Top 6 Benefits of Outsourcing your PCI-DSS Compliance

Cracking or stealing a cardholder data distresses the entire payment network. Card holders are losing trust in merchants or financial institutions, as their credit can be harmfully affected in a complex manner, taking time to rebuild. Merchants and payment providers’ reliability is being damaged, and they are also being subjected to financial losses.

The Payment Card Industry Data Security Standard (PCI DSS) council was founded by major credit card companies in order to address the growing threat of data breaches among payment cards. Visa, Mastercard and Discover are using the same set of compliance standards, whereas American Express and JCB use different criteria. If the only credit cards you accept as a merchant are Visa, MasterCard and/or Discover, you only need to reference the Visa tables:

Level 1: Merchants processing over 6 million card transactions a year.
Level 2: Merchants processing 1 to 6 million transactions a year.
Level 3: Merchants processing 20,000 to 1 million transactions a year.
Level 4: Merchants processing less than 20,000 transactions a year.

Every business that is accepting, transferring, and holding payment card information is obligated to comply with PCI DSS, a set of global standards that were created in order to keep card holders’ data secure. It contains operative and technical requirements for accepting or processing payment transactions, as well as regulating tech developers of the software and devices used in those transactions.

Managing PCI-DSS compliance is a full-time function for your company. While you have responsibilities to yourself and your customers to shoulder some of this burden, you have much to gain by outsourcing. Today’s business world moves quickly and demands more than ever. To keep up, consider these benefits of outsourcing this critical function.

1. Reduce Scope and In-Scope Processes
Active PCI compliance requires you to heavily invest in continually aligning the network security posture with PCI requirements. When you work with an outsourced compliance provider, you minimize the risk of a PCI related breach on your network. A payment services provider is encrypting your customer credit card numbers at-rest. Ever attempted to face the challenge of provisioning encryption on your databases? This is an experience you definitely don’t want to face yourself.

2. Save Time and Money
You likely process hundreds, if not thousands, of transactions every day. Maintaining a fully in-house compliance function on all of this data takes full-time hours devoted to the task. It costs you the time you could be focusing on building your business and devotes resources to protecting yourself, rather than driving your business forward. If you work with a trusted partner to manage it all, those costs will pay for themselves many times over.

3. Reduce Payroll
The more your sales grow, the more people and time you have to devote to PCI compliance. Not only does this cut into your profit margins, but it also becomes harder to keep finding people with the right skill set and knowledge. Outsourcing this function keeps you from overloading your payroll with defensive costs, and from burdening your recruitment and onboarding teams with hard-to-fill positions.

4. Shift Liability
Data breaches create enormous liability issues for companies every day. By storing your customers’ financial data for compliance purposes, you open yourself up to risk. An outsourced PCI compliance specialist will take on the risk of any breach and cover that risk with their liability insurance. Thus, you protect your revenues and avoid any potentially catastrophic lawsuits that come with any major breach.

5. Preserve Your Positive Reputation
A breach costs much more than money, of course. A business can replace lost funds, and often they would be covered by your commercial liability insurance policy. But you cannot as easily restore a reputation once you have exposed your customers’ financial information to theft. When you outsource PCI compliance functions, you protect your positive reputation against actions from a potential bad actor.

6. Fraud and Risk Management
When applying PCI compliance with your payment provider, you should also examine the fraud and risk management tools that are available via your chosen third party. State-of-the-art fraud and risk management tools are a key benefit of working with a reliable payment provider, since most merchants are not equipped with such capabilities. As part of SafeCharge’s active risk and fraud management services, we monitor our customers’ transactions daily. If we discover suspicious activity, we’ll notify an operator immediately and review the questionable transactions to determine if fraud is at play. Furthermore, we educate merchants on cautious payment processing practices and which documentation they’ll need to minimize fraudulent chargebacks.

As laid out above, PCI compliance demands constant focus, time, and attention. For your business, it creates a sunk cost that only grows with your sales success. That’s why you should look for a partner with expertise and careful attention to detail to both free you up and protect you from disaster. If you’d like to consult about PCI compliance and risk management solutions for your business, feel free to contact me or our support for assistance.

