Business spend on travel reached $1.15 trillion in 2016, but companies aren’t always able to see where their dollars are going. That certainly presents problems for spend management, according to research from the Global Business Travel Association (GBTA) Foundation, which found last year that non-corporate payment methods like cash and personal cards are limiting businesses’ access to transparency travel spend.
“Regardless of the reason, these methods can pose problems, including reduced spend visibility, making it difficult to both track and enforce policy compliance and to perform back-office functions, such as reconciliation and reimbursement as well,” said GBTA Foundation Director of Research Monica Sanchez in a statement when the report was published.
There’s another problem linked to a lack of payment visibility in the corporate travel industry, however.
The latest report from eNett International, “It Pays To Know: Fraud In Travel Payments,” warns that payments fraud is plaguing the global travel space, though, in this case, the issue is imbedded deep within the travel supply chain itself.
The B2B travel payments company found that fraud may increase as much as 20 percent by the end of the decade, hitting $25 billion. The eNett report — the research of which was conducted by Edgar, Dunn & Company — found fraud in the B2B travel market led to $6 billion in direct losses and $15 billion in indirect costs like damage to company reputation and increased operational costs.
The rise in online travel booking means online travel agents are likely to be worst hit by payments fraud in the industry, with analysts anticipating an $11 billion impact on this segment in particular.
“High-value transactions, rapid consumption, online booking habits and the sheer number of suppliers across the globe mean travel intermediaries are especially vulnerable to fraud,” said eNett CEO and Managing Director Anthony Hynes in a statement, according to Travel Daily News reports. “With industry margins already under immense pressure, it has never been more important for companies to understand where fraud occurs and how to reduce its incidence and impact. The good news is payment solutions have also evolved to minimize the cost and reduce the risk of fraud significantly.”
B2B Payments a Major Pain Point
The complexity of the global travel supply chain, saturated with suppliers, means payments fraud is especially rampant in the industry’s B2B payments space.
Researchers for the eNett report found 60 percent of businesses acknowledge fraud is a concern when they make supplier payments. According to analysis, stolen payment method details are the most common strategy deployed by fraudsters targeting accounts payable and supplier payments, followed by a cyber breach of an online booking platform and stolen security credentials.
“It is relatively common for travel intermediaries to share payment details, such as information about cards used for procurement, with trusted travel suppliers,” the report stated. “Travel supplier information may be compromised or a rogue employee at the travel intermediary or travel supplier may choose to dishonestly use a card outside agreed terms to obtain a financial advantage.”
Use of foreign credit cards is another hot area for fraud, cited by 29 percent of survey respondents as the area of highest risk when they receive payments. More than a third said receiving online payments is their riskiest process.
Making matters worse, according to eNett’s report, is that B2B payments fraud in this industry is rarely reported. That makes it more difficult for industry players to detect fraud and makes it more difficult for analysts to pinpoint exactly how large the payments fraud problem is in this industry.
“Wherever money changes hands, fraudsters may take aim, but there are things travel companies can do to avoid falling victim,” said Hynes. “This stars with some quick wins, such as using payment methods that provide specific controls and opportunities for recovery. A more coordinated effort, including knowing your supplier and carrying out a comprehensive analysis of fraud patterns, will then help to effectively tackle fraud across the organization.”