transportation operators actually deliver is widening. Travellers increasingly want an immediate response at the moment of disruption - funds on their phone, usable at the nearest café or pharmacy, without paperwork or a claims call. The industry's default response - a bank transfer that arrives in three to five working days - is not keeping up.
That expectation gap has real commercial consequences. Research by CMAC Group found that 75% of UK passengers experienced flight delays or cancellations in 2025, yet fewer than half received support quickly enough. One in three reported heightened stress, and passengers now expect a response within an hour - on average they wait nearly two. For travel insurers and assistance providers, that gap is both a risk and an opportunity.
Virtual card issuance addresses it directly. A Mastercard/Visa Virtual Card Number (VCN) can be generated and sent to a claimant or passenger within minutes of a trigger event - whether that is a claim approval, a flight delay threshold being crossed, or an emergency assistance request. The policyholder receives funds instantly, usable in-store and online, with spend parameters that ensure the money is used appropriately. Edenred Payment Solutions has built this capability specifically for the insurance and assistance industry - not a generic payments tool adapted for the sector, but a platform designed around the operational realities of claims disbursement.
In this article, we examine how virtual card issuance is changing claims disbursement and passenger compensation for travel insurers, assistance companies, and large transportation operators - and what it means operationally for the teams managing these processes.
The scale of travel disruption in the UK makes the expectation gap a significant commercial issue. In 2024, one in three passengers departing from UK airports experienced a flight delay or cancellation. That translated to 3.4 million passengers entitled to compensation under UK261 rules alone - a number that has grown every year since 2022.
The problem for travel insurers and assistance providers is not just the volume. It is the mismatch between the moment of disruption and the moment of relief. A passenger stranded at an airport at 11pm with a five-hour delay needs food, possibly a hotel room, and possibly transport. They do not need a claim reference number and an instruction to keep their receipts.
Mintel's UK Travel Insurance Market Report 2025 found that 63% of loyalty scheme members prefer instant rewards over long-term ones - a signal that the expectation of immediacy now extends to insurance outcomes. Traditional bank transfer payouts cannot satisfy this. They are irrevocable once sent, arrive in bulk making reconciliation difficult, and require the policyholder to fund disruption out of their own pocket first and wait. That experience is precisely what damages loyalty and drives switching.
Vrush Sumanoharan
Product Marketing Manager
Edenred Payment Solutions
Instant disbursement at the point of need
A virtual card is a unique, digitally generated Mastercard/Visa card number, created on demand with configurable spend parameters. Claimants receive funds within minutes of a trigger event - no bank details required, no transfer delay, no reimbursement form.
The card is sent directly to the policyholder's phone, usable in-store, online, and compatible with mobile wallets. Cards can be customised with the insurer's own branding - meaning the interaction a policyholder has at the moment of receiving support is a brand experience, not a generic payment. That distinction matters for loyalty: a claimant who receives instant, branded funds at a moment of genuine stress is considerably more likely to renew than one who is told to keep their receipts and wait. The out-of-pocket problem - the defining frustration of traditional travel claims - is eliminated at the point it matters most.
Rehana Mitha
Managing Director
Edenred Payment Solutions
Spend controls and MCC filtering
Each VCN is issued with parameters that define exactly what it can be used for. Merchant Category Code (MCC) filtering restricts the card to relevant spend categories - a card issued for meal expenses during a flight delay can be configured to work at restaurants and cafés but not electronics retailers or jewellers. The authorised value is fixed; the validity window closes when the coverage period ends. These controls are not applied as a monitoring layer after the fact. They are embedded in the payment itself, which means misuse is structurally prevented rather than detected after money has already moved.
Unique VCN per claim and automated reconciliation
Each claim gets its own unique Virtual Card Number. When the transaction posts, it matches automatically to the corresponding claim record - eliminating the manual reconciliation process that currently ties up finance teams. Industry estimates suggest finance staff at travel businesses may spend 20–40% of their working week on reconciliation of fragmented payment data. Issuing a unique VCN per claim resolves this at the structural level: the card number is the claim reference.
Virtual card transaction data is also cleaner for VAT recovery and audit purposes. Every payment is attributed to a specific claimant, category, and event - a clean audit trail that bank transfer processes cannot produce.
Lean funding model and working capital optimisation
Pre-loading individual cards before issuance is operationally burdensome and creates cash flow pressure, particularly for high-volume assistance operations managing hundreds of concurrent claims. A lean funding approach draws from a central pool instead - the card is created with the right parameters, and funds are allocated at settlement rather than upfront. This frees working capital that would otherwise be tied up in pre-funded balances, a meaningful advantage for assistance companies managing complex, multi-event disruption scenarios.
Portal dashboard and agent empowerment
Agents and claims handlers manage cards through a single portal dashboard - issuing, monitoring, pausing, or cancelling VCNs without developer resource or lengthy approval chains. A handler can issue a VCN to a stranded passenger immediately, without routing the request through multiple sign-off stages. In an assistance context where speed is the entire point, the removal of approval bottlenecks is not a minor convenience. It is central to the product's value. Cards run on the Mastercard/Visa network, so acceptance is universal - policyholders can use their VCN anywhere in-store, online, or via mobile wallet, including when abroad in unfamiliar locations. Every transaction is logged, producing an audit trail that supports compliance and dispute resolution.
