Consumer spending increases at certain times of the year. The obvious example is Christmas, but there are other peaks related to seasons or special days or events. Such busy shopping periods provide retailers with a volume of consumer activity that allows robust analysis of payment issues that may be causing basket abandonment, loss of sales, or returns.
By analysing the wealth of data collected during peak periods, retailers can pinpoint any problems in their payment process, and make informed decisions about where improvements need to be made. They can also gain insights into how customers like to pay, which can help to create new payment methods, or highlight which methods need to be retired.
When customers abandon their baskets, it is sometimes because their preferred payment options are missing. By looking closely at data, retailers have a better understanding of consumer backgrounds and behaviour. Demographic characteristics such as age and location, as well as cultural preferences, affect payment decisions and can help to create a more consumer-focused service.
While product returns are a bugbear with all retailers, fraudulent chargebacks are far more damaging. It’s therefore essential for retailers to thoroughly analyse chargeback and return trends, since customer profiling and satisfaction are crucial in improving systems and preventing chargebacks. Rather than simply following official return policies, retailers must take the time and trouble to dig deeper and find out the reasons behind chargebacks.
Retailers can reduce chargeback rates by making returns as easy as possible for customers and by communicating policies clearly, while improving the accuracy of product descriptions can help to minimise dissatisfaction.
Ask the right questions to prepare for peak demand
Before peak shopping periods, retailers need to be confident that their behind-the-scenes payment processes, handled by merchant acquirers, are reliable, seamless and fast. Although a retailer's payments process may perform perfectly well for most of the year, the pressure at peak times may adversely affect performance.
Retailers should put the following four questions to their merchant acquirer:
1. How do you ensure that your system can handle fluctuations in transaction volumes?
Merchant acquirers should test their payments systems and make sure they can handle a variety of different scenarios, including a sudden increase in the volume of transactions. Testing should never be an afterthought: it should be present at the initial stages of creating the payment processing software and systems.
Consumers expect swift and hassle-free transactions. If transaction processing is quick, with few hurdles, retailers will be held in high regard by consumers. Consumers sometimes have more than one retailer’s website open on screen in order to find the best price, and if several retailers offer the same price, then a buying decisions may be based on the speed and efficiency of the payments process. While transaction times are partly down to the e-commerce system, overall time can be impacted by the software or systems that merchant acquirers use to connect with various downstream providers in the supply chain.
All retailers should comply with the Payment Card Industry Data Security Standard (PCI DSS), and be careful to follow the rules on what card data may and may not be held. Above all, retailers should ensure that their merchant acquirer is compliant with PCI DSS, and operates to the highest security standards.
Often a fraudulent transaction results in a chargeback, which is designed to protect consumers and compensate them when their details have been compromised – with the retailer carrying the cost. When this happens, the merchant acquirer must quickly inform the retailer, and then help to resolve the issue. This not only gives the retailer peace of mind, it also promotes customer service and increases confidence.
2. How quickly are transactions processed?
For example, in some cases a merchant acquirer won’t connect directly to a bank but will go through other third parties, which inevitably slows the process and introduces more points where a technical fault could occur. In addition, fraud filters can also slow down transactions as the information goes through multiple checks. Fraud prevention measures vary between payment methods, so retailers should check that their acquirer has taken the necessary security steps while also ensuring a good user experience and minimum friction
3. What measures have you taken to ensure payment information is secure?
When retailers accept credit card payments, they must make sure their merchant acquirer is security compliant at a level appropriate to their business. Each credit card company has its own umbrella compliance programme, which focuses only on transactions for its own credit card.
4. What is your fraud resolution process?
Even with all the necessary fraud prevention measures in place, no business is completely safe. There are many different types of card fraud, from stolen and cloned cards, which are then presented to a retailer, to the illegal use of card information for Card Not Present (CNP) transactions over the telephone, via mail or through an e-commerce site.
Clearly, there are many things that retailers should consider during busy times of the year, and one of the most important is to have a robust and resilient payments process. It is essential for merchant acquirers to be equipped to process every type of transaction from every scheme used by customers, and to cope with business peaks.
Retailers should use periods of increased activity as opportunities to identify any weaknesses or shortcomings in their payments infrastructure. Working with merchant acquirers to resolve issues in this way will ensure improved preparedness for the next period of high demand.