Harnessing the Power of Payments This Festive Season

By Todd Atkins | 09 Dec 2019

From 11.11 to Boxing Day sales and beyond, we’re in the midst of a global retail marathon, and for retailers, surviving the season unscathed means paying attention to the big-ticket items (availability, delivery and a laser focus on the needs and wants of your customers), as well as the back end that supports the purchasing process.

For many retailers, payments are often overlooked, but critical part of the purchasing process. A great payment process should feel seamless to consumers. From product selection to check out and receipt, making this as easy, secure and intuitive as possible will serve online retailers well this
shopping season. On the flip side, getting it wrong can be a costly exercise. Here are two key ways to harness the power of positive payment experience.

Fraud protection – Beware the chargeback

Security is top of mind for consumers in an online shopping environment. PayPal’s 2019 mCommerce Index found that 63 percent of consumers said that security and trust issues are the top concern when shopping via mobile. This means they will be less likely to interact with businesses
they deem unsafe or untrustworthy. Whilst consumers are aware of the process involved in resolving fraudulent credit card charges,
what they’re not so aware of is the cost to the merchant themselves. In the case of fraudulent account transactions, initial refunds come from merchants, not the financial institution, followed by a lengthy recovery process between the merchant and the bank. This is called a chargeback and they can cost merchants dearly.

No business can be completely immune to fraud, but there are steps online merchants can take to safeguard against fraudulent activity. These include basic fraud protection like AVS (Address Verification System), CVV (Card Verification Value), and risk thresholds that allow merchants to block certain high-risk transactions by crosschecking geolocation, proxy detection, IP tracking, and Bank Identification Number.

Prevent payment declines

There are two types of declines: hard and soft.

Hard declines happen when there is an irreparable issue with the customer’s payment method – for example, their card has expired or has been cancelled which means their payment cannot be processed. Soft declines originate from the bank issuing the card or payment method and are
usually temporary.

Common causes include:
1. Insufficient funds
2. Incorrect payment details
3. The issuing bank’s own fraud guidelines

Here, the greatest loss of revenue is in the friction between checkout and payment, and the potential sale lost in the process. In fact, PayPal’s 2019 mCommerce Index found that 20 percent of Australian consumers have abandoned a purchase or payment because the site didn’t work for their mobile devices. In today’s competitive online market, losing one-fifth of potential customers can be devastating to the bottom line.

While the onus is often on the customer to prevent a card decline, ensuring multiple ways to pay is one step that can help prevent card declines. Set up your checkout to include various options like debit card, bank transfer or PayPal, this way, you can lessen the chances for a customer’s payment to be declined. For merchants, ensuring the back end is fighting fit is paramount as we come up to Black Friday. A seamless shopping journey from browsing to purchasing will help generate a positive customer experience and keep revenue ticking along. Keeping an eye on preventing declines and fraud are incredibly essential for all retailers as we accelerate into the biggest retail period of the year!

Todd Atkins is Head of Market Development at PayPal Australia

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