Going cashless has become increasingly popular in recent years among UK businesses, including those in the hospitality industry. While going cashless has many advantages, such as increased efficiency and a lower risk of theft, there are some additional risks that hospitality venues should be aware of before making the switch, with fraud being a key concern.
Fraudulent activities such as chargebacks and identity theft can increase when businesses go cashless, which can lead to financial losses. Therefore, it is important for hospitality venues to implement robust security measures and educate their staff on how to identify and prevent fraudulent transactions.
There are also several other fraud risks associated with a cashless venue. Here are some examples:
Payment fraud: Since cash is not used, electronic payment methods such as credit/debit cards, mobile wallets, and online payments become the primary means of payment. This makes these payment methods vulnerable to fraud, including stolen credit card information, chargebacks, and unauthorized transactions.
Data breaches: Cashless venues store electronic payment information, which makes them a target for hackers. In the event of a data breach, the sensitive financial information of customers can be stolen and used for fraudulent activities.
Technical glitches: Technical errors or system malfunctions can result in incorrect charges, double billing, or system crashes, causing inconvenience to customers and raising concerns about fraudulent transactions.
Identity theft: Cashless venues require customers to provide personal information to set up accounts or register for loyalty programs. This information can be used for identity theft, leading to financial loss and reputation damage.
Social engineering scams: Fraudsters may use social engineering tactics to trick customers into sharing sensitive information, such as their credit card details, through phishing emails or fake websites.
To mitigate these risks, cashless venues should have robust security measures in place, including secure payment gateways, encryption, and multi-factor authentication. Regular monitoring and auditing of transactions and data storage can also help prevent fraud. Additionally, customers should be educated on how to protect their personal and financial information and should be encouraged to report any suspicious activity immediately.
Here are 5 tips to help you look out for fraud while being a cashless venue:
- Monitor your transactions: One of the most effective ways to watch for fraud is to monitor all transactions closely. This includes reviewing daily transaction reports and looking out for any unusual activity, such as transactions that are much larger than usual or that come from unfamiliar sources.
- Implement fraud detection tools: In addition to monitoring transactions manually, consider implementing fraud detection tools that can automatically flag any suspicious activity. This can include tools such as machine learning algorithms or artificial intelligence-based fraud detection systems.
- Require multi-factor authentication: To further enhance security, consider requiring multi-factor authentication for all transactions. This can include requiring an additional confirmation step such as a fingerprint scan or a text message verification code.
- Train your staff: Fraudsters often target cashless hotels by trying to exploit vulnerabilities in staff training. Make sure all staff members are trained on how to identify and prevent fraud, including how to identify phishing scams and other common tactics used by fraudsters.
- Keep your software up to date: Finally, ensure that your hotel’s software is up to date and that any known security vulnerabilities are patched as soon as possible. Outdated software can be a prime target for fraudsters looking to exploit known security flaws.
Capcon offers a comprehensive range of tailored business services, including auditing and stocktaking, reporting and data analysis, employee screening, payroll, corporate due diligence, and other specialised compliance-related services tailored for the hospitality industry. We work together to help businesses gain real-time visibility in order to reduce strategic risk, make better decisions, and increase profits.
Talk to us about how we can help you and your business.