The Clearsale Blog

[Country Profile] E-Commerce Fraud Risk: Mexico

[Country Profile] E-Commerce Fraud Risk: Mexico

E-commerce has made our world smaller — allowing online merchants to sell internationally almost as easily as they can sell domestically. But as merchants expand, they need to be aware of the individual fraud risks of each country in which they sell. And Mexico is no exception.

While approximately 80% of online purchases in Mexico are legitimate, there’s some bad news that’s concerning to merchants:

Chargeback rates in Mexico reached 3 times the global average in 2015, and false decline rates exceeded twice the global average. And customers are worried, too. Approximately 78% of internet users in Mexico are concerned about identity theft that stems from increasingly frequent data breaches and leaked personal information.

As a result of the high fraud levels, many merchants may be reluctant to accept transactions that initiate from Mexico — or to even do business there.

Let’s dive into the riskiest industries and payment types in Mexico and learn what merchants are doing to confidently expand into this country.

What Risks Do e-Commerce Merchants in Mexico Face?

Higher Fraud on Smaller Purchase Amounts

Approximately 50% of e-commerce purchase complaints were for amounts of less than 200 pesos (roughly $10) in July 2018. The majority of complaints were related to digital purchases — like downloads, music and movies — and charges on private transportation platforms like Uber.

Credit and Debit Card Fraud

E-commerce customers in Mexico prefer using cash-on-delivery payment methods over credit cards.  

They’re also skeptical about using debit cards: 28% of citizens believe the banks’ security systems for online transactions are currently insufficient, and they’re concerned for good reason. In 2014, fraudulent charges on credit and debit cards totaled more than 5 billion pesos (approximately $260 million) — 3 billion pesos of which were returned to cardholders.

While credit cards have traditionally been the most susceptible to fraud (accounting for 48% of the total fraud cases in 2014 - the rapid increase in cash alternatives has meant fraudsters are exploring new ways to leverage vulnerabilities. As a result, debit card fraud has risen substantially in the past several years in Mexico, growing from 6% to a staggering 17% in 2015.

Consumers are asking banks and card issuers to help minimize fraud, by letting customers set restrictions on how their cards are used. This includes limiting single-purchase amounts, restricting spend in specific countries and notifying customers by text each time their card is used for a purchase.

Mobile Payments

Mexico boasts a fast-growing smartphone market; so it makes sense that as a result, mobile payments are on the rise. Currently, approximately half of mobile users turn to their devices to make purchases — and even more research their future purchases on their phones. With this increase in popularity, merchants can expect fraudsters to increasingly target the relatively unprotected mobile channel and take advantage of its authentication and verification challenges.

Industries Most at Risk

When it comes to vulnerability to fraud and chargebacks in the Mexican e-commerce market, these two industries are especially susceptible:

Travel and Transportation

With its robust tourism industry, Mexico is easily one of the most visited countries in the world. To keep pace, the airline and overall travel industry have become two of the main drivers of e-commerce innovation. As a result, they’ve also become a target for fraudsters. Airplane and bus tickets are frequently targeted for fraud, and the incidence of fraud rises significantly when tickets are purchased just days or hours in advance.

Consumer Electronics

Fraudsters in Mexico commonly target high-value electronics, where they can take advantage of a robust secondary market to resell stolen goods at near- purchase prices.

How e-Commerce Retailers Selling in Mexico Can Protect Themselves

Mexico is home to more than 15.9 million online shoppers, and e-commerce sales are projected to exceed $14 billion in just a few years, which makes Mexico a hot market that many e-commerce merchants want to take advantage of. Unfortunately, it’s not a market without fraud risk.

Approximately 14% of orders in Mexico are rejected due to suspicious of fraud and 2.2% of sales result in chargebacks — both the highest rates in all of Latin America. But can e-commerce merchants find effective fraud prevention measures that will help protect them from this risk?

With extensive experience in the high-risk markets in Latin America, including an 85% market share, ClearSale is ready to help. Our unique approach to fraud prevention results in some of the lowest levels of false declines and highest approval levels in the industry. Contact one of our seasoned analysts today to learn how you can confidently grow your business in Mexico.

New call-to-action

You may also like

Country Profile: The Guide to E-Commerce in Canada

Country Profile: The Guide to E-Commerce in Canada

Canada is the logical next step for a U.S.-based e-commerce business looking to expand internationally, or for any e-commerce merchant interested in growing its footprint in North America.

Country Profile: The Guide to E-Commerce in the United States

Country Profile: The Guide to E-Commerce in the United States

In the world of e-commerce, one market looms larger than the rest: The United States of America. The U.S. has long enticed businesses as the land of opportunity.

E-Commerce Fraud Trends & Tips: Argentina

E-Commerce Fraud Trends & Tips: Argentina

Latin America continues to be a global hotspot for e-commerce retailers, thanks to rising internet penetration rates and more and more consumers going online. Argentina is no exception, with..

Global Markets Watch: The 10 Hottest E-Commerce Countries in 2020

Global Markets Watch: The 10 Hottest E-Commerce Countries in 2020

Cross-border e-commerce continues to grow at exponential rates and shows no signs of cooling off anytime soon. With global online sales expected to reach a mind-blowing $4 trillion by 2025, online..

Country Profile: The Guide to Ecommerce in Mexico

Country Profile: The Guide to Ecommerce in Mexico

¡Bienvenido a México! The digital economy south of the border is growing by leaps and bounds. For the ecommerce retailer, Mexico represents an exciting opportunity to enter a new market of..

Country Profile: The Guide to E-Commerce in Argentina

Country Profile: The Guide to E-Commerce in Argentina

Latin America has become a global hotspot for e-commerce investment. Internet penetration rates in the region are climbing, the number of mobile users is skyrocketing, and more and more Latin..

Country Profile: The Guide to Ecommerce in Australia

Country Profile: The Guide to Ecommerce in Australia

This guide covers everything you need to know to get started with ecommerce in Australia.

We’ll dive into an overview of the Australian market and Australian customer behaviors. Then we’ll look at..

From Singles’ Day to El Buen Fin: Online Shopping Holidays Around the World

From Singles’ Day to El Buen Fin: Online Shopping Holidays Around the World

Holiday shopping is big business in the United States, and the 2019 season was no different. Even with six fewer shopping days between Thanksgiving and Christmas, U.S. consumers managed to spend a..

How to Create an Effective Cybersecurity Routine for Your E-Commerce Business

How to Create an Effective Cybersecurity Routine for Your E-Commerce Business

Imagine a situation: a long-time client of yours sends you an email asking if you received the money in your new bank account.

Want to write
for our blog?

Please review our writers' guidelines
https://www2.clear.sale/press/clearsale-guest-blog-guidelines
and then email guestwriter@clear.sale with your pitch!

Subscribe to our blog