Sign up for The Paypers newsletter Follow The Paypers on LinkedIn Follow The Paypers on Twitter Follow The Paypers on Facebook
The Paypers, paypers, Insight in payments, News, Reports, Events

Philipp Bock, allpago and Pedro Chiamulera, Clearsale: "Are customers falling prey to small schemes?"

Thursday 5 May 2016 | 10:14 AM CET

The challenge to overcoming customers falling prey to small schemes does not only imply stopping big fraud schemes that operate on a large scale, but also consumers falling prey to these small schemes

Melisande Mual, Managing Director at The Paypers, spoke with Pedro Chiamulera (Clearsale) and Philipp Bock (allpago) at the MRC Vegas 2016.

Brazil used to be an interesting option for expanding companies. Do you think that this is still the case?

Absolutely, especially the ecommerce sector continues to grow, and purchasing power is also still growing, although maybe not as rapidly as before. In 2015, the ecommerce volume increased by 15.3% in Brazil to USD 11.8 billion (source: Ebit Webshoppers Study 2016). On top of that, the country is going through some major political changes, which will make the country stronger for the future. We are seeing a lot of reform happening and as we say: when you clean up, you’re getting rid of a lot of dust. In the future, Brazil will be much more advanced, compared to other large countries.

What does the payment landscape currently look like in Brazil, and what is needed to succeed in this market?

In Brazil, around 70% of transactions are made with physical cards, mostly credit cards. 30% are alternative payment methods. The key to success in Brazil is the local credit card companies, providing local cards by Visa or MasterCard, plus the local schemes. Together, these make up 50% of the total payments volume. At the end of the day, to process these cards you need to work with these incumbent acquirers. There are a lot of new entrants, but most of them still struggle to offer all available schemes. Alongside this, you still need to work with the big banks, as well, to offer the full range of possibilities.

What does the fraud landscape currently look like, and what forms of fraud are prevalent in Brazil?

Brazil is going through an economic crisis, so we have seen a large increase in fraud attacks, especially in friendly fraud and account takeovers. In 2015, the fraud attempt reached 4%. It means that of every BRL 100,00 in transactions, BRL 4,00 are fraud attempts. We are trying to manage that and 2015 was very challenging for us, because of the status of the economy. However, we managed to beat a lot of fraud and keep the fraudsters at bay: in 2015, Clearsale saved USD 136 million in prevented frauds.

What do you feel are the main differences between the US and Brazil fraud environments?

There are a lot of small fraud schemes, alongside the big professional ones. Small fraud schemes are most likely to commit identity theft, and use this for phishing. It’s a very sophisticated scheme in Brazil. The challenge to overcoming customers falling prey to small schemes does not only imply stopping big fraud schemes that operate on a large scale, but also consumers falling prey to these small schemes. Nevertheless, Brazil is more effective in preventing fraudst than US. Comparing chargeback rates from US and Canada, we had 0.4% against 0.6% in North American market.

What do you think is the best way to fight fraud as a merchant, and how could one boost conversion rates?

It could be a good practice to outsource it to a third party, because it is too much work to do it internally. Despite having a lot of useful information, you also need to have an experienced team of experts to properly tackle the extensive problems.

Now, Clearsale has a market share of about 80% in Brazil, giving us the unique opportunity to gain an oversight of almost the entire market. This helps identifying these small fraud schemes very effectively. Every case of fraud that is detected gets added to the network of data that already exists, making fraud patterns easier to detect in the future. The challenge lies beyond technology. However, you need a critical approach by experts. Luckily, we have more than 700 analysts working at Clearsale to properly handle this.

About Pedro Chiamulera

Pedro believes employee empowerment and creative problem solving yield the best results for clients, such as zero chargeback liability, stringent fraud prevention, and reduction of false declines. Pedro built a corporate culture of creative exploration, continuous learning, self-awareness, and fun to support employees` personal and professional growth. The result is an employer of choice for top talent.

Pedro earned his bachelor degree in Computer Science from Point Loma Nazarene University in San Diego, California. After competing in the 1992 and 1994 Olympics in the 110-meter and 400-meter hurdles, he began his IT career. Pedro founded ClearSale in 2001. By 2007, integrated manual order analysis allowed clients to outsource the entire risk management process. In 2010, Clearsale was Brazil`s 2nd-fastest growing company. In 2011, New York’s Endeavor Global organization named Pedro a high-impact international entrepreneur.

About Clearsale

Clearsale is a fraud prevention company that protects a variety of market segments merchants against chargebacks, offering an end-to-end fraud detection solution that combines advanced technology and statistics resources with a passionate team of 500 in-house highly specialised fraud analysts, focusing on increasing revenues while decreasing fraud costs. Clearsale has been preventing fraud in the most complex and dynamic international ecommerce markets, providing merchants with simple decisions and peace of mind, so they can focus on their core business.

 About Philipp Bock

Philipp Bock is the Chief Executive Officer & Founder of allpago. Before founding Allpago, Philipp was Managing Director and responsible for the turn-around of the Brazilian subsidiary of arvato services (Bertelsmann AG) in São Paulo, after managing the go-live and roll-out of the global online marketing platform for Microsoft`s Channel partners at arvato. Prior to joining Bertelsmann, Philipp worked as the Executive Assistant to the CEO of Infineon Technologies in Munich and Paris. In addition, he worked at The World Bank Group in Paris, Arthur D. Little in Madrid, eVentures in Hamburg and Schroder Salomon Smith Barney in London.

About allpago

allpago is the leading payment service provider for the LATAM region with offices in Bogotá, Berlin, São Paulo and Mexico City, which was founded in 2010. allpago provides all relevant local payment methods and features through one API and one single platform. The company`s solution offers the best conversion rates providing state-of-the-art technology and legal advice necessary for a successful ecommerce operation in Latin America.