New Study Finds Payment Security Affects Travel Purchase Decisions

Organized fraud rings target the travel industry because of its high transaction values and international nature, according to an Outpayce study.

Passenger jets taxi at the LAX airport in Los Angeles on Nov. 21, 2024. John Fredricks/The Epoch Times

Security has become an important factor that individuals consider before traveling, according to a new study, with more than 70 percent saying they would choose a travel company based on its strong reputation for secure commerce.

Some 67 percent of travelers across five markets would not be enticed by a travel company that has poor cybersecurity even if it offered a 5 percent discount, according to the survey of 4,500 travelers from France, Brazil, the United Kingdom, the United States, and Singapore published on March 11 and commissioned by travel payments company Outpayce.

That’s because 64 percent of travelers perceive payment fraud as being on the rise, according to the survey.

“It’s clear from this research that there is an issue with the perception of security, which is making it harder to deliver smooth one-click payments,” Jean-Christophe Lacour, senior vice president and global head of product and delivery of Outpayce, a subsidiary of the travel technology company Amadeus, said in a statement.

“Widely publicized data breaches have reduced consumer confidence and the industry needs to take proactive measures to rebuild trust.”

Payments fraud happens when a bad actor uses an individual’s payment information to illegally purchase goods or withdraw cash.

The Outpayce study also found that organized fraud rings target the travel industry because of its high transaction values and the international nature of the industry.

“Everyone is quick to type in their credit card information online, all under the illusion that our data is safe, but this is far from the truth,” senior travel adviser Sunil Gupta of Luxury India Tours—which organizes trips to India, Sri Lanka, Bhutan, the Maldives, and Nepal—told The Epoch Times.

Casago CEO Steve Schwab said artificial intelligence (AI) is now a part of the problem.

“When it gets in the hands of bad actors, it can make fraud attempts a lot more difficult to detect,” Schwab told The Epoch Times. “Many travel companies are also lacking in strong enough cybersecurity measures, especially ones like travel agencies that have been around for many years and aren’t modernizing as they should.”

The use of AI in tourism is expected to reach $13.38 billion by 2030, according to a Research and Markets study from February.

According to data from RSA Security and Juniper Research analyzed by the International Air Transport Association in 2020, 46 percent of all payment fraud cases target the airline industry. As a result, all airlines are faced with the need to prevent fraud without inconveniencing their customers during the payment experience.

“Airlines are more prone to fraud with more complex systems, a higher volume of international transactions, and higher-cost purchases,” John Rose, chief risk adviser of global corporate travel management company Altour, told The Epoch Times.

Rose attributes the rise in fraud to outdated infrastructure and inconsistent adoption of secure payment practices.

“Many merchants, particularly in industries like travel, are still storing credit card information, leaving customers vulnerable,” he said.

Travel companies often want customers to store their card details online to enable effortless one-click payments.

However, trust in travel companies is low.

Some 63 percent of travelers “are reluctant to store their payment details with travel companies due to concerns over fraud, data privacy, and unauthorized charges,“ and a third of respondents said they ”do not trust travel companies to keep their payments data secure at all, fearing details would be lost during a data breach,” according to the Outpayce study.

In addition, Gupta said, “if a company is only dealing with wire transfers, crypto, gift cards, and similar, then there’s a good chance it’s a scam.”

“These are types of transfers that are much more difficult to track, which is why they’re loved by scammers everywhere,” he said.

The Outpayce survey further found that Brazil has the highest percentage of payment fraud victims, at 89 percent, followed by the United States at 44 percent and the UK at 38 percent. France and Singapore, both at 37 percent, have lower payment fraud rates.

“Both France and Singapore have implemented comprehensive regulations and standards around secure payments, and they incentivize businesses to adopt NFC, tokenization, and encryption,” Rose said.

The study defines tokenization as the practice of replacing sensitive payment card data with a secure token, a looming technology that lowers risk for customers by providing alternatives to storing the traveler’s sensitive payment details with the travel company.

But the cost and complexity have prevented some airlines and travel companies from adopting such technologies more quickly, according to Rose.

“Card numbers should no longer be allowed to be stored anywhere, as doing so creates a massive vulnerability in the payment system,” he added. “Implementing tokenization widely among airlines, however, presents challenges. It requires significant investment in upgrading systems, employee training, and establishing customer trust.”