About the author:
Meron Behar, Deputy of Chief Information Security Officer, SafeCharge, a Nuvei company
Meron has a Master of Science degree from the Polytechnic Institute of New York University. He is responsible for all aspects of security and compliance in our company. Those security aspects include policies, network and endpoint protection, security monitoring, and GRC and awareness. His compliance work covers all PCI-DSS components. He has over 20 years of experience in the Security & IT industry, as well as over eight years as a Chief Information Security Officer in financial firms.

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Everything You Need to Know About Present and Future Fraud Management Trends

As part of my role as SafeCharge’s VP of risk management, I was recently chosen to take part in an expert’s round table for payment and fraud challenges faced by those in the gaming industry by leading publication iNTERGAMINGi.

Within the article, there were several insights I provided that I think would be of help to a broader cross-section of industries that are dependent upon the success of online payment processing.

Thus, I would like to use this space to keep companies aware of present-day and upcoming innovations that are set to help in the battle against fraud which are set to come to the fore with the arrival of Strong Customer Authentication (SCA) under the PSD2 requirements.

PSD2 Offers Merchants a Chance to Improve Risk and Fraud Management
The changes enacted under the umbrella of PSD2 will be of considerable significance to merchants, particularly with Europe. With the deadline set for the 31st December 2020, the requirements of the industry-wide regulations will make the payment environment much more secure, reduce fraud levels, and will enable issuers and operators to reduce the number of resources dedicated to fraud prevention activities.

Biometric Authentication
The impending changes will usher in a new era of payment security by facilitating biometric authentication (such as fingerprint or facial recognition). Soon high-risk operators will be able to perform behavioural biometrics risk scoring, which can be used for transaction-risk-analysis exemptions as well as fraud prevention.

While it’s true that the requirements under SCA will increase friction slightly, it will increase approval ratios across the board because issuers will be able to remove several restrictions on their side. By combining biometric authentication with behavioural biometrics verification, all sides of the payments process can dedicate less time and resources to risk and fraud management.

We expect this trend to drive up the significance of mobile payments, whereby solutions such as Apple Pay, Google Pay and PayPal already provide a frictionless transaction experience whilst meeting biometric authentication requirements.

Machine Learning
Another trend set to increase in popularity as a result of the PSD2 directive is the use of machine-learning-powered (ML) fraud management systems to detect even advanced fraud methodologies.

The game-changing element that ML brings to the table is its ability to identify new fraud patterns on the fly and react immediately to them. Traditional fraud rule settings take much longer to identify and then implement, usually leading to considerable losses. Therefore, this feature will dramatically reduce false positives for those that introduce this technology correctly.

While we are not quite there yet, ML will soon be able to identify the correct module and implement the correct subsequent parameters to prevent future incidents. Once we arrive at this level of optimisation, operators will benefit enormously both in terms of fraud-related losses and in expenditure dedicated to its prevention.

We think that a blend of machine learning with a flexible rules and alerts system is the best current approach for high-risk operators.

Smarter 3DS Routing
Another trend that operators are going to need to pay attention to is their 3D-Secure routing. The improvements being made under the SCA/PSD2 requirements are making the payments environment within Europe much more secure. However, they also make them much more complicated.

For that reason, merchants will have to manage their 3D-Secure routing much more effectively, with systems that can automatically flag exemptions. While 3DS2 has removed a lot of the friction associated with 3DS1, on the back end, systems need to make intelligent decisions (powered by AI) regarding routing flow (3DS1 vs 3DS2), with universal acquirer acceptance to improve approval ratios.

With the multitude of possible combinations between these two functionalities, payment providers’ resources will be aimed at optimising the approval ratio between all the combinations, rather than investing more in fraud prevention systems.

Mobile Payments Increase Chances of Detecting Risk
As mentioned, mobile payments are containing to rise due to their increased convenience when it comes to SCA requirements. But operators may well encourage mobile payments for the additional reason that they help to detect risk.

