Digital payments exploded in Latin America and the Caribbean

[msttasnuvanava]

The eCommerce market in Latin America is experiencing a period of strong growth, and is estimated to continue growing by 20% per year until 2025.¹ The sudden change in consumer behavior is generating new revenue streams for merchants, but it also requires new payment strategies to offer a better user experience.

In this growing eCommerce landscape , the number of customers storing their payment credentials at a merchant has increased significantly, both for recurring automatic payments and for online purchases at that merchant. These card-on-file (COF) transactions grew by 150% from 2021 to 2022 globally.² It’s critical to protect sensitive payment information while offering a convenient and seamless checkout experience.

Never before has it been so necessary to have network tokens

In this region, token penetration and volume growth was massive, with token how to get south korea whatsapp number penetration rising from 5.9% in September 2022 to 23% in September 2023.³ Growth is expected to continue, as most issuers in the region already operate with network tokens and at least 38 local token service providers are certified by Visa Token Service . Merchants investing in network tokens can see a significant return on investment (ROI).

Reducing fraud

Fraud is reduced by 30% with network tokens compared to using PANs.⁴ Tokens replace traditional card numbers with a digital token that helps reduce the risk of fraud. Additionally, solutions that use device linking can make card-on-file transactions more secure by linking the network token to a trusted device of the customer.

Better clearance rates

Globally, authorization rates for Visa tokenized⁵ CNP transactions increased 4.6% compared to those using PAN.⁵ Increasing authorization rates and reducing transactions declined due to false positives helps deliver a positive customer experience at checkout .

Fully integrated commerce experiences

40% of consumers say they would not return to a merchant where they experienced a false positive.⁶ Visa Network Tokens can leverage Visa’s value-added services, such as Visa Digital Credential Updater (VDCU) and Visa Card Enrichment Services (VCES), to keep cardholders’ payment credentials up-to-date, maintaining payment continuity and improving authorization and provisioning rates.

Authentication

Tokens are revolutionizing the card-not-present (CNP) transaction environment by mimicking the card-present environment. This transformation is being achieved by introducing innovative methods to authenticate cardholders. These methods take the existing rails used for authentication and use them for payments in guest checkout and card-on-file (COF) experiences.

With an eye toward an authentication strategy beyond 3-D Secure (3DS), we have successfully launched the Cloud Token Framework and Digital Authentication Framework . We are very excited about the improvements that tokenized credentials will bring over regular tokenized credentials, especially in terms of fraud prevention and improved authorization rates. This is a clear testament to our commitment to enhancing security while delivering seamless user experiences.

If you want to learn more about how network tokens can help create innovative payment experiences for your customers, downloadhere our report.

Contact your Visa account executive and find out how we can help Latin American merchants take advantage of this opportunity to innovate with network tokens.

Sources:

1. The 2023 Latin America E-commerce blueprint, PCMI , 2023.

2. Based on COF transactions processed by Visa from October 2021 to October 2022.

3. CNP on VisaNet, July 2023 and July 2022.

4. VisaNet, October-December 2022. Global debit and credit card-not-present transactions with tokenized vs. non-tokenized credentials. Authorization rate is calculated as the number of approved authorizations divided by the total authorization attempts based on the first attempt of a single transaction.

5. Visa Risk Datamart, Global , tokenized transaction fraud rate, Q1-Q4 FY22, compared to PAN transaction fraud rate by payment volume at merchants with 1,000+ tokenized CNP transactions per month, by country. Individual merchant rates may vary.

6. State of Consumer Attitudes on Ecommerce Fraud & CX 2021, ClearSale.