November 16, 2017
This week is International Fraud Awareness Week, an initiative designed to highlight the impact fraud has on society and boost awareness and understanding of how to spot and prevent fraudsters. And with fraud on the rise, it’s never been more relevant.
The travel industry in particular suffers from high levels of fraud, with online bookings through agency sites having the biggest rate of fraud1. The International Airport Transport Association (IATA), a trade association of the world’s airlines, estimates that fraud is costing airlines up to $1 billion a year2 and the Association of British Travel Agents (ABTA) reports that travel fraud is up 425% year-on-year3. By definition, the travel industry involves large volumes of payments, with multiple consumers and suppliers across many different countries using a plethora of booking and payment systems. With billions of transactions a year, it’s not surprising that fraud is a top pain point for travel companies.
Global travel market research company, Phocuswright, found that fraud was the biggest concern amongst travel firms, with 40% stating that credit card fraud and supplier default are their biggest challenges4. The problem is so engrained in the industry that travel agencies now set aside 1-2% of their revenue into managing fraud5. In an industry where margins are already tight, it’s still a substantial cost. But with today’s advanced payment solutions, minimising the risk of fraud is as simple as changing the way you pay suppliers.
Virtual Account Numbers (VANs) are increasingly popular with travel businesses. A key draw is the increased protection they offer from fraud. Instead of a single physical card number, a digital 16-digit Mastercard number is generated uniquely for each individual transaction, making it a safer way to pay suppliers. A wide number of payment parameters can also be added for greater control, including restricting the VAN by merchant category code. And with chargeback capabilities, VANs also provide protection in the event of supplier default. It’s a digital solution to minimise the risks of fraud and improve recovery.
Consumer demand for travel to exotic locations and customised trips organised through different suppliers will continue to grow. The travel industry will also continue to be a target for fraudsters given the vast number of transactions made in different currencies and to far-reaching corners of the globe. VANs provide travel companies with a way of minimising fraud, as well as being a fast, easy and safe payment method for transacting with suppliers and protecting customers.
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