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A card not present transaction also known as MO/TO (Mail Order/Telephone Order) is a payment card transaction made where the cardholder does not or cannot physically present the card to a merchant for order verification such as for transactions by telephone or Internet. Card not present transactions (CNP) are a major route for credit card fraud, because it is difficult for a merchant to verify that the actual cardholder is indeed authorizing a purchase.
CNP fraud is growing in the travel industry. In fact, according to the Travel Payments Insider and the 2015 Trustwave Global Security Report, the hospitality industry falls in 3rd place for data breaches, accounting for 12% of the breached or hacked records globally.
Airlines and hotels are being hit the hardest when it comes to online fraud. Why? With the onset of EMV, fraudsters are looking to take their fraudulent activities online, causing many in the hospitality industry to reevaluate their online fraud strategies.
By nature, the hospitality industry is focused on serving their guests, sometimes even at the cost of the hotel or airline. In fact, according to research from the American Hotel & Lodging Association, 15 million deceptive hotel bookings were made in 2015 at a cost of roughly $1.3 billion. This can be challenging for the hospitality industry, especially the hotel industry, where employees pride themselves on making their guests’ stay a good one. Some hotels will still honor the fraudulent online booking and charge it to the hotel’s corporate account instead of risking an upset guest. This ultimately costs the hotel – and the hotel’s guests, with higher prices to cover the fraud.
A common fraud scenario for airlines is last minute departure bookings. Tickets that are purchased close to the departure date (often within 48 hours) run the risk of being fraudulent because more often than not, fraudsters know that they can use a stolen credit card at the last minute and slide right past the airline fraud department’s fraud triggers, due to the airline loosening their fraud rules as they try to fill the plane up before the flight departs.
A common fraud scenario for hotels is prepaid hotel bookings online. Sure, this is a great way for hotels to secure paid online bookings ahead of time. However, fraudsters see this as a quick way to test stolen credit cards, leaving hotels responsible for both the chargeback and the missed opportunity to book the room.
With 3DSecure (3DS) or Consumer (Payer) Authentication, merchants can create rules to determine which transactions are risky and should be authenticated, and which transactions appear to be low risk and should be allowed through without obstruction.
As a relatively newcomer to the e-commerce arena, CX Pay has been applying the latest technology like 3DS that addresses the phenomenon of fraud transactions. Especially in the travel industry, CX Pay’s security measures ensure that the merchants can cater to their guests’ needs, while at the same time protecting the company and its consumers. With the help of 3DS or Consumer (Payer) Authentication, merchants can see the following improvements to their e-commerce business