5 key measures to prevent digital fraud in the tourism and travel sector

One of the sectors most impacted by COVID, while being one of the industries that showed the most growth in recent years, travel continues to grow and shows no signs of slowing down, driven by the phenomenon of "revenge tourism".

This is confirmed by global market figures, projected to reach €27.6 billion in 2029.¹ However, every coin has two sides, and along with this growth, fraud threats have also increased, putting both businesses and consumers at risk.

What are the main threats affecting the tourism sector? And what measures can companies take to protect themselves?

Digital fraud in the travel industry

There are many factors that can hurt a company's profitability, such as supply chain inefficiencies and inadequate business strategies. However, payment process security is becoming an increasing concern, not only due to the significant losses it can cause (Juniper Research² estimates that between 2023 and 2028, merchants will lose almost $362 billion to payment fraud) but also because of its negative impact on the customer experience.

In this context, the travel and leisure sector stand out as one of the three industries with the highest rate of suspected fraud detected in 2023, according to a TransUnion³ study, particularly concerning fraudulent account creation (36%). However, the types of fraud that can affect both tourists and travel companies are numerous and dangerous:

• Fraudulent bookings
• Identity theft
• Phishing
• Data theft
• Account Takeover (ATO)

Learn more about the most common types of payment fraud and the most effective security technologies in our free whitepaper.

Why is the travel sector such an attractive target for cybercriminals?

• High volume and high value transactions:
  Bookings for flights, hotels, and holiday packages involve a large number of transactions, often of high value, making them attractive to scammers and increasing the risk of travel scams.
• Variety of payment methods:
  The adoption of various payment methods by travel companies broadens the possibilities for fraudulent attacks. Furthermore, as they often deal with cross-border payments, detecting fraud and suspicious purchase patterns becomes more complicated.
• Complexity of the supply chain:
  Tourism involves many intermediaries (such as travel agencies, tour operators, and booking platforms) and heavily depends on third-party providers. This complicates transaction verification, increasing the chances of security breaches.
• Handling sensitive data:
  Personal financial data involved in travel transactions, such as passport information or payment card details, are an attractive target for identity thieves who can use this data for illicit activities.

Travel scams: The main threats to operators in the sector

From the sale of fraudulent holiday packages to the impersonation of operators, travel scams take many forms. Therefore, it is essential for travel companies to remain constantly vigilant to protect both their businesses and their customers.

In this sector, fraudulent attacks are particularly impactful, not only because they cause direct and indirect financial losses, such as increased operational costs for investigating and managing incidents. In fact, the customer experience is also harmed, as fraud management often causes delays in daily operations, increasing consumer dissatisfaction.

Additionally, non-compliance with regulations related to personal data protection, due to data breaches or fraud, can result in penalties for businesses and damage the relationship with customers whose information is compromised. However, reputational damage is one of the most serious consequences, as it negatively affects both customer trust in the company and the brand's image among other potential travellers.

5 key strategies to prevent digital fraud in payments for travel industry businesses

1. Adopt an end-to-end payment infrastructure
   Implementing a comprehensive platform that manages the payment flow from start to finish is key to optimising control and oversight. Payment orchestration platforms not only guarantee this control but also allow for the management of multiple PSPs and acquirers from a single platform. Thanks to technologies like smart routing, payments can be processed via the most secure payment service providers (PSPs) for each geographic area, maximising security and reducing fraud risks.
2. Offer secure and trusted payment methods
   When customers are familiar with a payment method, they are less likely to fall victim to scams, so providing trusted tools for clients is crucial. Additionally, recent innovations like Pay by Bank, offered by Payment Initiation Service Providers (PISP), provide high levels of security: being simplified versions of bank transfers, they use the enhanced authentication provided by banks, ensuring effective protection for both the customer and the business.
3. Integrate advanced fraud prevention solutions
   The adoption of AI and machine learning technologies allows the detection of fraud patterns and unusual transactions. Tools like Transaction Risk Analysis (TRA) optimise security, improving two-step authentication and enabling businesses to apply PSD2 exemptions to avoid friction in the customer experience.
4. Leverage payment card tokenization services
   Tokenization converts sensitive credit card data into a unique, indecipherable code, reducing the risk of this information being stolen during the payment process. By adopting this technology, on one hand, businesses ensure that customer data is never exposed or stored in its original form, and on the other hand, card network tokens even allow card information to be updated when it expires, streamlining the customer experience for recurring payments in total security.
5. Automate management and reconciliation processes
   Implementing solutions that automate payment verification and reconciliation can improve operational efficiency while reducing human errors and the time and resources spent on manual back-office operations. Therefore, services like the Account Information Service (AIS) licence streamline not only reconciliation between payments and orders but also the processes of identifying and resolving fraudulent payments, enabling businesses to react more quickly and effectively to potential threats.

Reducing the risk of fraud and quickly detecting the many common forms of scams in the travel sector are key challenges for companies. Implementing these five strategies can be crucial to overcoming them successfully, creating a secure environment for both customers and the business's payment flow.

Relying on Fabrick for secure and advanced payment management

In a sector like travel and tourism, where fraud is a constant threat, adopting advanced technological solutions and end-to-end payment infrastructures is not only a preventative measure but also a competitive advantage. Payment orchestration platforms like Fabrick Payment Orchestra come with all the features and added-value services needed to implement the best fraud detection and prevention strategies. By integrating the PISP payment licence and AISP account information, Fabrick and its solutions enable companies to have the tools to protect their operations and offer their customers the confidence they need to enjoy travel without worries.