By Anthony Hynes, Managing Director and CEO, eNett International

Last week was 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.

B2B payments are increasingly being targeted. According to the Association for Financial Professionals (AFP), there’s been a ‘dramatic’ increase in payments fraud hitting businesses compared to 2015.[1]In fact, 74% of surveyed employees reported that their organisations were exposed to either attempted or actual payments fraud in 2016 – up from 71% in 2015.[2]This isn’t that surprising when you consider the large sums of money being transacted. In the US alone, B2B payments reached an estimated $18.5 trillion last year, vastly outstripping B2C and consumer payments.[3]

For the majority of businesses, technology has moved from being an operational service towards being the means of generating revenue for many of our best-known businesses.  As more valuable transactions and information is delivered digitally, the potential gains for fraudsters increase.  A European Commission report estimates global financial losses due to cybercrime to be at least €350 billion a year and projected them to reach €1.89 trillion by 2019.[4]

The travel industry in particular suffers from high levels of fraud, with online bookings through agency sites having the biggest rate of fraud.[5] 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 year[6] and the Association of British Travel Agents (ABTA) reports that travel fraud is up 425% year-on-year[7]. 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 challenges.[8] The problem is so engrained in the industry that travel agencies now set aside 1-2% of their revenue into managing fraud.[9]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.

[1] 2017 AFP Payments Fraud and Control Survey

[2] 2017 AFP Payments Fraud and Control Survey

[3] The B2B Payments Explainer 2017, BI Intelligence

[4]Michael Daughton, ‘Cybercrime: Dealing with a global threat’, KPMG, 14 September 2017, accessed: https://home.kpmg.com/ie/en/home/insights/2017/09/cybercrime-dealing-global-threat.html

[5] Fraud takes off in the travel and leisure industry, report by Kount

[6] IATA Industry Fraud Prevention Survey

[7] ABTA Report 2017, “Top five scams as busiest holiday sales period gets underway”

[8] PhocusWright Payments Unsettled Report 2013

[9] Fraud and the U.S. Travel Agency Marketplace, by Phocuswright