The Future of Payments: Security is the priority

2020 was an extremely challenging year for us all. Unfortunately, fraudsters have benefitted from the devastating effects of COVID-19. For example, UK Finance found that £1.26 billion was lost to fraud in the UK alone in 2020. In the first few months of 2021, a range of news outlets published stories proclaiming a ‘fraud epidemic’ across a range of sectors.

When it comes to travel payments, security is the absolute priority. Global travel payments involve a vast amount of money as, pre-pandemic, the travel sector accounted for a colossal 10.2% of the world’s GDP. Travel payments are usually high-value, one-off payments that are rapid consumption and are very common. Unfortunately, it makes them a prime target for fraudsters. Criminals will always flock to where the money is and will use complex methods to commit their crimes. This is certainly the case for the travel industry. The worrying truth is in the figures: in 2017, fraudulent attacks cost the travel industry a staggering $21 billion and was expected to increase to $25 billion by 2020.

So, how can travel providers make payments more secure in the face of rising instances of fraud?

The role of 3DS2

One of the main weaknesses of the travel industry is that the complex digital payment landscape presents criminals with a range of ways to commit fraud. A growing travel fraud trend involves fraudsters posing as travel agencies to steal consumers money by accessing their payment card data. The good news is that 3DS2 is particularly beneficial for effectively fighting this type of fraud.

Originally developed by Visa, 3DS2 uses multi-factor authentication to confirm identities using either One Time Passwords, fingerprint or facial recognition, or QR codes that can be scanned using a mobile device. The software analyses over 100 key data points, such as the merchant’s contextual data, to add a layer of fraud protection. When the cardholder enters their card details at checkout, the merchant’s 3D Secure service provider will send an authentication request with accompanying data to the issuer. The data is made up of both device and cardholder information such as the ID of the device used to make the payment, the MAC address, the location, and previous transactions.

After this, the risk of the transaction is assessed. If the transaction is determined to be particularly risky, the transaction is challenged. This involves the cardholder verifying their

identity through biometric methods, such as fingerprint scanning or a one-time password. If the transaction passes the security checks and is viewed as low-risk, the cardholder will not need to complete the extra layer of authentication, and their payment will be processed.

A new approach to security

3DS2 represents a new approach to payment security. It reflects the complex realities of today’s online and mobile environment and takes customer experience into account in the process. Authentication is becoming more challenging, but 3DS2 is meeting that challenge head-on. One of the main reasons that 3DS1 was unfit for purpose was because it did not provide a good customer experience. It was vulnerable to phishing attacks and, additionally, was unsuitable for mobile commerce. With mobile commerce sales poised to exceed US$3.56 trillion in value in 2021, a payment security system that works well on mobile was undoubtedly essential.

Customers want frictionless payments, and a seamless payment process leads to lower cart abandonment and higher conversion rates. 3DS2 offers a ‘best of both worlds’ solution for customers and merchants. Customers no longer need to remember numerous passwords or navigate endless pop-ups. With 3DS2, payments undergo multi-factor authentication, protecting customers from fraud, but the checkout experience is still smooth.

Payment security and brand reputation

In 2020, brand reputation took a hit in the travel industry. Thousands of people struggled to obtain timely refunds from a variety of travel companies, causing trust in the sector to plummet. In May 2020, Which? found that trust in the industry dropped from a net score of 9 in February 2020 to -12 in May of the same year.

Travel brands need to win back consumer trust, not only regarding refunds, but with enhanced payment security. One of the best ways to do this is to offer customers financial and fraud protection on payments made to travel providers. If a customer believes that their money may be at risk, they will likely take their business elsewhere. Travel providers that invest time and effort into ensuring their payments systems are secure will reap the benefits, as customers will feel that their payments are safe from rising fraudulent activity. To win back consumer trust, travel providers must do all they can to make customers aware of security procedures to assure them that their money is not at risk.

Unfortunately, fraud is becoming increasingly sophisticated. Similarly, the growth of new technology has meant that there are more opportunities for fraud to occur, and criminals are adopting increasingly complex methods. As businesses find new ways to protect their customers, fraudsters find new ways to con them. Luckily, 3DS2 will protect consumers by making payments of all kinds more secure and more seamless.

How can Trust My Travel help?

We fight fraud, so you don’t have to. Trust My Travel provides a full-scale fraud prevention system designed to lower the chance of outright fraud, friendly fraud and your chargeback ratio. Our monitoring system flags suspicious transactions based on either the card or cardholder characteristics. Dynamic fraud settings based on your traveller’s location protect your business, all while maximising conversion. We have developed specific fraud rule settings over several years of processing bookings in the travel industry, meaning we can spot suspicious activity. The specialist Trust My Travel fraud team handles all fraud and chargeback cases, saving you precious time.

If you’d like to learn more about Trust My Travel fraud tools, please do not hesitate to get in touch. We’d be happy to help and discuss our services in more detail.