Financial Crime World

Nicaragua Struggles with Cybercrime as eCommerce Remains a Niche Market

Nicaragua’s struggle to adopt digital technologies is reflected in its cybersecurity landscape, which faces significant challenges due to limited internet access and a lack of legal framework regulating online transactions.

Limited Internet Access and Slow eCommerce Adoption

  • Only 57% of Nicaraguans used the internet in 2021, compared to a Latin American average of 76%.
  • The country’s eCommerce market is still in its infancy.
  • The Nicaraguan government has been known to disrupt internet service at will, as seen during the 2018 protests when authorities shut down internet access in some cities.

Cybersecurity Concerns

  • The Cybercrimes Law allows for electronic monitoring of individuals’ activities and forces internet providers to release sensitive information about customers upon request from law enforcement.
  • There is a lack of legal framework regulating online transactions, which has led to a reliance on private banks offering digital payment methods.

eCommerce Growth Despite Challenges

  • According to the Nicaraguan Central Bank, the country saw roughly 56 million transactions in the fourth quarter of 2022, with debit cards accounting for 57% of those transactions.
  • Online shopping remains a niche market, and most businesses continue to rely on traditional payment methods.

Barriers to eCommerce Adoption

  • Commercial banks in Nicaragua are notoriously conservative, with high security deposit requirements for online transactions, making it difficult for many businesses to adopt digital payment methods.
  • Some entrepreneurs have turned to foreign payment systems like PayPal to avoid these costs, but these services are not integrated into Nicaraguan banks.
  • The relatively low purchasing power of Nicaraguans remains a significant barrier to widespread eCommerce adoption.

Glimmers of Hope

  • App-based delivery platforms have gained popularity in the capital city of Managua, particularly among certain segments of the population.
  • These services allow for cash payments and have helped increase eCommerce adoption among some segments of the population.

Conclusion

For Nicaragua to develop its eCommerce market, it must address these challenges head-on. Improving internet access, implementing robust cybersecurity measures, and creating an enabling environment for online transactions are crucial steps towards unlocking the country’s digital potential.