The travel industry is not only one of the fastest growing and evolving lines of business, it also has a notably expanding customer base.
This is evident by the surfacing of more and more online-based travel agencies which has further speeded up the shift to mobile technologies and penetration into newer markets across the globe.
And just like any new idea that involves a massive shift, this transition to online booking has attracted the attention of fraudsters who are now looking to grab a bigger share of what the travel industry is making.
The fact that every entrepreneur running a travel merchant account is focusing more on, widening the customer base, improving consumer experience and broadening product offerings is a brilliant idea. Only that each of the above growth efforts significantly increases the possibility of fraud.
Here are some factors surrounding the travel industry that makes it vulnerable.
Fraud due to Mobile Bookings
A study by Google disclosed that 31% of vacation travel and 53% of business travel bookings are completed using smartphones. And this is a warning sign companies should prepare for both genuine and counterfeit mobile bookings.
In a perfect setting, companies should have a “device agnostic” booking procedure. That is, the risk profile should remain constant despite the device the client is using. Unfortunately, fraud patterns usually vary from one device to another.
Luckily, fighting mobile fraud is relatively easy if you have the right tools to collect and analyze extra data such as the type of device and the mobile carrier which are both helpful in pinpointing scam.
Increasing Competition amid Small Margins
Thanks to the increasing competition, we now have several different travel products in the market. But most of the companies suffer a small margin — more so in the OTA and airline sectors. We all know that selling High value tickets on a low margin increases the risk of business. And once lost to fraud, an “inventory” e.g. a ticket, cannot be recovered.
Also, it takes a company time to spot a fraudulent credit card and when by the time you realize the legitimate customer has filed a chargeback, the flight ticket or booked accommodation is no longer valid.
Exploring New Markets which Changes the risk profile
Even as businesses in the online travel industry rejoice in the many great expansion opportunities they have, it helps to keep in mind that every market comes with different levels and types of risks.
So, if you want to grow from your local business to the larger foreign platform, you’ll need to familiarize with the norms of the new market. In brief, travel agencies should invest in the right tools and hire new personnel with specialized knowledge of every market they choose to explore.
Author Bio: Electronic payments expert, Blair Thomas, co-founded eMerchantBroker. His passions include producing music, and traveling to far off exotic places. EMB is America’s No. 1 travel merchant account company, serving both traditional and high-risk merchants.