Fraud is an ever-present danger for retailers, and travel retailers are no exception. But the form a fraud may take changes over time.
The incidence of crime in face-to-face transactions has fallen substantially since the introduction of chip and PIN debit and credit cards. It is transactions where a card is not present that pose the greatest risk to agents today.
Indeed, the problem posed by card-not-present fraud is growing as criminals join the rest of industry online.
In September 2008 the UK Association of Payment and Clearing Services reported an 18% rise in CNP fraud over the previous year to a total across all sectors of £161.9 million.
Fraud experts warn the situation is likely to grow worse during an economic downturn, with small companies at greater risk than major firms of being targeted by fraudsters.
So how seriously do consumers and travel businesses take the threat?
Researchers at the Royal Bank of Scotland spoke to 1,000 consumers and 110 companies to find out, and the bank’s payment solutions brand WorldPay hosted a round table in London to examine the findings.
Payment experts from British Airways, Expedia, National Express, Flybe and Sunvil discussed the issue of credit card security.
All the companies represented employ online security measures. Some felt customers did not always understand the importance of these.
British Airways global payments manager Ken Muir said: “We have been using the 3D secure system, but a lot of people don’t seem to know what it is. There should more publicity to make people aware of security.”
Flybe director of group finance Andrew Rosser said security systems could be off-putting to customers.
“An extra screen is a turn-off – customers just want to pay and go,” he said. “Some customers can be cavalier about security.”
Making every step of the process clear appears to be the key to success, as confusion can quickly lead users to click away from a site.
Sunvil financial controller Ismet Emin said: “People get frustrated if there is no number to call. If they don’t understand the site, they want to speak to someone.”
Expedia product manager Ira Ignatora agreed: “A lot of work goes into providing good explanations as to why a transaction has failed. Payment solutions don’t excite the
customer, but if these don’t work they become upset.”
All agreed a good security system can have a positive effect on revenue.
“People forget about the back office, but security can turn a loss-making business into a profitable one,” said Worldpay head of business development Ian Rutland.
Some travel companies are altering payment options during the recession to give customers more flexibility. For example, Expedia is allowing customers to split payments between two cards.
Ignatora explained: “People can split a payment between two cards in the UK and about 20% use the option. We are thinking of extending it to Continental Europe.”
Payment systems continue to evolve, with Worldpay testing wave-and-pay debit cards for small transactions, and Rutland said: “I would like to see a cashless Olympics in 2012.” That might test the fraudsters.
Findings: Credit card fraud
What do businesses think of credit card fraud?
- Payment solutions are way down the pecking order of factors perceived to contribute to a company’s success – well below service, price and quality of product.
- Yet almost half of the businesses surveyed admitted that upgrading their card payment solutions increased company profitability.
- One in five businesses reported an increase in profitability of between 25% and 50% following improvements to payment systems, and some claimed even greater profit growth. The average increase in profitability, according to the RBS survey, was 18%.
- But almost half of the 100 businesses surveyed (47%) believed there was nothing they could do to improve payment systems.
Findings: Travel fraud
What do consumers think about travel fraud?
- The RBS survey found most customers would like to see improvements both in the security and in the speed of online transactions.
- More than half of consumers ranked security as the most important factor when booking online.
- 59% said they look out for the Verified by Visa or MasterCard Secure systems.
- One-third of customers feel more comfortable making a booking offline than online.
- One quarter of respondents would like faster payment solutions when paying for travel.
- Half of consumers would like to see a cashless society by 2030.
- Four out of 10 consumers would like to have a single card that takes care of everything, and 42% want to eliminate cash altogether.