This is because we are able to gather much more information from a mobile payment than we can for a desktop transaction. The device ID detection is also significantly more accurate. Thus, we expect the trend of mobile payments to increase across the board for the beneficial impact on customers and merchants alike.

Increased Focus on Data Breaches
With the new regulation aimed at helped to reduce the number of data breaches, the fines and penalties associated with failure are increasingly harsh. Thus, operators will have to redouble their efforts to ensure that their payments infrastructure is as secure as possible.

Outages pose one of the biggest threats. When it comes to payment security solutions, they should empower businesses in the sense that they provide mitigation against any possible danger to service continuity.

Sophisticated denial of service (DDoS) attacks present one of the biggest threats in that regard. In the event of such an attack, a secure environmental architecture that enables high performance and that continuously maintains a business continuity plan (BCP) is crucial.

Another critical aspect that merchants must turn their attention to is data security. Many hand off their PCI data security requirements to third-parties such as ourselves. But operators should understand that there are best practices that their payment services providers such be adhering to, including but not limited to: perimeter defence, role-based access control, database and endpoint security and security monitoring to detect anomalies and policy violations.

It’s a continuous and evolving challenge. However, our team of security experts continually improve security and provide a high level of assurance to our clients.

Final Thoughts
The future is exciting when it comes to fraud management in the context of payments. Soon machine-learning-based processing and routing systems will make even the most sophisticated fraud methodologies obsolete. However, with increased security in the payment environment, comes increased complexity.

Increasingly, high-risk operators will have to lean on the expertise of payment solution providers such as SafeCharge to ensure they maintain a frictionless and secure experience for consumers.

If you have any questions, or have any concerns regarding your future risk and fraud management plans, then don’t hesitate to message me directly and I’ll gladly answer your questions and provide advice concerning the risk management systems in place for your business.

About the author:
Noam Grinberg, VP Risk Management, SafeCharge, a Nuvei company
In his role as the VP of Risk Management at SafeCharge, Noam Grinberg is responsible for driving and implementing the risk strategy for the payment tech company. Noam’s areas of expertise are Fraud & transaction laundry prevention along with managing Credit risk. Thanks to his in-depth knowledge and vast experience, Noam has always been the go-to guy for risk management over his 11 years career at SafeCharge.

 

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Harnessing the future of digital commerce with tokenisation

 


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The Secrets Behind High-Converting Checkouts

High-converting checkouts are the dream of every business owner. With the average cart abandonment rate hitting 69.57% according to research undertaken by the Baymard Institute, it’s clear that online retailers that get the checkout process right will significantly increase their revenues.

After accruing years of experience in the payments industry, and through hundreds of conversations with the merchants we serve, I’ve come to the conclusion that the most significant factor in high-converting checkouts is trust. That said, back-end conversion-boosting tools and fraud management software are also crucial components in driving up successful transactions.

Bearing that in mind, let examine those elements in closer detail.

Improve Consumer Trust in the Payment Process

We’ve found that when online retailers try to optimise their checkout process, the most significant factor is trust. Nearly a fifth of all cart abandonments are a result of a customer not trusting a website to handle payment information.

By working hard with our clients, we’ve developed a solution that helps to build trust to eliminate carts abandoned over this specific issue.

Localised Payment Pages
A customer is going to struggle to trust a company that’s unable to display prices in their local currency or display vital payment instructions in the local language. If a customer cannot understand specific factors on the payments page (such as currency or language), they are almost certain to abandon their purchase in favour of a retailer they can trust.

Therefore, payment pages that dynamically adapt to a user’s location using IP address identification can dramatically increase conversions. By implementing localised payment pages, you can increase levels of consumer confidence, and therefore checkout conversions.

Trusted Alternative Payment Methods
As part of your localisation strategy, you need to have a checkout process that features the most prominent local payment methods first. If customers can’t quickly find their preferred payment method, they’ll have their confidence and trust shaken.

