Financial Risk or Credit Risk Management:
Travel agencies are infamous in the payment card industry for producing some of the highest levels of credit card fraud, especially in card-not-present transactions. So infamous in fact, that some payment processor will not provide merchant services to new travel agencies and will go into great lengths to ensure that applicants with processing history can actually be trusted to implement adequate risk management procedures to minimize fraud, customer disputes and chargebacks.
What exactly makes travel agencies so risky and unpalatable to processors? Well, the question is more like whether there is a high-risk transaction characteristic that is missing from their sales. Travel operations tend to involve high-ticket, high-volume sales, often exclusively conducted in a card-not-present environment. These are the classical high-risk features, but travel agencies go beyond that. In most of their transactions the service is provided weeks or months after the sales date, which leaves plenty of time for even perfectly legitimate sales to deteriorate into chargebacks. So if you bought a cruise package for the summer, but a family emergency prevented the trip, you would have to cancel the transaction. Yes, you would be allowed to do that, but you would have to pay a cancellation fee. True, the cancellation fee was prominently featured in the contract that you signed, but this doesn’t make it any more enjoyable. You would still go ahead and honor your contractual obligation, but many others would do their best to avoid it, including filing a dispute with their card issuer.
The following procedures should be taken into consideration when developing your own set of best practices:
Set aside large-value bookings for fraud review. Large-value transactions may increase your exposure to fraud and customer disputes. A careful review of such transactions before they are settled can mitigate risk and minimize potential fraud-related losses. For best results contact the cardholders involved in such transactions to verify the booking.
Create an Effective Program
Your travelers are an extension of your organization and anything that affects them also affects your business. TripBorn will help you create an effective travel risk management program to protect travelers and prevent a disruption in overall business continuity.
TripBorn offers a comprehensive travel risk management program that helps you fulfill your duty of care by protecting your travelers and your bottom line. TripBorn continually monitors all travelers’ current and future trips with real-time trip alerts and reports to track affected travelers so we can get them home safely.
Through our Travel Portal, we provide Travel Managers risk management tools that access security intelligence and traveler locations to mitigate safety risks. Travel managers can:
- Locate all travelers on the road, with comprehensive views of itineraries
- Identify “hot spots” (security, weather and health threats) via a global map interface
- Access drill-down information on employees in hot-spot locations
- In-built customized Credit and Financial Risk Management