How small businesses can lower payment costs and operate efficiently in the new normal
Over the last year, lockdowns and operating restrictions have proved challenging for merchants across many industry segments. The last thing business owners need is more uncertainty as they re-open and welcome back customers.
Let’s take a closer look at programs and processes to help manage costs, control fraud, and build back customer confidence as society pivots to the new normal.
Transparent and affordable pricing
Business owners don’t have time to break down complicated merchant statements with extra hidden processing charges and monthly fees. Additionally, during these times of uncertainty, onerous contract terms with early termination penalties simply aren’t helpful.
Flat-rate pricing programs offers easy to understand credit and debit card processing rates and fees aligned with acceptance channel: in-person using an EMV device, manually keyed into a system for phone and mail payments, or captured online via a shopping cart or secure online payment form. Flat transaction pricing is predictable and, unlike traditional interchange models, doesn’t fluctuate based on the type of card presented and other factors.
Many of the traditional additional account fees that impact operating costs could potentially also be eliminated, including start-up fees, monthly service fees, monthly minimums, chargeback fees, and PCI DSS program fees. Even better, merchants gain peace of mind with the ability to sign up and start accepting payments without fear of being charged an early termination fee should their business hit a roadblock that causes them to close locations.
Credit card added fees
Consumers are abandoning cash in favor of convenient contactless card and smart phone payments, and increasingly, transactions are shifting from in-person to online methods. While these factors join to streamline payments, accepting more electronic transactions can mean more money spent on processing-related fees. And due to COVID-19, merchants struggling to stay afloat are increasingly looking for smart ways to lower operating expenses and keep their businesses profitable.
One trend currently gathering speed is adding on a small percentage fee to a credit card transaction to cover the merchant’s costs for accepting the payments. This is supported in all but six states and can be applied to both in-person and online transactions. Customers must be presented with clear notification at the point of sale or online checkout page and receipts must contain disclosures about the additional charge. Customers can avoid paying the additional amount by switching their payment method to something other than a credit card.
Contactless in-person and remote payments
Shifting consumer behaviors— fueled by social distancing guidelines—and the growth of digital experiences have accelerated the adoption of safe and convenient ways to pay. Increasingly, consumers and businesses are choosing on-site and digital contactless payment solutions that eliminate unnecessary touchpoints. In addition to minimizing customer and staff interactions, these touch-free solutions speed up the checkout process, whether made in-store, in-app online, curbside, or via back-office means such as digital invoices.
Paying via contactless cards, smart phones and wearables for in-store tap n' go checkout is popular where customers continue to enjoy the convenience. A study done by Mastercard* in March 2020 found that the use of contactless payments jumped 40% as the pandemic worsened.
Online and in-app payments for order ahead with curbside or in-store pickup also surged during 2020. According to a Shopper Study from Incisiv*, 85% percent of shoppers have significantly increased curbside pickup orders compared to pre-COVID-19 rates. It’s important to note that payment details captured online, over the phone, or via email are riskier, and as a result, the card brands charge higher “card-not-present” (CNP) interchange rates. The costs can really add up, especially for businesses that offer high-ticket goods and services. Consider adopting a “Buy Online. Pay at Curbside.” policy to lower risk and transaction costs.
Digital invoices sent via email and “Pay Now” buttons for payment via apps, websites and social sites allow consumers to pay from anywhere by entering payment details quickly and securely into a hosted payment form. This convenient way to pay is great for service-oriented merchants serving consumers and businesses. Payment details can be captured and stored in a secure customer vault to be used for future billing or even recurring payments.
Staying ahead of the fraudsters
The shift to digital means that businesses are accepting a higher percentage of payments via online channels, which carry an increased risk of fraud. The result is an increase in chargebacks and write-offs. According to a report from Chargeback Gurus*, there has been an 800% increase in chargebacks since the COVID-19 pandemic started. Not only is the transaction amount debited from the merchant’s account; they may have also lost inventory and incurred internal labor and additional handling costs.
Here’s a quick list of best practices that can help you protect your business against fraud and wrongful chargebacks:
- Use an EMV terminal to capture in-person transactions
- Use EMV 3D-Secure to authenticate online transaction
- Use fraud-prevention measures like AVS and CVV for card-not-present transactions
- Use advanced security technology like encryption and tokenization to protect data and simplify PCI DSS compliance validation
New solutions for the new normal
Let’s celebrate as customers get back to shopping, dining and frequenting businesses in person once again. Be sure you are prepared with solutions and processes that allow you to control costs, operate safely, and focus your energy on the customer experience. To learn more about how Elavon can help, visit https://www.elavon.com/solutions.html.
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