For instance, if you fail to offer WeChat and Alipay to consumers from China, your conversion rates will suffer as 65% of Chinese consumers prefer using these mobile payment apps. By contrast, in the EU countries of Hungary, Romania, or Slovakia, the Cash on Delivery (COD) payment method accounts for 54%, 69%, and 72% of all online transactions in these countries respectively. If you fail to prominently display a COD option at checkout, you’ll likely lose the purchase.

Utilise a Branded Checkout
One of the worst actions you could take as a retailer when it comes to trust is taking them off your website to complete a purchase. While it’s typical to use a third-party hosted checkout solution for PCI-compliance purposes (as well as superior performance), if they land on a checkout page that looks completely distinct from your website’s branding, they are almost certain to abort.

Consequently, it’s prudent to implement a third-party solution such as SafeCharge’s checkout page that comes with a theme editor. You can utilise the theme editor to customise the checkout page with your branding to ensure a seamless transition rather than undermining customer trust at the vital moment of entering payment details.

Leverage Technological Innovation to Increase Conversions

Even if a customer trusts your website and proceeds to make a payment, it still might end in a lost sale. Global approval rates are hovering at 85%, leading to a loss of sales worth over $100 billion each year. So, what can you do to drive up higher approval rates?

The best option is to leverage cutting edge technology to better manage your traffic — both on the front end and behind the scenes between issuers and acquirers.

A/B Testing
A/B testing helps you to test which of your page designs are the highest converting simultaneously. By continuously analysing and improving, you can lower the number of cart abandonments. In a recent webinar, my colleague Omri Dubovi, our VP Product Management, ran through the example of one SafeCharge client that was able to reduce abandonment by 12% through A/B testing alone.

While A/B testing is an excellent best practice within one market, it becomes a necessity when operating in multiple countries. A one-size-fits-all approach simply doesn’t work with international operations, due the number of socio-cultural differences across different regions. It could be the case that a high-converting payment page layout in one country is actively harming sales in another. Thus, you need to continuously test to see what works well and what doesn’t.

Decline Recovery
Despite your best efforts, not every transaction goes to plan. How your website reacts and manage these declines can be critical in saving the sale from abandonment. In many cases these declines are legitimate (such as insufficient funds). With decline recovery in place, your payments page will return with the decline page, which states the reason for the decline and how to continue the purchase suggesting the most relevant alternative payment method to this consumer at that given moment.

By saving the details of the cart and your customer’s information, you can keep a decline as frictionless as possible and allow them to reattempt the checkout a mere matter of seconds later, driving up conversions.

Partial Approval
A feature of decline recovery is partial approval. This feature approves part of the transaction for which the issuing bank is happy to approve while presenting alternative options to complete the purchase. Most traditional solutions would merely decline the entire transaction. However, with SafeCharge’s solution, e-commerce merchants can still retrieve either part of or the total value of the sale.

Optimised Routing Between Banks
In some scenarios, everything is correct on both the side of the retailer and the customer, but the transaction isn’t approved. In many instances, this is a result of poor routing choices. That’s why you need to use a payments provider that utilises intelligent cascading routing. This is a process whereby smart payment engines use dynamic routing to present transaction to the correct acquiring partner, increasing your chances of having the payment approved.

Technological Innovation in Numbers
By implementing these SafeCharge solutions, customers have seen a dramatic improvement in their conversion ratios:

  • 5% to 8% of transactions were saved using SafeCharge’s decline recovery tools
  • 15% decrease in total cart abandonments
  • 5% increase in sales volumes via partial approval tools in the UK and Italy
  • 3% increase in approval rates through correctly managing the traffic between different providers

 Use Strong Customer Authentication as a Conversion Boosting Tool

With the introduction of PSD2, many customers fear that the additional authentication requirements may impact conversion rates. However, here at SafeCharge, we see them as an opportunity to boost conversion rates.

Firstly, we believe that the issuer might ease the risk checks on their end for authenticated transactions which will lead to higher conversion in total. Furthermore, the UX associated with 3DS has dramatically improved. With mobile compatibly and advanced authentication methods, the secured user experience should massively improve, bumping up successful transactions.

