As Fraud Prevention Month in Canada comes to a close, it is natural to ask ourselves what will the future hold.
The traditional travel distribution channel (B2B2C) is today still completely exposed to the risk of fraud without any opportunity for the types of protection that are now available to those selling direct to consumer.
The fundamental problem is that the credit card is handled at the travel agency point of sale however the ultimate credit card merchant is either a wholesaler or an airline who never interacts with the cardholder; this makes the transaction a card not present sale and the travel agency is held responsible for any fraud.
To face this challenge, the Association of Tour Operators of Quebec (ATOQ), the Association of Canadian Travel Agencies (ACTA) and the Canadian Association of Tour Operators (CATO) share a common objective:
Accelerate change towards a fully secure transaction environment for all participants in the travel distribution network in Canada.
Are there protection options on the horizon? Yes.
Are there any fast and easy solutions? No
Are there challenges and frustrations to deal with yet? Yes
First, the good news.
The credit card companies like Visa and Mastercard want both the credit card holders and the merchants accepting cards, to be able to operate in a secure environment. Motivation is simple, if cardholders do not fear using their cards online, and if merchants are less concerned about fraud, total transactions will rise significantly.
For transactions done with tour operators, and starting in late 2018 and coming on strong in 2019, the travel industry will have the option to benefit from the newest version of the fraud security software (3DS 2.0) being made available by the major credit card brands.
Would it not be nice to be able to accept a high value, last minute transaction from a client that you barely know and to be able to process the sales without any worry about fraud? Yes!
In order to benefit from the full fraud protection we will need to change the way we manage our work flow today as full protection can only be provided when the cardholder interacts with a secure online payment gateway.
Do we have to change the way we deal with our long term, well established customers? No You can continue using the same procedures you have always followed however you will still remain responsible for any fraud. Luckily these types of clients are not where we experience fraud.
Will we want to change the way we deal with new or unknown individuals who want to buy from us? Yes.
Accepting card details over the phone, email or through any other electronic communication, and then passing the info on to the travel supplier, will not allow you to benefit from fraud risk transfer to the card issuer.
In cooperation and consultation with all the players in the B2B2C distribution system, we will be seeking new systems and procedures that work well with our day to day realities and which will ultimately deliver greater safety.
Now some not so good news.
It seems like we will be waiting longer for fraud protection for airline tickets sold through IATA appointed agents or consolidators/tour operators.
There was a great opportunity to start to reduce risk with airline tickets which are one of the top sources of credit card fraud globally. New data interchange procedures were approved and published by IATA in July 2017 (DISH 22.2) which would have permitted the necessary infrastructure required to transfer fraud risk back to the credit card issuers.
Unfortunately, IATA proposed rescinding the fraud protection for agents during meetings in Oct. 2017 and this change received final approval in February 2018. IATA’s action is perplexing especially when we are now going through the whole NewGen ISS 2 process which is clearly focused on reducing payment risk.
IATA agents are now left to wait, and will continue to lose millions of dollars a year, until IATA brings back the same fraud protection option under their next version of data interchange standards (DISH 23) which could be as late as sometime in 2020.
Due to the great work done by the Airline Reporting Corporation (ARC)3, the travel agents in the USA are positioned to soon benefit from fraud protection on airline ticket sales. As of this date, we are waiting for official word from IATA about the timeline for when protection for Canadian agents will be made available.
Rest assured that the ATOQ, ACTA and CATO will continue to work closely together to accelerate change so that the Canadian industry can be early adopters of the best tools available for fraud reduction.
Safe selling, and never forget your best protection: KNOW YOUR CUSTOMER!