At this year’s summer Olympics in Brazil, eCommerce retailers and elite athletes will have one important thing in common: opportunity. That’s because athletes and online retailers alike will also be hunting for gold and silver. For merchants, it will come in the form of the payments consumers will be handing out from their pockets via Brazilian digital sales channels. The stakes could not be higher; Brazil’s 2016 retail eCommerce market is estimated to be worth over $20 billion.
However, the Rio Olympics also offer more sinister parallels as well. Many online retailers are wary of Brazilian fraudsters, resulting in hesitation to take full advantage of the country’s market. The result is that – like Russian track & field athletes who saw their opportunity stripped via a blanket competition ban brought on due to a fear of doping – retailers face the prospect of their own chances to make the most out of the 10th largest eCommerce market being taken away over fear of fraud.
Brazil is not nearly as fraudulent as retailers fear
Denying athletes the opportunity to compete in the world’s premiere athletic competition based on speculation is causing huge worldwide consternation. Ecommerce merchants missing out on the lucrative Brazilian market over fraud concerns should be feeling the same thing towards their own operations. In fact, internal Riskified data shows that over 82% of online orders placed from a Brazilian IP address are safe. That means if you are an online merchant accepting fewer than 4 out of 5 orders from Brazil, you’re leaving money on the table.
Placing a blanket ban on orders – or athletes – from any particular country is sure to result in many false positives. In fact, for orders placed from Brazilian IPs, Riskified approved 85% of orders that merchants had planned to otherwise decline. It’s impossible to overestimate the harm these false positive declines do to retailers’ bottom lines. Research of US consumers by Javelin Strategy showed that 66% of cardholders falsely declined via a digital channel either limited their patronage or completely stopped shopping with the declining merchant.
Understanding fraud patterns in Brazil
With the Olympics going on, it’s even more important for online retailers to understand the fraud patterns of the Brazilian market. For example, in the short term, some 400,000-500,000 international tourists are expected to flood the country, not taking into account the more than 10,000 athletes and coaches who will be on hand to participate in the games.
It’s very likely that while at the games, international tourists and athletes will make online purchases for shipment either to their homes or hotel rooms. Merchants who block orders with Brazilian IP addresses or reject transactions with mismatches between the IP, shipping address, and credit card country, risk cutting themselves off from this huge pool of revelrous consumers.
Moreover, while the Olympics in Brazil may exacerbate the trend, we’ve already seen that online merchants tend to decline too many Brazilian orders in general. The reality is that Brazil is a much safer market than commonly believed. In fact, Riskified data shows that the approval rate for orders with a Brazilian IP and a non-Brazilian credit card, billing address, and shipping address is 88% – nearly 9 out of 10 orders. For orders that include a foreign credit card and billing address, with a Brazilian IP and shipping address that safe approval rate is 77% – still over 3 out of 4 orders.
When combatting fraud, practice makes perfect
Just like with Olympic athletes, the only way for online merchants to perfect their online fraud prevention routines is through constant practice and adaptation. Dynamic solutions that take all aspects of an order into account before making an approve/decline decision, along with a solid knowledge base of the said market and trends, are a must for any retailer hoping to contend for the gold medal this summer.