Lastly, the enhanced data provided by these new solutions will allow merchants to carry out more detailed analysis and implement their findings for improved conversion purposes.

Implement Tokenisation to Prevent Fraud 

Remember, it’s not all about conversion. Losses as a result of fraud are growing by 15% CAGR per year, with 73% of issuer fraud losses due to Card Not Present (CNP) fraud. Token technology can help to mitigate some of the more prevalent methods used to commit fraud.

Firstly, the rich data collected within the token improves risk decisioning, and automatic updating of token details reduces declines due to expired cards. Another critical feature of tokenisation is that customers can continue to shop even if their token has been breached on another site.

Token use is restricted to device, merchant, transaction type or channel helping to prevent fraudulent transactions. Finally, the token also generates a dynamic cryptogram for every single purchase, making it incredibly difficult for fraudsters to operate.

Implement a Premium Payments Solution to Skyrocket Conversions

As demonstrated, our payment solutions have an excellent track record when it comes to reducing cart abandonment and increasing approvals.

We’ve helped our clients secure an increase in approval rates by an average of 7% to 9%, by providing dynamic locally-displayed information, industry-leading decline recovery protocols, and intelligent authentication and anti-fraud technology as part of our all-in-one checkout page.

If you need help in building a high-converting checkout process for your online business, feel free to contact me to discuss options for your online business in private.

About the author:
Guy Douek, SVP Business Operations
Guy is responsible for the entire strategic direction as well as commercial and operational management of SafeCharge’s merchants, channels and partnership. Guy has over 10 years’ experience in diverse roles in the various payments functions across both the merchants side as well as a payment provider.
Guy joined SafeCharge from Gett (a global ride hailing company) where he was a Global Head of Payments. Previously he was Head of Risk (alternative payments) at Worldpay.

 

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Why your Business Needs Automated Payments Reconciliation

Accounting functions should work to make your company operate smoothly and efficiently. When you run manual reconciliations on your ledger, though, you utilise your resources in the most inefficient way possible. You not only open yourself to human error, but also limit the time you have to deal with any problems that may arise. Automating your reconciliation process alleviates both of those issues and makes your business more nimble as a result.

Manual Processes Waste Time and Effort

A manual reconciliation process is labour-intensive. Your accounting staff needs to work through bank statements, sales records, invoices, and cost statements to line up your payments and ensure each line item matches up, for both income and outgoings. Even for a small business, this represents hundreds (or even thousands) of transactions every month. Working through this manually takes a long time ­­­– and opens the door for the odd inevitable human error.

Today’s software can cut right through this process. An integrated payment system with accounting functions can run in the background to reconcile payments for you. At any time, you can identify costs accrued and expected revenue, on both an individual transaction basis and across a time period such as a calendar month. Thus, it frees you and your staff to focus on core business activities and handle what really matters.

One of the most significant advantages of having a reconciliation management system, is the fact that it enables the merchant to investigate and resolve customer complaints about missing funds quickly and efficiently. A reconciliation management system also enables merchants to discover technical payment processing issues promptly, since the activity is being monitored daily.

Value in Automating Reconciliation

Automating your processes addresses both sides of efficiency: the time required and the accuracy of the process. Where people get tired and make mistakes, accounting technology does not. The number-matching and item-matching software work through the process faster than any person can physically manage, without tired eyes missing a problem along the way. It will also continually identify exceptions during the process, leaving you to examine only the potentially problematic line items.

Herein lies automation’s greatest benefit. It allows you to rapidly identify and rectify errors or missing and unexplained transactions, rather than working through everything that has gone correctly. It makes sense to let the technology deal with the mundane so that your brightest minds can focus on the vital aspects of their respective roles.

The SafeCharge Reconciliation Manager generates a weekly/monthly report of the periodic activity that is being monitored. This is a crucial feature for our clients, as it gives them a very detailed overview of their entire activity handled by us.

