Fraud is a big issue for the online travel industry with 40 per cent of agencies revealing it is their greatest worry alongside supplier default. Bethany Cornell, a technology and security writer, explores opportunities and advancements in tech.
Online travel agencies are particularly at risk from cyber-attacks because of the large number of transactions conducted online between clients, agencies and suppliers such as hoteliers in many different countries. With global online travel sales reaching $530 billion in 2015 and expected to surpass $760 billion by 2019 the risk for financial damage to the industry as a result of hacking is huge.
Payment systems have also become increasingly complex with the introduction of mobile payment systems and growing demand from travellers. The fact that many payments take place across multiple jurisdictions and in many different currencies has further complicated the different systems.
According to the reports there was a 300 per cent increase in ransomware attacks between 2015 and 2016 with hackers looking to exploit any weaknesses they could. In recent months, big business across the globe has been hit by the likes of the Petya virus, with hackers demanding money to decrypt company data whilst WannaCry infected the NHS.
However, virtual account numbers (VANs) are fast becoming the latest defence against online fraud or supplier default for the travel industry to help combat these statistics.
How VANs work
In many cases the customer pays up front to the travel agency, then the travel agency pays its trading partners and 90 per cent of these payments are either via money transfer or with credit card. The system works fine if it isn’t hacked and those card numbers stolen, or if the supplier is known. But if those numbers go astray or the merchant you’re paying is unscrupulous there’s nothing to stop someone taking those details and using them to buy all sorts of goodies with yours or your company’s money.
VANs stop that kind of fraud happening in its tracks. Each time a transaction occurs a random 16-digit number is generated which is linked to the real credit card number – this is the number that the supplier receives.
The VAN normally expires after that one transaction or it can be set for limited number of transactions or for a certain amount of time. Even if it does fall into the hands of fraudsters they can’t use it because the number will already have expired and they won’t have the real credit card number.
VANs offer other benefits to the online travel industry
VANS offer a much greater level of security for online travel companies, significantly reducing the risk of online fraud, successful ransomware attacks and supplier default.
They are also a great B2B payment solution because they speed up payments and reduce manpower costs by automating much of the process, including the reporting and reconciliation. In addition, they have a positive impact on IT security costs.
Because VANs are linked to credit cards like MasterCard, they are accepted in millions of locations worldwide, making it easier to transact with suppliers in different countries. They’re also available in many currencies which again simplifies the process and reduces the complexity which comes with online travel agencies handling prices in different currencies. It also makes it easier for travel companies to grow into new markets – there is no need to set up new payment systems in foreign jurisdictions because VANs can simply be used instead.
A payment method for the future?
VANs are definitely high up on the list when it comes to making safe, secure payments online. They’re not perfect because although they protect financial information, hackers can still access personal information such as usernames, passwords and date of birth. However, in the ever-evolving fight against online fraudsters, they are an important part of any company’s internet security arsenal.