What Can Mexican Issuers Do to Fight Ecommerce Fraud

Globally, there has been a surge in online transactions and Mexico is no exception. Mexico’s ecommerce sector has experienced substantial growth, expanding from MXN 758.7 billion ($42.8 billion) in 2020 to an estimated MXN 1.3 trillion ($70.9 billion) in 2024, reflecting a 13.5% compound annual growth rate (CAGR).??

This upward trajectory is largely driven by increased smartphone adoption particularly among Millennials and Generation Z. According to Global Data’s Mexico Cards and Payments – Opportunities and Risks to 2028, social media platforms like Facebook, WhatsApp and Instagram are playing a key role in influencing online purchasing behaviour.? The rise of online shopping events has further accelerated ecommerce adoption, with digital payment solutions including PayPal, Google Wallet, Apple Pay and more recently, Click to Pay gaining popularity as consumers seek easy and secure transaction methods.?

However, as digital transactions become more prevalent, so do the risks associated with online fraud, making it crucial for issuers to strengthen security measures and protect consumers from financial threats.?

As fraudulent activities become more sophisticated, consumers will grow increasingly wary of digital transactions, while businesses will face mounting losses due to chargebacks and the rising costs associated with fraud. For issuers, this presents a dual challenge, that of ensuring smooth payment experiences while implementing robust security measures to combat cyber threats.?

In this article, we explore the most common types of ecommerce fraud in Mexico, the risks they pose and the role of issuers in strengthening digital transactions through innovative solutions like numberless cards and tokenization. By adopting advanced fraud prevention strategies, issuers can help build consumer trust and support the sustainable growth of ecommerce in the region.?

The most common types of ecommerce fraud in Mexico?

Ecommerce fraud takes many forms, but some types are more prevalent in Mexico due to the combination of sophisticated cybercrime tactics and evolving consumer behaviours. One of the most common types is Card-Not-Present (CNP) fraud, where fraudsters use stolen card details to make unauthorised purchases since ecommerce transactions do not require physical cards. Identity theft is another major issue, as cybercriminals steal personal information to impersonate individuals and open fraudulent accounts. Friendly fraud, also known as chargeback fraud, occurs when consumers dispute legitimate charges, claiming they never authorised the transaction, which leads to chargebacks for merchants. Then there are phishing and social engineering attacks which are also widespread, with fraudsters tricking consumers into revealing sensitive information through fake emails, messages or websites.?

Why ecommerce fraud is prevalent in Mexico?

Several factors make Mexico particularly susceptible to ecommerce fraud. One key reason is the high dependency on cash, as many consumers still prefer physical currency over electronic payments. This makes them less familiar with online security best practices, increasing their vulnerability to scams. Additionally, there is a lack of consumer awareness regarding fraud tactics, leading many individuals to fall victim to phishing and other deceptive schemes. Some merchants and financial institutions also lack advanced fraud detection tools, further creating opportunities for cybercriminals to exploit vulnerabilities in the payment ecosystem.?

In June 2023, fraud pressure and attempts targeting merchants surged by 68% compared to April 2023 in Mexico alone. Additionally, a 2024 survey revealed that 43% of online users globally have fallen victim to online fraud, highlighting the widespread nature of the issue. These trends underscore the escalating threat faced by both consumers and merchants.?

How issuers can protect consumers: numberless cards & tokenization?

To combat fraud effectively, issuers must adopt secure payment technologies that safeguard consumer data and minimise the risks of stolen card details. Two of the most impactful solutions are numberless cards and tokenization.?

Traditional cards display sensitive information such as the card number and CVV, making them easy targets for fraud if lost or stolen. Numberless cards remove this vulnerability by eliminating printed card details. Instead, consumers access their card information securely through their banking apps, ensuring that fraudsters cannot misuse their physical cards.?

Tokenization provides an additional layer of security by replacing actual card numbers with unique tokens that are useless outside the specific transaction they are generated for. This means that even if fraudsters intercept payment details, they cannot reuse them for unauthorised purchases. As for virtual cards, which are another tokenization-based solution, these allow users to generate a new card number for each transaction or merchant, preventing unauthorised reuse. These solutions are particularly effective in reducing fraud risks in ecommerce transactions.?

In November 2024, Mastercard set a bold milestone, pledging to eliminate card numbers from all their physical cards by 2030?

