Why fraud detection matters

Several issues haunt the LATAM industry regarding payments: low acceptance rates, high payment processing costs, slow processes, and dealing with integration issues for different payment methods.

Several issues haunt the LATAM industry regarding payments: low acceptance rates, high payment processing costs, slow processes, and dealing with integration issues for different payment methods. With about 30% to 40% denied transactions, merchants lose millions by blocking good customers and paying fraudulent transactions. Preventing fraud by prior detection is not only possible but achievable and urgent. Furthermore, disposing of a good payment stack flow is as necessary as fraud detection and grating customers’ support and security.

What are Payment Frauds

Payment frauds are transactions made without the cardholder’s consent. Most cases happen due to stolen credit card details, checks, and debit card information. Criminals range from amateur card testers — most likely to be caught by anti-fraud systems — to experienced ones, whose attacks mimic specific client information (location, browser language, and others), making it much harder to detect. Usually, online payment fraud is a fast method of money laundering, and reality does not indicate it is decaying soon.

What is happening in LATAM

Worldwide, merchants will lose $130 billion to online payment fraud between 2028 and 2023 ¹. Specifically, 1.3% of all revenue is lost to fraud in LATAM, while 2.8% of transactions are prevented due to fraud suspicion. About 20% of orders are reviewed manually, and 20% of reviewed orders are declined ².

These statistics represent an alarming situation. Dealing with the aftermath of fraudulent transactions is not only time exhausting but dangerous for online sellers. Customers tend to blame brands for lack of security in their e-commerce, putting great customer support an imperative for any online business. Customer loyalty depends on good fraud management on the merchant’s side.

Merchant’s side

There will always be cases of card-not-present (CNP) fraud in e-commerce checkouts, which makes fraud detection investment a need for every business. Merchants lose several amounts of ordered merchandise and have to deal with high fees of chargebacks from their payment providers and customers (chargebacks also represent 0.6% of the total revenue in LATAM²). Fraudulent transactions also impact negatively the overall online business reputation.

Merchants can either choose if they have the necessary time, data, and qualified staff for developing their own anti-fraud management or if outsourced solutions might be a better case for them. Either way, some points must be considered, such as the differentiation of what needs human review and what doesn’t — ideally reducing operational costs and boosting automation; IP analysis, i.e. checking geolocation and whether the user is using VPN, proxy, emulators, privacy software, or not; and that sophisticated criminals impersonate buyers’ behavior and even have customer information at their disposal.

Customers’ side

On the other side, customers have to deal with the frustrating process of calling banks to cancel credit cards and even the much more desperate issue of losing money while all the bureaucracy is on the way. Waiting for chargebacks is also a pain point, making customer loyalty to the brand much apart.

However, there are some preventions merchants should inform buyers of. Choosing just one credit card for all online purchases is ideal since some banks offer cards meant to be used online, making it much easier for anti-fraud systems and canceling the card if needed. Using unique and effective passwords, security software alongside regular OS updates also protects customers’ devices from invasions and, thus, information leaking.

Yuno’s Solution

Yuno’s Unified Solution offers several tools to ease merchants’ payment orchestration in a user-friendly environment making an easygoing flow a reality. As a payment integration software, Yuno cares about bringing a safe environment for merchants and ultimately safety for their customers. An intuitive dashboard provides useful information for teams to analyze how payments are being denied and processed. Amongst others, Yuno offers:

  • Global and Local Payment Ecosystem;
  • Merchants’ access to their Target Audience’s preferred methods;
  • On-demand free addition of payment methods if they are not available yet;
  • Tools to group and conciliate transactional data through the dashboard, consolidating analytics, sales, and declines;
  • Smart Routing, quickly processing payments and offering a seamless one-click experience;
  • Fraud Management and Tokenization, with a PCI Level 1 compliant delivering a centralized vault for recurring payments.

Check our article on Unified Payments for your Business with Yuno to learn more about our approach and how we are revolutionizing payment orchestration in LATAM.