How to Improve your Onboarding process and avoid payment errors when operating in Latin America?

In the digital age, businesses increasingly seek to expand their services into new markets and regions. However, entering these new territories requires both knowledge and tools to ensure secure processes. Latin America is one of the regions where companies from other parts of the world, particularly the United States, aim to establish their operations.

Businesses in sectors such as financial services, payments, lending, e-commerce, and more have entered the Latin American market. However, their entry has necessitated implementing security measures to minimize risks related to fraud—whether during registration processes or while conducting payments.

One effective way to combat fraud is through account verification. By requesting a bank account and confirming that the individual is the rightful owner, businesses can reduce the risks of sending payments to the wrong person or processing fraudulent registrations.

What Tools Can Businesses Use to Minimize These Risks?

1. Microdeposits
   This involves making small deposits into the registered client’s or supplier’s bank account. Once the user confirms the deposits, the account details are verified.
2. API Verification
   A direct connection with financial institutions enables real-time verification of the account information provided by the user or supplier.
3. Document Submission
   Users or suppliers upload bank statements or financial documents, which are validated using Optical Character Recognition (OCR) technology and artificial intelligence to ensure accuracy and authenticity.
4. Biometrics and Multifactor Authentication
   - Biometric Verification: Users or suppliers confirm their identity through fingerprint or facial recognition.
   - Multifactor Authentication: A two-factor authentication tool, such as a code sent to the user, ensures that the individual performing the transaction is legitimate.

Onboarding or Know Your Customer (KYC) processes are necessary for businesses to establish secure and trustworthy relationships with clients or suppliers.

According to a LexisNexis report, the creation of new accounts poses the highest fraud risk for merchants and financial institutions. That’s why it’s critical to implement security measures right from the initial step. In Latin America, digital channels now account for 51% of total fraud losses, surpassing physical fraud for the first time.

For companies that require banking information during their onboarding process, identity fraud is a common threat, often resulting in significant financial and reputational losses. To combat this, Prometeo’s Bank Account Verification solution ensures that the banking information used in an onboarding or KYC process is accurate, up to date, and belongs to the person providing it.

This solution integrates directly into your company’s platform. When a user or supplier starts their registration process, the system verifies the information entered.
With access to over 900 financial institutions across Latin America and the United States, Account Verification streamlines the onboarding experience as follows:

1. The user begins the registration process and provides their details, including bank account information.

2. Upon submission, the solution verifies the banking details.

3. If the bank account matches the user’s name, the system confirms the successful registration within seconds.

3.1. If there is a mismatch due to a manual error or fraud attempt, the registration is flagged as unsuccessful.

The 2024 LexisNexis report reveals that businesses in Latin America bear a fraud cost that is 3.9 times higher than the nominal value lost in fraudulent transactions. These losses include internal labor costs to fix errors, legal fees, recovery charges, and expenses related to replacing lost products.

Whether due to human error when entering account details or fraudulent account information, preventing payment errors is critical for businesses.

Prometeo’s Account Verification solution ensures that bank account details entered for payments match the correct recipient, preventing funds from being sent to the wrong accounts due to manual mistakes or fraud.

By integrating this solution, your company can verify banking details before processing one or multiple payments. Here’s how it works:

1. Your company’s system generates a payment list, including account details and recipient names.

2. Account Verification uses Prometeo’s API to validate that the account numbers match the account holders’ names.

3. The API provides a clear response, confirming whether the details are accurate or flagging incorrect accounts before the payment is processed.

This solution helps businesses reduce fraud risks and manual errors in onboarding or payment processes. It adds significant security value, especially for companies outside the region that need to operate safely in Latin America.

With Bank Account Verification, your business can:

• Verify the identity of users and suppliers.
• Detect potential fraud risks.
• Validate banking information in real time.
• Access a solution that covers over 10 countries and 900 financial institutions.

If you want to enhance the security of your operations in Latin America, contact us, we’ll make it happen.