In an era when more and more of our daily routines are embarking on a digital metamorphosis, it is key for merchants to know how to ride the digital wave. The ripple effect of this phenomenon has already had influence on global markets. Consider Latin America, with its eCommerce as one of the fastest growing in the world. The region’s sales are expected to reach $72 billion by the end of the year – a 19% increase from 2016.1 This growth stems mostly from markets like Brazil, Mexico and Argentina, where customers are wading further into the waters of the eCommerce market, carrying out more and more of their purchases online.
For merchants, the changing tides presents a challenge. It comes as no surprise that the transition into the digital landscape can often be overwhelming; you must expand your business into new channels to keep up with customers’ demands, while at the same time being savvy to ward off the threat of online fraud.
While fraud is not a new obstacle, new platforms and interfaces allow more opportunities for fraudsters to target merchants and consumers alike. Below are a few tips on how to sink or swim in the wave of online expansion.
- SINK: Falling behind on market trends can only hurt your business. As consumers move towards digital platforms for their making purchases, it is the merchant’s responsibility to meet their demand in order to stay competitive and retain customer loyalty. Rejecting the digital shift risks alienating customers and reducing potential revenue.1
- SWIM: Giving consumers the option to operate through mobile channels will likely increase activity and revenue for your business. According to the 2017 Visa Online Fraud Report for Latin America, currently 32% of merchants have reported owning a website and an app to support mobile commerce activities, while 53% are exclusively using a mCommerce website.1
- SINK: Not staying on top of account protection and fiscal accuracy are poor business practices that are bound to cause trouble at one point or another. Small mistakes in these areas can happen to anyone, especially to businesses that rely heavily on manual review— process of reviewing and authorizing online orders manually. Of online orders placed, currently Latin American and Caribbean merchants reported a chargeback rate of 1.7%1, a manual review rate of 28%1, and a rejection rate of 9.2%1. This means that businesses are potentially sacrificing a significant portion of valid orders, thereby alienating good customers and reducing potential revenue.
In addition, with the rapid growth of mCommerce, which is expected to more than triple from 2015 to 2020 up to US$ 16.6 Billion2. We see that, while 67%1 of merchants in the region report that they screen for fraud in the mobile channel, the methods are not specifically tailored to accurately detect mobile fraud.
- SWIM: Opting for automated detection tools is an easy way for merchants to improve both accuracy and efficiency within their businesses. Automated detection tools can screen orders in real time to accurately distinguish genuine purchases from fraudulent ones and can also help increase revenue, improve productivity and reduce fraud-related costs, all while enhancing the customer experience.
Visa’s 2017 Online Fraud Report for Latin America highlights key trends and challenges facing Latin American and Caribbean businesses, and provides insights on how to best help businesses ramp up their fraud management efforts.
(Views and opinions expressed in this article are my own.)
1 Visa, 2017 Online Fraud Report for Latin America (CyberSource, 2017)
2 Euromonitor International 2015