Cyber attacks and fraud are now commonplace news stories in global media. And it’s not just small businesses with limited resources to allocate for security. Cyber attacks grew by 50% last year, with high profile victims including the NHS and Danish transport giant Maersk getting hit badly.
This meteoric rise in attacks and fraud is unsurprisingly costing industries around the world billions of dollars. Just look at the stats:
- Online fraud in the UK alone grew by 2% in 2016, costing more than £768m
- Of that amount, card payment fraud accounted for a huge 80%
- And globally, thieves stole $16bn through online scams last year, almost a billion
more than 2015
The scope and ramifications of these problems are admittedly huge across many verticals, but nowhere is the issue more prevalent than with Online Travel Agencies (OTAs).
The Challenge for OTAs
OTAs are especially at risk when it comes to fraud and cyber attacks because of the large
number of transactions carried out over the internet between clients and suppliers across
According to Mountain View, online travel businesses lose anywhere between 0.64% and 2% of their annual revenues to fraud. This might not sound like much, but with global revenues at $530bn in 2015 and expected to surpass $760bn by 2019, the potential damage digital fraud can cause is mammoth.
Virtual account numbers offer a Viable Solution
To fight back against this kind of threat, many businesses, including some OTAs, are turning to virtual payments with VANs.
A VAN – or Virtual Account Number – is a unique 16-digit number that is generated each time a transaction occurs. The number is linked to a specific account but it is the VAN, not the credit card number, that the supplier receives.
VANs can be valid for a single transaction or they can be set for a certain number of transactions, certain monetary amounts, particular merchants or for a set period of time.
And even if hackers do manage to steal the number, they can’t use it as it will have expired or the amounts being charged won’t fit within the set parameters.
VANs are not only helping to protect against fraudulent transactions and data theft, they are also making digital travel agencies more efficient by speeding up payment processes. They’re the ideal B2B payment solution for companies looking to boost their security. Below we walk through the three main benefits.
They Make Things Easy
The main and obvious draw of VANs is that they limit the threat of digital attack, but the
benefits don’t end there.
Companies like eNett can set up VANs payment systems which not only protect against online fraud, but also speed up payment processing, automate many of those manual processes and can even help guard against supplier default. The online travel industry currently spends around $1.5bn a year on manual processing and as much as 40% of the industry still relies on this method. But by automating with a VANs payment solution like this, businesses can cut down dramatically on IT and accountancy costs.
VANs can help OTAs expand very quickly and easily into new jurisdictions. Because they are accepted anywhere where Mastercard is online, they are accepted in 35.9 million locations in over 70 different countries and across more than 35 different currencies. This means that instead of having to set up payment processes in each new country, OTAs can simply
generate VANs which will be accepted in that country because of its connection to Mastercard.
With payments more rapid and automated, suppliers can receive their money on time and build trust with new partners, so everybody wins.
VANs might be adaptable across borders which is great, but working across multiple jurisdictions in different currencies can affect OTA margins. Brexit has weakened the pound against the dollar and euro, eroding travel industry profit for UK OTAs.
But this isn’t a problem as VANs are locked in at the time of booking, reducing the chance of any profit being wiped out by a currency fluctuation.