Ensure Integration Is Complete

Of course, for everything to work, comprehensive integration is the key. You need to work with a payment services provider that can not only pull in all of your accounting software, but also function seamlessly within your environment, linking across each distinct business function. Ideally, this should operate as part of your payment system to immediately and automatically reconcile each day’s inputs and outputs.

Remember, you’ll still need to manage and run checks against your system. When your payment services provider delivers such a product, it should give you the tools and metrics necessary to track performance and give you peace of mind in your day to day functionality. This focuses your attention on the exceptions rather than the norms and allow you to run your business effectively rather than chasing numbers.

SafeCharge Reconciliation Manager has been recognised as a high-quality and technologically-advanced solution by both external companies and independent associations.

In a recent case study, Gett, a leading corporate transportation company, described their reconciliation challenges and how SafeCharge’s reconciliation service has streamlined their processes and ensures that all payments are received correctly and processing fees are in line with related service contracts. “Our business model demands an accurate reconciliation against banks and internal systems, to then pay the drivers”, said Gett’s global head of payments. “Without an automated solution, this would have been unsustainable in the long run. With a small team we can now cope with the highest degree of payment processing, without worrying about losing revenues due to mismatches”.

SafeCharge Reconciliation Manager was awarded ‘The Best Product’ in the Lion’s Den at the 12th Airline & Travel Payments Summit!

Automation of all kinds can handle the numerous mundane tasks each business undertakes every day. By automating your reconciliation process, you can hand over a task that machines are better at accomplishing, and free up your people to do what they do best. Schedule a free consultation with one of our payment reconciliation specialists and find out if you are losing revenue due to mismatches and reconciliation errors.

About the author:

Koby Sebbag, Banks Support and Matching Department Manager, SafeCharge, a Nuvei company
Koby is a payment operations expert with over ten years of experience in the fintech industry. He is a veteran employee at SafeCharge, starting his journey in 2007 as an account manager, and managing a successful bank operation & reconciliation division in the company. In his job, Koby supports the organisation’s aggressive business growth, leads complex financial operations of worldwide payment solution partners (credit cards, alternative payment methods and e-wallets), and ensures the smooth operation of payment services for complex businesses in various industries and geographic locations.

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5 Ways to Protect Your Business from Chargebacks

One of the side effects of the Covid-19 crisis in the eCommerce sector, and predominately in the travel industry and its related segments, is chargebacks. Chargebacks on credit and debit cards can be some of the most frustrating experiences you have to go through as a merchant. You’ve made a sale and accounted for the revenue, only to be forced to return the money and pay a chargeback fee on top. It also damages your relationship with your bank and your processing company. While some returns are inevitable, you can take steps to reduce chargebacks for your business.

1. Post Your Return Policies

Whether you are operating in-store, online, or both, a written return policy is your best friend. It gives your customers notice that you place limits on how and when they may return items. In addition, it allows you to point to that policy if someone attempts to process a return outside of your terms. This simple step can protect you from having to process a return-based chargeback weeks, or even months, after the customer made his or her initial purchase.

2. Clearly Describe Purchases

When you process a payment, make sure you include a product description with the receipt. The clearer and more precise that description is, the more easily a customer can recall the charge later. A vague description leaves you vulnerable to customers claiming no memory of receiving the product or service you provided. By detailing what your customers buy, you protect yourself from this kind of friendly fraud.

3. Maintain Records

The purchase description is only half of the equation. The more carefully you maintain your own records for purchase history, shipments, and inventory, the more thoroughly you can protect yourself from chargeback demands. You should also retain records on the chain of custody, so you can track where a product was at every step, from inventory to delivery. Stay on top of your business records to limit the number of chargebacks you are left unable to dispute.

4. Follow Protocols

Having a plan to prevent credit card fraud only helps if you follow it. Your processing company will set guidelines such as checking CVV codes, confirming signatures, and confirming matching information on card-not-present transactions. You should also have internal policies designed to confirm the identity of your customers who use cards for payment. Do not treat any of these as optional, even when doing so would save time.