Delegated authorisation and real-time intervention
Bank transfers are irrevocable once sent. Virtual cards are not. If a card is issued in error, a claim is disputed, or a transaction looks inconsistent with the covered event, the card can be blocked immediately via Delegated Authorisation - before any additional funds move. Insurers and assistance companies are not simply releasing money and hoping it is used appropriately. They retain the ability to intervene in real time.
|
Challenge |
What virtual card issuance delivers
|
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Out-of-pocket policyholders |
Funds issued instantly at point of need - no forms, no waiting, no reimbursement cycle |
|
Manual reconciliation |
Each VCN ties to a specific claim - transactions match automatically, exceptions only |
|
Fraud exposure |
MCC filtering and spend controls are embedded in the card - misuse is blocked at issuance |
|
Irrecoverable bank transfers |
Cards can be blocked or recalled in real time via Delegated Authorisation |
|
Approval bottlenecks |
Agents issue VCNs directly from the portal dashboard without multiple sign-off stages |
|
Traveller disruption response |
VCNs issued to passengers immediately - accessible in-store, online, and via mobile wallet |
The most significant emerging opportunity for virtual card technology in travel is parametric insurance - a product model that is moving from niche to mainstream faster than most insurers anticipated.
Traditional insurance requires a claim to be submitted, assessed, and approved before a payout is made. Parametric insurance works differently: a payout is triggered automatically when a pre-defined threshold is met, with no claims process required. In travel, the most common application is flight delay - a passenger registers their flight in advance, and if the delay exceeds a set threshold (commonly two to three hours), a payout is triggered automatically based on verified flight data.
The market is already moving. Blink Parametric launched a flight delay benefit in late 2025 that triggers automatically for delays of three hours or more, offering passengers a lounge pass or instant cash payout with no paperwork or manual submission. Chubb launched its parametric Travel Pro product in October 2025, embedding automatic payouts directly into the booking flow for airlines and OTAs7. The global parametric insurance market was estimated at $16 billion in 2024, and travel is one of the fastest-growing segments.
The connection to virtual cards is direct. A parametric model is only as good as its disbursement infrastructure. If the trigger fires but the payout takes three days to arrive by bank transfer, the product's defining promise - instant relief at the moment of disruption - is broken. Virtual card issuance is the payment layer that makes it work as designed: the trigger fires, the VCN is generated and sent to the passenger's phone, and within minutes they have usable funds. No claims call. No paperwork. No wait.
Travel insurance fraud is a persistent operational challenge. The UK Finance Annual Fraud Report 2025 recorded 3.13 million confirmed fraud cases across UK businesses in 2024 - a 14% increase year on year - with total losses of £1.17 billion. Travel insurance is particularly exposed: high claim values, international transactions, and the difficulty of verifying out-of-network expenses create multiple entry points for fraudulent activity.
Virtual card issuance inverts the traditional approach. MCC filtering means a card issued for medical expenses abroad cannot be used at a casino. Spend limits prevent overcharging. A validity window means the card cannot be reused after the coverage period ends. The fraud controls are embedded in the payment itself - misuse is blocked at point of sale, not identified and disputed weeks later.
The travel assistance and passenger compensation context makes the virtual card case particularly concrete. Consider the following scenarios, all of which currently require either a claimant to fund the expense out of pocket or an operator to issue a bank transfer that may not arrive for days.
For travel insurers and assistance companies, the implementation question is how virtual card issuance connects to existing claims management systems and assistance platforms. The answer, in most cases, is via API - and the integration is less disruptive than most finance and operations teams expect.
Global virtual card transactions are projected at $5.2 trillion (approximately £3.9 trillion) in 2025, with B2B accounting for 76% of that total - rising to 83% by 2029. Despite this, 60% of companies have still not explored virtual card automation. In travel insurance and assistance, the gap between awareness and adoption is particularly significant - and closing it represents a genuine competitive advantage for organisations that move now.
Regulatory pressure is also building. The FCA's Consumer Duty requires firms to deliver good outcomes throughout the product lifecycle, and claims handling has become a supervisory priority. An insurer whose claims experience consistently leaves policyholders out of pocket while waiting for bank transfers is increasingly exposed - not just to switching risk, but to regulatory scrutiny of whether it is genuinely delivering fair value.
For claims and digital transformation leads weighing up where to direct technology investment, virtual card issuance offers something that large-scale core system projects rarely do: fast, measurable ROI. It integrates via API alongside existing claims management infrastructure rather than replacing it, which means the operational improvement is visible within months rather than years. It is one of the few technology investments in insurance that simultaneously improves customer outcomes, reduces fraud exposure, and cuts operational overhead - without requiring a multi-year transformation programme to deliver results.
The policyholders and passengers at the centre of these interactions are not asking for a frictionless digital experience as a nice-to-have. They are stranded, stressed, and in some cases out of significant money. The organisations that respond with instant, controlled, accessible funds - on a phone, without paperwork - will build loyalty that survives price comparison. Those that respond with a bank transfer reference number and a request to keep receipts will find themselves on the wrong side of a widening expectation gap.
Edenred Payment Solutions provides virtual card issuing and payment infrastructure purpose-built for the insurance and assistance sector. Our Portal enables claims teams to issue Mastercard/Visa virtual cards instantly, with configurable spend controls, real-time monitoring, and automatic reconciliation through unique VCNs per claim.
Speak to our team to find out how we can implement the solution for your business.