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Posted April 5, 2016

fight payments fraud


In today’s digital payments environment, there’s always a need for higher security—it just goes with the territory. News of each new technology rollout or upgrade simply isn’t complete without comments speaking to the security measures being taken to protect customers’ data and assets. There’s also no shortage of commentary about the hackers and ne’er-do-wells waiting to pounce on system weaknesses, fingers crossed for oversights. That leaves corporate travel managers, whether working for traditional travel agencies, online travel agency, or in-house departments challenged with fighting with fraud, especially related to T&E credit card payments.

Fraud in the Travel Industry

In their 2015-2016 Global Fraud Report, global provider of risk solutions, Kroll, reveals that like the survey respondents as a whole, 75% of companies in the transportation, leisure and tourism sector are affected by at least one type of fraud, yet the average loss (0.9% of revenues) is slightly higher than the norm (0.8%). The sector reported the third highest rate of corruption (15%) and vendor and procurement fraud, at 20%, is above the average of 17%. Kroll suggests that the biggest drivers of increased exposure to fraud in the sector are high staff turnover (32%); entry into new, riskier markets (15%); and complexity of products and services sold (15%).

Most travel managers today rely on credit cards or lodge cards for bookings. While considerably less risky than paper checks, these payment methods put their accounts at risk of fraudulent card-present and card-not-present transactions. And most business travelers themselves pull plastic cards out of their wallets to manage expenses while on the road, a common practice that, unfortunately, can lead to card skimming or physical loss or theft.

As a result, travel managers need to stay on top of invoices, receipts, and expense reports to be sure they’re properly reconciling, oftentimes manually accounting for every detail. This leaves room for next-generation solutions that take security and administration a few steps ahead.

The Rise of Virtual Card Numbers (VCNs)

Use of VCNs is helping companies, especially those with high transaction volumes, mitigate and manage risks associated with travel bookings and related expenses. Single-use VCNs are inherently more secure than traditional plastic cards. Each transaction is given its own secure 16-digit number—a number that can be used only once, and for a specific purpose as defined by the travel manager. And because transactions flow through a paperless, automated, and more streamlined process, VCN payments require minimal, if any, manual touch-points. A virtual payment boasts these built-in measures of payment security:

  • Contains the same info as plastic cards: the standard 16-digit card number, an expiration date, and a CVV number
  • Doesn’t rely on a physical card that can get lost, stolen, or copied
  • Works within precise transaction controls, set by the travel manager, including specific dollar amounts, timeframes, and merchant or supplier or merchant categories
  • Sent through the same trusted network as all major credit card transactions

Additionally, no banking information needs to be exchanged and/or maintained between the buyer and supplier, reducing the risk of data compromise.

The focus of travel payment risk management today centers on protecting physical cards and their digital assets from the hands of criminals. Credit card companies are on diligent lookout for fraudulent activity—and they’re employing more sophisticated methods to protect their business and personal customers all of the time—but there remain innate risks with the traditional plastic cards in widespread use. For security reasons alone, VCNs have the leg-up, and the travel industry is seeing a continued rise in their adoption.


WEX Travel