5. Be Proactive on Fraud Detection

Invest in a processing provider or outside service that can identify suspicious payment patterns in your business. While you cannot catch every instance of a fraudulent payment made to your business, you have no excuse not to at least try to do so. Sophisticated tools are now available that can flag activity that might otherwise slip past your attention. If you identify these patterns right away, it can save enormous headaches later. Visa Merchant Purchase Inquiry is a perfect example. It enables signed-up merchants the ability to respond to cardholder inquiries around unrecognised transactions (and other dispute categories) PRIOR to a chargeback/dispute by providing relevant supplemental merchant information, in near enough real-time.

No business will ever eradicate chargebacks completely. Even so, you should take every step you can to minimise the problem. Every chargeback you avoid is a positive step for your bottom line and your business relationships. Should you feel you need to lower chargebacks or improve the fraud management system in your business, contact me today. The risk management team of SafeCharge and I are ready to listen, and provide solutions to your specific issues.

About the author:
Noam Grinberg, VP Risk Management, SafeCharge, a Nuvei company
In his role as the VP of Risk Management at SafeCharge, Noam Grinberg is responsible for driving and implementing the risk strategy for the payment tech company. Noam’s areas of expertise are Fraud & transaction laundry prevention along with managing Credit risk. Thanks to his in-depth knowledge and vast experience, Noam has always been the go-to guy for risk management over his 11 years career at SafeCharge.

 

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How Can Merchants Benefit from Latin America eCommerce Market?

Finding room to grow in a market used to present a considerable challenge. Today, with the world accessible from almost anywhere, the challenge is no longer whether you can grow, but which markets present the best opportunity for you. As you look to expand, Latin America offers tremendous growth potential for all kinds of companies. The key to this growth is the proliferation of smartphones, which facilitate the immediate purchase of products and services with a few taps of a screen. While smartphone ownership penetration is high throughout Latam, there is significant variation among countries when it comes to using these devices to make online purchases through shopping apps. For example, the highest usage of shopping apps on smartphones is in Brazil, coming in at 83%. By contrast, the lowest rate is in Chile, with 44% of those with smartphones using their device to shop. Peru comes in at second to last, with 50%.

Source: Mastercard Whitepaper December 2019: Examining the Latin American and Caribbean E-commerce Market

Latin American countries have exhibited a significant growth trend in online sales in recent years. While that growth is expected to slow, Statista estimates sales to Latin America will grow by 13% in 2020, and another 10% in 2021. This surge is thanks to, in large part, a middle class that has doubled in size during the last decade, creating more potential customers than ever before. If you are looking for paths to new customers, this data suggests that Latin American markets present a powerful opportunity for you – if you know how to market and sell effectively there, of course.

Distribution of e-commerce spending in Latin America in 2018 and 2022, by payment method:

In 2018, digital wallets such as AliPay or PayPal accounted for 15% of Latin America e-commerce spending. This share is set to increase to 18% in 2022 (Source: Statista 2020)

Latin American Challenges

Of course, Latin America does not consist of a single, homogeneous area. Countries differ in the kinds of products they purchase, the ways they shop, and even the languages they speak. Connecting to customers in these countries means overcoming language and dialect barriers, as well as cultural differences.

You have to be able to work with the currency of each country, and focus your marketing efforts on segments where you can achieve the highest rates of sales conversions. Many of the Latam countries do not process under Visa and Mastercard directly. Instead, they use local interchange agreements, which are generally aligned to the schemes’ rules, but apply their own interchange fees, timeframes and chargeback rules. APMs for Cash-In services are still widely preferred in many of the Latam countries, and local eWallets are also preferred by the consumers in the region as they are more comfortable using them. The settlement period is incredibly variable throughout the region, while Mexico settles T+1 as the U.S does, Argentina and Brazil may only settle once a month.

Merchants who wish to penetrate and grow within any of the Latam markets, has to both understand the target market and work with vendors and business partners that possess the necessary experience and capabilities to help them reach their sales potential.

