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Preventing fraud with virtual cards.

Online travel agencies play a pivotal role in the modern travel industry, facilitating millions of transactions between travellers and suppliers worldwide.

The Thredd team

February 15, 2024

Online travel agencies (OTAs) play a pivotal role in the modern travel industry, facilitating millions of transactions between travellers and suppliers worldwide. However, the convenience and accessibility of online bookings also present significant challenges, particularly concerning payment security and fraud prevention. In this blog, we explore how virtual Visa or MasterCard debit and prepaid cards can be effectively utilised by OTAs to mitigate fraud risks when paying suppliers, thereby enhancing security, efficiency, and trust in the travel ecosystem. 

Understanding the Fraud Landscape. 

Fraudulent activities pose a substantial threat to both the integrity of online transactions in the travel industry as well as an OTAs’ cost of doing business.   OTAs face a range of fraud-related challenges when making payments to suppliers, including hotels, airlines, car rental companies, and tour operators. Some common forms of fraud encountered by OTAs include: 

  1. Card Not Present (CNP) Fraud: Fraudsters exploit vulnerabilities in online payment processes to make unauthorized transactions using stolen credit card information. 
  2. Disputes and Chargebacks: OTAs are vulnerable to chargebacks initiated by customers who dispute transactions, resulting in financial losses and operational disruptions. 
  3. Identity Theft: Fraudsters may impersonate legitimate travellers or suppliers to make fraudulent bookings or payments, leading to reputational damage and financial losses. 
  4. Data Breaches: Cyberattacks targeting OTAs can compromise sensitive customer and payment information, posing significant risks to security and compliance. 

Leveraging Virtual Cards for Fraud Prevention. 

Virtual cards offer a compelling solution to the complex challenge of fraud prevention in online transactions. These digital payment instruments generate unique card numbers for each transaction, providing enhanced security and traceability while minimizing the risk of fraud. Here are several ways OTAs can leverage virtual Mastercard and Visa debit and prepaid cards processed by Thredd to prevent fraud: 

1. Single-Use Card Numbers 

  • Virtual cards enable the creation of unique, single-use card numbers for each transaction, rendering them useless for any subsequent transactions. 
  • By utilizing single-use card numbers, OTAs can significantly reduce the risk of unauthorized transactions and mitigate the impact of data breaches or card theft. 

2. Transaction Controls and Limits 

  • Thredd’s payment processing services allow OTAs to set transaction controls and spending limits for each virtual card, providing greater control over payment authorization and reducing the risk of fraudulent activities. 
  • Implementing transaction controls such as geographic restrictions and merchant category restrictions helps prevent unauthorized use of virtual cards for illicit purposes. 

3. Real-Time Fraud Monitoring and Alerts 

  • Thredd provides real-time transaction monitoring capabilities and customizable alerts that notify OTAs of suspicious or unusual transaction activity. 
  • By combining virtual cards with Thredd’s robust fraud detection mechanisms, proactively monitoring and responding to alerts, OTAs can swiftly detect and mitigate potential fraud attempts, minimizing financial losses and reputational damage. 

4. Enhanced Authentication Mechanisms 

  • Working with a leading payments processor like Thredd, OTAs can add enhanced authentication mechanisms, such as two-factor authentication (2FA) and biometric verification to ensure secure access to virtual card accounts and prevent unauthorized use. Implementing multi-factor authentication protocols strengthens the authentication process and reduces the risk of account takeover and fraudulent transactions. 

Online travel continues to proliferate, and digital payment transactions have become increasingly prevalent. OTAs must prioritize payment security and fraud prevention to safeguard their operations and reputation. Virtual cards offer a versatile and effective solution for OTAs seeking to mitigate fraud risks when paying suppliers, providing enhanced security, efficiency, and peace of mind. 

By leveraging the unique capabilities of virtual cards, including single-use card numbers, transaction controls, real-time monitoring, and integration with fraud detection systems, OTAs can fortify their payment infrastructure against evolving fraud threats and maintain the trust and confidence of travellers and suppliers alike.  

How Thredd can help your business run a best-in-class fraud solution with 3D Secure & Fraud Transaction Monitoring. 

Visa and Mastercard debit or prepaid card programmes launched with Thredd support a variety of payments purchase scenarios from in-person to online transactions, including contactless tap on a Point of Sale (POS), digital wallet NFC on POS (Apple/Google Pay), and card data entry on eCommerce platforms. 3DS focuses on eCommerce transactions by adding an extra layer of cardholder authentication to comply with PSD2 regulations using 2-factor authentication. Our 3DS solution is seamlessly integrated within each eCommerce transaction ensuring compliance for all transactions globally. 

Thredd ensures your fraud prevention strategy aligns with your evolving business needs. We've built a flexible suite of fraud products which accommodate your business growth plans from start-up, to scale-up, to a fully mature business. 

Fraud solutions from Thredd not only ensure compliance but also offer additional benefits for OTAs: 

  • Increased customer trust 
  • Enhanced conversion rates 
  • Reduction in chargebacks and operational overheads 
  • Accelerated go-to-market and global recognition for scale and growth 

As the travel industry evolves, OTAs must remain vigilant and proactive in adopting innovative payment solutions and best practices to stay ahead of fraudsters and ensure the integrity and security of online transactions. With virtual cards as a cornerstone of their fraud prevention strategy, OTAs can navigate the complexities of the digital landscape with confidence, resilience, and trustworthiness. 

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