There are many enticing reasons to sell in Latin America, including: LatAm is the fastest growing ecommerce market and according to Statista, Brazil alone is expected to hit an emarket volume of mUSD 34,449.7 and user penetration of over 50% by 2020. However, there are a few catches to selling in this fast growing emarket.
Some concerns for businesses looking to expand their ecommerce to LatAm are fraud and chargebacks rates.
According to the Online Fraud Report for Latin America 2015 by CyberSource and eInstituto, in Latin America:
- 6.8% of orders are rejected because of fraud suspicion, compared to 4.8% in Europe and 2.3% in the US/Canada
- 1.4% of sales become chargebacks, compared to 0.8% in Europe and 0.6% in the US/Canada
Yet, selling to LatAm proves beneficial to ecommerce sales so long as effective anti-fraud measures are in place.
Traditional anti-fraud systems use a series of static rules to block fraudulent purchases or activities. These static rules are established buying patterns or behaviors that are known, more often than not, to be linked to fraudulence. For example, most fraudulent transactions are made between 2-4am; therefore, a static rule would be to mark all transactions made during this timeframe as fraudulent. Static rules are one of the simplest ways to prevent fraud. However, many static rules are usually necessary to be effective and can often arbitrarily block valid customers from making purchases. Not only that, fraudsters are aware that these rules exist and change their purchase habits to avoid being blocked by common static rules.
Are static rules outdated? Not completely.
Some static rules usually have little to no room for error, such as possessing over 200 credit cards. These extreme characteristics are rare to find among normal buyers. However, there are advanced anti-fraud measures that incorporate attentive fraud teams with machine learning technology.
Machine learning anti-fraud systems track the behavior of potential customers right before they enter your website and until they complete a purchase. Each customer is given a risk assessment score for review based on their behavior. An expert fraud team then analyzes the report and provides the system feedback, allowing it to learn from and adapt to the habits of your customers–instantly. Anti-fraud systems with a self-learning element are more accurate than traditional anti-fraud methods because of their adaptation speed and ability to analyze each potential customer.
Many countries in Latin America such as Brazil or Mexico, use methods of payment that are native to the region, opening the ecommerce market to unique fraudulent habits. When selling to countries with payment systems different from your country of incorporation, your business should consider advanced anti-fraud systems. By partnering with a payment processing expert that understands the unique payment methods and the fraud tendencies of each country, merchants can sell to the fastest growing ecommerce markets without the worry or the stress on their ecommerce reputation.
Visit the EBANX website to learn about our payment solutions for Latin America.