Why Payment Processing Decline Rates Are So High in LATAM—and How to Fix Them

Why is LATAM facing high payment processing decline rates?

Across Latin America, businesses are running headfirst into an invisible wall: unusually high payment processing decline rates. Whether due to insufficient funds, fraud concerns, or local banking restrictions, businesses often face higher decline rates compared to other regions. These declines chip away at revenue, erode trust, disrupt growth, and frustrate businesses and consumers.

Why are payment declines high in this region? More importantly, how can businesses turn more of those declines into approvals?

Bank Decline Rates in LATAM

Latin America has some of the highest bank decline rates in the world, particularly for eCommerce transactions. Declines typically range from 15% to 25%, with some markets experiencing even higher rejection rates.

Common reasons for bank declines include:

• Fraud Concerns. Latin America has one of the highest rates of card-not-present (CNP) fraud globally, causing banks to be more cautious in approving transactions. Banks tend to err on caution, rejecting transactions they suspect may be fraudulent, even if legitimate.
• Insufficient Funds. A leading cause of declines, especially in economies where credit card penetration is lower and consumers rely on debit cards.
• Regulatory and Issuer-Specific Restrictions. Local banking rules, cross-border transaction limitations, and outdated fraud detection systems contribute to rejection rates.
• Local Payment Methods Not Supported: Many transactions are rejected due to a lack of integration with preferred local payment options.
• Fragmented Payment Ecosystem: With over 80 payment gateways operating in the region, authorisation rates can vary dramatically. Some gateways have rates as low as 16.3%, while others achieve rates as high as 84.4%.

High Fraud Risk for Merchants in Latin America

Latin America faces some of the highest eCommerce fraud rates in the world, with fraudulent order rates reaching up to 3.7%. Around 20% of eCommerce transactions are declined as fraudulent—double the global average. In Brazil alone, the fraud-related decline rate hits 5%, far above the global 2.6% average.

Revenue Impact 

Fraud drains nearly 20% of LATAM’s total eCommerce revenue, second only to Southeast Asia. This growing threat is fueling demand for solutions, with the region’s fraud prevention market expected to rise from $821.6 million in 2021 to $2.95 billion by 2028.

Industry Hotspots

Sectors like travel, digital goods, and cross-border commerce face elevated fraud risks. As LATAM’s eCommerce market grows over 30% annually—outpacing global growth—more transactions are exposed to these threats.

How Businesses Can Reduce Declines in LATAM

To lower both bank and fraud-related decline rates, businesses in LATAM can use a variety of strategies to improve payment success:

• Support Local Payment Methods. Improve acceptance rates by integrating popular regional options like Boleto Bancário, Pix, and credit cards with instalment plans, as well as alternative methods such as e-wallets and bank transfers, which make up 27% of LATAM’s payments market.
• Leverage Fraud Detection & Prevention. Use AI-driven fraud tools, behavioural analytics, and tokenisation to reduce false declines, enhance security, and block fraud without disrupting legitimate transactions.
• Collaborate with Issuers. Work with local banks, acquirers, and payment networks such as Visa and Mastercard to optimise fraud rules, improve authorisation rates with enhanced APIs, and implement stronger fraud prevention measures.
• Optimise Payment Routing. Improve approval rates by working with local acquirers, which often see 60–80% approval rates versus 20–45% for offshore options. And use orchestration platforms to route transactions dynamically.
• Provide Consumer Education. Help reduce unnecessary declines by encouraging customers to enable international transactions, use local payment methods, and understand the benefits of each payment option.