Fraud prevention as a competitive advantage in travel

According to ourlatest research , more than half of travelers have been victims of payments fraud in recent years, with this figure rising to 80% in certain markets. Travelers are highly aware of the problem, with the majority recognizing that fraud rates are increasing significantly.

At Outpayce, we are working with several partners to enhance fraud management for travel companies. Ourlatest partner, PRECISION by EG Fintech Solutions — Etraveli Group’s fintech entity specializing in solutions tailored for the travel sector — was developed from within the industry to tackle its unique fraud challenges. I recently sat down with Peny Rizou, Etraveli Group's Chief Fintech Officer and head of EG Fintech Solutions, to discuss the issue.

As Peny Rizou explained, Etraveli Group has expanded beyond its roots in operating some of the industry’s most well-known consumer OTAs.“With a strong foundation in developing powerful in-house technology, our company has evolved to provide B2B services and solutions that many travel partners — including household names like Booking.com — already rely on, establishing ourselves as a leading travel tech provider, additionally making it available to other travel companies, including airlines."

Fraud is a very significant issue for our industry, perhaps more than any other sector of the economy. In fact, a study by Juniper Research highlighted that 46% of all eCommerce fraud is targeted specifically at the airline industry, with IATA suggesting fraud losses equate to around 1.2% total industry revenues. These are huge numbers and Peny explained why travel has become such a target.

“There are several reasons why the industry attracts such high levels of fraud. Firstly, the high value of transactions creates opportunities for significant financial gain when exploited successfully. Secondly, it involves cross-border payments adding complexity and making fraud harder to detect. Finally, unlike eCommerce that deals with physical goods, there is no product to ship - tickets are issued instantly, delivered digitally, requiring fraud decisions to be made in real-time with little room for error."

While fraud is a global problem, it doesn’t affect all markets equally. Our latest research shows that travelers from regions like South America tend to experience higher rates of payment fraud, which, as Peny explains, can be a major obstacle for travel companies looking to expand into new markets.

“Yes, there are significant regional differences. Even within the same region, no two neighboring countries are alike, each has its own fraud patterns, payment behaviors, and regulatory landscapes. Etraveli Group companies process payments from more than 200 countries and territories, and in some, fraud rates are so high that doing business profitably would have been impossible, without PRECISION in place.”

“Rates of fraud are typically lower in Europe where the Strong Customer Authentication mandate has introduced two-factor authentication on a high percentage of payments, but the region is by no means immune. While South America presents significant challenges, it is far from the only high-risk region. North America, parts of the Middle East, Asia and North Africa also experience high fraud rates. Unfortunately, it remains a global and constantly evolving challenge, making it difficult for many merchants to combat effectively.”

According to Peny, in addition to the regional nuances, fraud in travel also follows distinct patterns which is why PRECISION is designed around the asset we need to protect - the airline ticket.

“Leveraging deep sector expertise and designed to handle massive data streams in real time, it delivers decisions with unmatched accuracy at the speed required in travel - when even a slight delay or false decline can mean losing a legitimate customer.

For example, a French citizen living near the Swiss border might decide to fly from Zurich. Standard fraud rules may flag the payment as suspicious or fraudulent, since the card is registered into a different country than the departure airport. PRECISION, however, understands these common travel behaviors and is far less likely to wrongly decline such a transaction.”

“In Brazil, for example, there is a significant proportion of the population that does not own credit cards. It’s common for one person to book travel for multiple family members using a single card (even when the cardholder is not traveling). Again, a standard approach to fraud is likely to incorrectly flag these transactions as it often does not account for regional payment behaviors and household financial structures.”

Peny is clear that an effective fraud prevention strategy is not just about stopping suspicious transactions but about overall decision accuracy, allowing legitimate customers to complete their purchases without hassle.

“There’s no silver bullet to eliminate all fraud, but effective fraud management is about finding the right balance between preventing fraud and enabling sales and growth. The key to achieving this is a 360-degree decision-making approach, ensuring a system’s ability to accurately detect fraud without unnecessarily blocking real customers. After all, preventing fraud at all costs is counterproductive if it also means turning away too much genuine business.”

With fraud tactics constantly evolving and travelers becoming more aware of the risks, it’s crucial for travel companies to take a proactive approach.

“Another key piece of advice is to stay proactive. Fraud isn’t static—while there’s always a baseline level, targeted attacks can happen at any time. We’ve seen cases where a criminal network exploited a vulnerability and carried out large-scale fraud over several days. The best defense is to have strong protections in place before an attack happens, not after.”