This ambitious move to make all their physical cards numberless by 2030 represents a groundbreaking leap in securing card transactions. By removing sensitive card details like card numbers, CVV codes and expiration dates from the physical cards themselves, Mastercard is addressing one of the key vulnerabilities in fraud prevention which is the exposure of static card information. Instead of traditional card details being printed on the card, this information will be securely stored in digital platforms such as mobile wallets or accessible through secure portals.?

For consumers, this enhances both their security and peace of mind. Coupled with virtual cards and dynamic tokens that ensure every transaction is unique, Mastercard's initiative showcases a future where fraud risks are significantly diminished, particularly in the fast-growing ecommerce space.?

As ecommerce fraud in Mexico continues to grow, it is vital for issuers to adopt solutions that safeguard their customers and stay ahead of fraudsters. Tokenization, virtual cards and now initiatives like Mastercard's shift to numberless cards, are powerful tools in this battle.??

By embracing modern technology and working with forward-thinking processors, Mexican issuers can transform the way they manage fraud prevention. Whether it’s launching new card programmes or diversifying existing ones, prioritising security and innovation is the best way to build trust, ensure compliance and stay competitive.?

If you found this insightful and want to learn more about the LATAM payments market, check out our blog on How BIN Sponsors Drive Speed to Market for Colombian Issuers.

FAQs?

Q: Why is ecommerce fraud a growing concern in Mexico??

A: As online transactions surge, so do fraud attempts. Mexico has seen a significant increase in fraudulent activities, with fraud pressure on merchants rising by 68% in just two months of 2023. Many consumers still rely on cash, making them less familiar with online security practices, while some businesses lack advanced fraud detection tools, leaving them vulnerable.?

Q: What are the most common types of ecommerce fraud in Mexico??

A: The most prevalent fraud types include Card-Not-Present (CNP) fraud, where stolen card details are used for online purchases; identity theft, where criminals use stolen personal data to make unauthorised transactions; friendly fraud (chargeback fraud), where legitimate purchases are disputed for refunds; and phishing attacks, which trick consumers into revealing sensitive information.?

Q: How does fraud impact consumers and merchants??

A: Consumers risk financial losses, identity theft and lengthy dispute processes, often leading to a loss of trust in digital payments. Merchants face rising chargebacks, higher costs associated with fraud and reputational damage, which can affect customer loyalty and revenue.?

Q: How can Mexican issuers help protect consumers from ecommerce fraud??

A: Issuers can roll out numberless cards, which remove printed card details to prevent theft, and implement tokenization, which replaces static card numbers with dynamic tokens, making transactions more secure. These technologies ensure that even if payment data is intercepted, it cannot be misused.?

Q: What is Mastercard’s initiative to eliminate card numbers??

A: Mastercard has committed to removing card numbers from all physical cards by 2030. Instead of printed details, card information will be securely stored in digital wallets or accessed through secure banking apps. This initiative, combined with tokenization, is expected to drastically reduce fraud risks.?

Q: What are virtual cards and how do they help in fraud prevention??

A: Virtual cards are temporary or single-use card numbers generated for online purchases. Since they can be used only once or with specific merchants, they significantly reduce the risk of fraud. Even if a fraudster intercepts the details, they cannot reuse the virtual card.?

Q: How does tokenization enhance payment security??

A: Tokenization replaces actual card numbers with unique, transaction-specific tokens. If intercepted, these tokens are useless outside their intended purpose. This method is widely used in mobile wallets and online payments to reduce fraud risks.?

Q: How does ecommerce fraud affect the future of digital payments in Mexico??

A: As fraud threats increase, consumers may become hesitant to use digital payments, slowing down the growth of ecommerce. However, with proactive fraud prevention measures such as numberless cards and tokenization, issuers can ensure a safer online shopping environment and sustain market growth.?

Q: What can Mexican issuers do today to stay ahead of fraudsters??

A: Issuers should prioritise fraud prevention technologies such as tokenization, virtual cards and numberless card solutions. Collaborating with advanced payment processors can help implement these measures effectively, ensuring compliance, security and customer trust.?

Q: How can these fraud prevention strategies improve the customer experience??

A: By reducing fraud risks, issuers can provide consumers with seamless, stress-free transactions. Secure payment methods like numberless cards and tokenization enhance user confidence, enabling a smoother and safer online shopping experience.?