In the wake of the FIFA World Cup tournament, many are wondering what's to come in regards to Brazil's economy. Some experts speculate that Brazil's tragic loss to Germany will sway voters in the upcoming election while others are hopeful that increased trade with China established in connection with the global sporting event will help catalyze future commerce.
The truth is, no one really knows what long-term impact Brazil's World Cup hosting stint will have on the economy. But most agree that Brazil's lack of stable infrastructure and ready availability of technology amongst the burgeoning middle class make it a prime candidate for eCommerce. And small business owners throughout the country are embracing the sales opportunities accompanying the international exposure gained throughout the event. Many are pulling efforts back from brick-and-mortar business, and are instead focusing time and resources on cross-border eCommerce.
A recent article in The Guardian looks at Brazilian business owners. Take Alexandre Ferreira, for example - a former football player turned chocolatier, who launched a new line of chocolates specifically centered on the FIFA event. Designed to engage an international audience, the specialty line features the definitive flavors of seven nations participating in the tournament. With the launch of these event-related flavors, Ferreira saw a 50% increase in sales to multi-national companies and consumers.
Sao Paulo entrepreneur Daniel Wjuniski saw a similar opportunity. He and his team recently developed The Brazil Traveler Health Guide, an application designed to help travelers and tourists locate health resources and Ministry of Health-recommended hospitals during their stay in any of Brazil's 12 host cities. Released for download through the Apple store on June 9th, the app retails for $0.99. Wjuniski and his team are hoping that the application will become a valuable reference for foreign tourists visiting Brazil in the wake of the tournament.
Many small business owners reported an overall increase in eCommerce sales throughout the summer months, although it was noted by research conducted by Braspag that online retailers reported a drastic (but temporary) drop in sales during the tournament itself – specifically, on those days when Brazil's team was scheduled to compete in the matches. “But, considering the whole period of the World Cup, the decline in sales was small – 3%,” said Braspag president Gaston Mattos. He estimates an overall 25-30% increase in 2014 online sales.
The sudden growth of Brazil's online retail and international sales brings with it the growing challenge of fraudulent activity. A discovery by researchers at RSA, the security division of EMC, revealed a sophisticated fraud operation devoted to the exploitation of payments in online transactions. By RSA's estimates, this particular fraud ring affected more than 30 Brazilian banks, and may be responsible for up to $3.75 billion USD in losses.
According to experts, this is just a drop in the bucket. Although Brazil is by far the largest eCommerce market in Latin America (comprising over 43% of sales), the country was also recently ranked as one of the least-prepared nations when it comes to online activity – due, in large part, to its weak legislation regarding cybercrime. Official regulation of Brazil's eCommerce activity is still in its infancy, and security is a huge concern.
The lack of government regulation and legislation means businesses interested in establishing a foothold within Brazil's growing online economy must fend for themselves. Though this leaves businesses shouldering responsibility of secure authentication and fraud prevention independently, recent advancements in eIDV technology can be leveraged to help businesses mitigate risk, and protect their online purchases from exploitation.
As the government gradually addresses security-related issues, we expect increased scrutiny of all online business transactions, intended to crack down on fraudulent activities. Effective and reliable identity verification will be a must for addressing these concerns, mitigating risk, and ensuring compliance with new regulations.
Businesses hoping to profit from the opportunities for international growth stemming from Brazil's participation with the 2014 World Cup must devise a plan for mitigating fraud risk, and addressing electronic identity verification (eIDV) requirements. Consumers demand a relationship of trust and reliability, which means businesses, must establish guidelines and practices, which meet global standards for industry best practice.
Trulioo’s Global Gateway product offers frictionless, cost-effective, on-demand eIDV to a growing number of international businesses that recognize the need to protect themselves and their customers against identity theft, credit card fraud, and other security-related losses.
As online retailers explore Brazil's upcoming economic opportunities, they can build trust and improve customer relationships by improving security and identity authentication measures. Those businesses that take action to meet global standards can expect eCommerce to boost economic growth, long after the fanfare has faded. Contact Trulioo to discuss eIDV and risk mitigation.