2 October 2023
Fraud has several monetary implications for travel merchants, and it is worth evaluating how fraud KPIs are shaping up in this context as one focuses on fraud prevention.
Studies have indicated that tracking metrics like revenue generation and cost of payments has gained importance this year, as compared to last year, as did the share who track refund rates.
Be it for facilitating transactions or protecting customers’ data, travel merchants have to deal with certain challenges such as complexity in payments, ID scams, account takeover, friendly fraud, loyalty fraud and so on. So as airlines, OTAs, hotels etc. evaluate fraud trends and benchmarks, they look at metrics such as chargeback rate, authorization, operational overhead costs etc.
Key developments:
- As discussed during this year’s #ATPSAPAC in Bangkok, merchants are utilizing an increasing array of fraud detection tools – five, on average – with over half using credit card and identity verification services. Cybersource recommends that more merchants should consider using biometric indicators, individualized fraud scoring models, and multi-merchant purchase velocity models, “given these tools’ low usage and high effectiveness”.
- Another key area of focus has been cutting down on manual reviews. Merchants (according to Cybersource and MRC) now screen an average of 19% of all ecommerce orders manually, 15% of which they end up declining. This means merchants tend to decline around one out of seven orders of the total they review.
- It is also acknowledged that AI-driven tools and human expertise should continuously be counted upon to deal with evolving fraud tactics.
- As Adyen points out, hurdles such as incomplete data access and subjective factors complicate measuring success. Also, transparency and collaboration must be approached cautiously.
By Ritesh Gupta, Ai Events