Your Opportunity

Once you’ve made the decision to expand into Latin American markets, you need to do your research. Study the markets to find where the best opportunities lie for the products or services you sell. Depending on which countries you identify, you will need to develop an online marketing strategy that connects with your potential customers. Take the time to learn about local customs, nuances to local language, and specific challenges that customers are likely to present to you. The more you can speak to what matters to a customer base, the more effectively you can grow in that market.

The largest online market in Latin America is Brazil, with almost 50% of the region’s ecommerce sales. Mexico is also a market with significant growth potential that has attracted many international merchants in recent years.

Frequency of online purchasing by country:

Source: Mastercard Whitepaper December 2019: Examining the Latin American and Caribbean E-commerce Market

Marketing can get you as far as bringing in potential customers. But to convert and grow your revenue streams, you still need to understand what payment methods they prefer and ensure you are equipped to process those payments. The right processing partner should come ready to handle the basics like conversions, regulatory hurdles, and accepting local forms of payment. Furthermore, they need extensive experience in limiting the kinds of fraud that foreign transactions sometimes enable. Make sure you are working with a partner ready to elevate your business as it explores new customer markets and territories.

SafeCharge has a Latin America team of payment experts located in Mexico who specialise in providing services to merchants that have existing ecommerce activity in this continent, or wish to expand their activity into this region. The Latin America team and I, as the regional director, have local knowledge of the culture, alternative payment methods, and the ways in which business is conducted within this market. The chances to gain the trust of Latin America online shoppers and grow revenues in this region increase when your payment provider is able to combine knowledge of the local payment infrastructure with international technology and acquiring services to facilitate frictionless payments. Contact me today and let’s discuss how to optimise the payment activity of your business in Latin America.

About the author:
Javier Guerrero, Managing Director Mexico, SafeCharge, a Nuvei company
In his role as Managing Director Mexico, Javier is responsible for the strategic direction of SafeCharge’s merchants, channels, and partnerships in both Mexico and other South America countries. Javier is an esteemed finance executive with 33 years of experience spread across global consumer banking and technology institutions. He also has extensive knowledge of local markets, competition, and authorities, which supports SafeCharge’s merchants’ growth within Latin America countries.

 

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Welcome to our new series

Each episode will focus on the most current trends and innovations in payments and provide tips and tools to assist you in optimising your business’s payment strategy. Our experts share their knowledge and valuable insights empowering you to leverage your payments functions to drive results.

Episode One:
How dynamic currency conversion enhances your customers’ payment experience

Hosted by Omri Dubovi, VP Product Managment


To find out more about DCC and other solutions, visit our Solution Portfolio, or contact us.

Stay tuned

Our next episode, hosted by Adi Cahana, Product Lead, will explain how to easily accept payments, even if you don’t have an online store, by simply using Paylink. This easy to use, feature-rich solution enables businesses to accept instant payments with no technical integration and fast setup. Find out more about Paylink’s various functions which have been proven to increase revenue and lower cart abandonment.

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DCC

Episode One:
How dynamic currency conversion enhances your customers’ payment experience

Hosted by Omri Dubovi, VP Product Managment


To find out more about DCC and other solutions, visit our Solution Portfolio, or contact us.

Stay tuned

Our next episode, hosted by Adi Cahana, Product Lead, will explain how to easily accept payments, even if you don’t have an online store, by simply using Paylink. This easy to use, feature-rich solution enables businesses to accept instant payments with no technical integration and fast setup. Find out more about Paylink’s various functions which have been proven to increase revenue and lower cart abandonment.

ENJOYED THIS POST? SHARE THE LOVE

SafeCharge Limited is an Electronic Money Institution authorised and regulated by the Central Bank of Cyprus and is a principal member of Mastercard, Visa and Unionpay International (CUP). SafeCharge Financial Services Limited is authorised and regulated by the Financial Conduct Authority as a Payment Institution. Both SafeCharge companies are wholly owned by SafeCharge International Group Limited.