PagBrasil / Understanding Online Fraud in Brazil
Understanding Online Fraud in Brazil
Brazil is one of the leading countries in the global ranking of online fraud, particularly in the e-commerce environment. A study by Konduto pointed out that in the first quarter of 2017, 18% of the country’s population had personal information stolen online. Furthermore, last year alone Brazil accumulated nearly BRL 70 billion in losses derived from online fraud and scams. When it comes to online card fraud, the country is second only to Mexico on a global scale. Understand the similarities between both countries and why they are leading the ranking, despite lagging behind other countries in terms of e-commerce transaction volume.
Why is Brazil One of the Leading Countries for Online Fraud?
Although Brazil is a very particular market for e-commerce and online payments, it also has some similarities with Mexico, the leading country for card-not-present fraud. Factors such as cultural elements, socio-economic environment and the evolution of the countries’ payment systems play important roles in this scenario.
Brazil and Mexico have the two strongest economies in Latin America, with Brazil leading the ranking. In addition, both countries struggle with enormous social inequality. Because of that, it is common to see people getting creative to make ends meet. Furthermore, the two countries have high criminality rates, which is directly reflected in the e-commerce segment.
However, the main reason justifying the positions held by Mexico and Brazil at the top of the global ranking for online card fraud is the evolution of the countries’ payment systems. Credit and debit cards in Brazil and Mexico are always issued with the EMV technology. Thanks to the requirement of PIN insertion to complete the payment transaction, the chances of physical fraud are greatly reduced. Because of that, fraudsters have massively shifted to the e-commerce environment.
There are different types of online card fraud and we have explained some of them before: card-not-present, friendly fraud, identity theft and card testing fraud. Some are easier to identify and prevent than others, but no matter the industry you operate in, dreaming about a zero-fraud scenario is no more than that, just a dream.
There are solutions out there offering zero-fraud or chargeback insurance, however, as we have explained here, this is not ideal. In addition to eliminating the risks, such option also reduces conversion. The path for healthy and sustainable growth is understanding the problem and knowing how to fight it.
Online fraud is part of the online business and merchants must assimilate the risk to know how to deal with them. A good fraud prevention tool, adapted for the market where you want to sell, such as PagBrasil’s PagShield for Brazil, is a great way of reducing the risks without reducing conversions.