In Payments

Access to new technologies seems to be going hand in hand with the increasing fraud in Latin America, so it is something leading financial services companies need to prepare for.

  • Mexico received 85 billion attempts at fraud in the first half of 2022, this, in a country whose smartphone adoption is 73%, according to AMI.
  • Brazil received 32 billion attempts at fraud, far fewer than Mexico, despite its 95% smartphone penetration.
Mass digitization in LAC (percentages of smartphone penetration in Argentina, Brazil and Chile are shown) and its contrast with respect to the increase in fraud attempts during the first half of 2022.

Andreas Farge, Senior Analyst at Americas Market Intelligence (AMI), says companies and governments in Latin America have been focusing on data protection. There are, however, “fragmentations” in their policies, as the table below shows.

Companies and governments in Latin America have focused their efforts on adopting international standards like the GDPR, prioritizing data protection. However, each country demonstrates a level of ‘fragmentation’ in its policies.

Andreas Farge
Senior Analyst
Americas Market Intelligence (AMI)

The role of data regulation in Latin America. The graph shows the regulatory requirements in privacy and data protection (from the point of view of businesses and users) in Mexico, Colombia and Chile.

On the other hand, there is a significant number of cases of phishing, identity theft, and online banking fraud in the region. To prevent, detect, and mitigate this goes beyond GDPR policies, Farge says. In this context, at a recent AMI Payments Coffee Chat, the AMI payments team decided to invite along two experts on cybersecurity in Latin America:

  • Tomás Castañeda Püschel,Customer Success Manager at the company Sovos
  • Camilo Andrés Alvarez Cárdenas, Vertical Solutions Consultant at LexisNexis Risk Solutions
LexisNexis Risk Solutions logo

A tech company dedicated to fraud prevention

Sovos logo

A company involved in data analysis and risk m

The two experts set out their strategies for counteracting fraud and improving cybersecurity, particularly within companies offering financial services.

Sovos: face onboarding and biometrics

Sovos has digital-identification technologies for face-to-face and virtual banking transactions. We adapt to everyday banking operations.

Tomás Castañeda Püschel
Customer Success Manager

To prevent virtual fraud, Sovos has implemented face onboarding at banks in Argentina and Chile, which has impacted the opening of more than 2 million online accounts. “It involves facial recognition and comparison with the user’s identity card, taken to the next level thanks to artificial intelligence,” explains Castañeda.

In the banking environment, it mitigates fraud and increases security when:

  • Opening new bank accounts online
  • Registering for e-wallets
  • Making digital bank transfers
  • Activating one-time passwords

“Sovos face onboarding uses a three-step system to check that the user is who they claim to be. Each step has been carefully developed to maximize security and reduce friction, reaching conversion rates of 75%,” he says. Face onboarding includes four technologies:

  1. Detection of fake identity cards, thanks to an artificial intelligence that can identify photographic editing or printing marks.
  2. Liveness detection: technology that identifies a person’s real movement behind the camera when taking the selfie.
  3. Real-time comparison with government databases: this allows you to verify the data of a company or person depending on the document.
  4. “One face/one identity”: a protocol exclusive to Sovos whereby a person’s face is inextricably associated with an identity, making it impossible to register other documents with doctored photos.

In addition, to prevent fraud and verify data in face-to-face transactions, Sovos uses another technology: fingerprint biometrics. “In Chile, chips on cards store fingerprint information. When a user uses their card, for example, on a POS device, Sovos software scans their fingerprint and ‘sends’ it to the chip to match it with the fingerprint registered on the chip. This technology is known as match on card” Castañeda explains. Another identification technique he mentions is “1:1 match,” where the user places their fingerprint on a sensor with infrared or NFC technology.

Digital identity technologies F2F identity verification. The case of fingerprint biometrics.

LexisNexis Risk Solutions: protecting digital identity

At LexisNexis Risk Solutions we recognize that digital identity has so many layers. With it we can not only create security, but also scalability in business.

Camilo Andrés Alvarez Cárdenas
Vertical Solutions Consultant, LATAM
LexisNexis Risk Solutions

According to Camilo Alvarez, the success of businesses today stems from information and data, which need to be aligned with a digital identity, and, together, they lead to cybersecurity. “We all understand that the payments ecosystem in Latin America must be secure; no one is competing for who has more or less fraud. The competition must be for products and services under a common practice of maximum security,” he says.

The role of data intelligence

Companies and governments have to establish security protocols based on the channels each person uses: email, social media, devices, etc. Each of these channels is linked to different user data, which can be analyzed and evaluated to trigger alerts. For example, the fact that a person uses a fake email to communicate with the bank. Or the fact that multiple transactions take place at the same time from the same IP address.

According to Alvarez, in the digital world everything can be a variable, and each variable can be expressed in numbers that allow us to identify suspicious behavior. For example, it may be suspicious that a person uses the “copy/paste” function to fill out the “Name” field in an online bank registration form.

Then there is the interaction of digital data associated with a person’s physical information, enabling them to construct their digital identity. The company achieves this through ThreatMetrix technology. “At LexisNexis Risk Solutions we understand that digital identity is dynamic: a person may change their phone number, residence, job, or online habits at any time. Even so, they have a unique identifier capable of recording their behaviors and detecting anomalies,” he says.

According to Alvarez, the data associated with digital identities gets to be so massive that it necessitates the use of technologies like big data and machine learning. In addition, financial service providers have to consider the entire ecosystem. The region is experiencing a strong trend toward interoperability, involving multiple industries.

Download the AMI Payments Coffee Chat Presentation

Fraud and digital identity in LAC

AMI Payments Coffee Chats are meetings held every two weeks with expert guests. In them, the Americas Market Intelligence team discusses the latest payment developments in the region. Click here for more information.

Moving beyond the chat

Contact us if you need detailed research on financial fraud mechanisms and mitigation strategies in specific Latin American markets or the region as a whole. Americas Market Intelligence can design and implement a personalized study focusing on solutions to enable your company to minimize risks or expand its opportunities for success.

In addition to fraud, our market intelligence team can help you with research on many other key topics of the payments sector in Latin America, including cryptocurrencies, buy-now-pay-later, e-commerce, payment methods between consumers and SMBs, mobile wallets, ACH, open banking, and much more. Contact us to let us know what you need and explore the possibilities of conducting a study.

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