E-commerce has revolutionised the way consumers are able to find and purchase goods and services online. In advanced economies, online transactions have become commonplace, with some businesses even phasing out cash payments completely. At the sametime,
cash-dependent economies in emerging markets are starting to make the transition to online payment systems, embracing the benefits on offer from e-commerce.
This is particularly prevalent in Latin America (LATAM). There are approximately 300 million digital buyers, with this figure forecast to grow 25% by 2025. LATAM e-commerce volumes are also rising at over 30% per annum.
Offering tech-enabled platforms, global payment service providers allow merchants to access more consumers by providing local payment methods to emerging markets. While positive for the development of the region, rapid adoption of online payment systems
has enabled the rapid rise of online retail sales but is also leading to a rise in fraudulent activities.
Online security specialists have revealed that one in five new online banking accounts created in the region are fraudulent. What’s more, the MRC’s 2021 Global Fraud Report, 3.5% of ecommerce transactions in Latin America during 2021 were fraud attempts,
higher than the global average of 2.6%.
These are concerning statistics, highlighting the heightened risk exposure of consumers and businesses as a consequence of rapid digital adoption. If not addressed, there are real concerns that rising fraud activities could undermine the impressive e-commerce
growth experienced in LATAM.
Part of this solution will come from the implementation of the fraud management systems by payment service providers in the region. This include 3D secure requirements to maintain low fraud and chargeback levels, transactional limits, IP and BIN blocking
and Unique Device ID counts.
While fraud may be more prevalent in certain regions like LATAM, the reality is that fraud prevention needs to be at the top of the agenda for the payments services sector. The biggest challenge of online fraud is the evolving nature of the threat. Global
payment service providers must always be on the front foot, identifying potential threats and putting in place fraud management systems to protect their network of merchants.
The e-commerce sector is growing at pace, and payment service providers have an important role to play in providing the systems needed for fast and secure transactions with minimal risk of fraud.