For online stores, the 2020 holiday shopping season will be unlike any in recent memory.

And if you haven’t started planning for the upcoming holiday seasons including Black Friday and Christmas, it’s time to ensure your offers are ready to go for a busy online shopping season to come.

In this post, we will look at how you can navigate the online shopping space for this pandemic period. We’ll look at how to protect yourself, your customers, and your business.

As a high-risk merchant, you will face increased scrutiny, security concerns and a potential influx of chargebacks and refunds if you’re not proepared. We want to ensure that you can make money and keep as much of it as possible in Q4 2020. So, besides the tips in this post, we recommend that you also contact the team at DirectPayNet. We will help you make sure that your ecommerce store and payment processing are ready for the season ahead.

So, what are the experts predicting for the 2020 shopping season?

And why will this online holiday shopping season be different?

What to expect for the 2020 shopping season?

With the threat of COVID-19 still looming, many shoppers will be wary of in-store shopping. Brick-and-mortar stores will be doing their best to increase safety measures. But you can still expect a deluge of online shoppers as more persons embrace online shopping. Here are a few things to note.

No thanksgiving shopping, longer sales periods

Already, major retailers have indicated that they will close on Thanksgiving. Macy’s and Walmart are 2 big names that decided to forego Thanksgiving evening shopping. And for Black Friday in particular, most major retailers will be spreading out their deals by weeks or even months.

Boomers are going digital

In addition to millennials who embrace the tech age, boomers have increased their digital shopping due to the pandemic. So, you’ll need to cater to a variety of digital audiences in your site navigation and payment processing options like ACH and payment plans.

Ecommerce is going to be the big winner for 2020 holiday shopping

Senior manager and forecaster at Deloitte, Daniel Bachman, is predicting ecommerce to do well in the latter part of 2020. According to Bachman, “e-commerce is likely to be a big winner because consumers have shown a clear movement towards buying online rather than at brick and mortar stores.”

Many merchants are now better prepared than in the spring to accommodate online sales growith in the November to January sales period. Getting fulfillment and inventory ready for the higher demand is key.

Plus, ecommerce businesses will get a boost from consumers spending less on other expense items like travel for the past few months. This may increase their spending power for holiday shopping.

Deloitte also predicted a spending increase between 1% -1.5% for November to January. This figure is half of the previous years. But it is still a significant jump given what has occurred for the past few months.

The statistic that should concern online business owners is the prediction that ecommerce sales will grow by a whopping 25% to 35% for the November to January holiday shopping season. This is more than double (14.7%) the 2019 sales increase. With that growth comes logistical nightmares if you’re online shop isn’t prepared with extra staff to handle customer service and package shipment. If your online nutra shop isn’t sending packages out on time, you could see a huge spike in chargebacks as customers are becoming accustomed to quick delivery times like Amazon offers.

What will you do to capitalize on this expected development?

Moving your business online

Ecommerce sales were already growing before COVID-19. The pandemic accelerated the progress.

If you’re operating on Shopify and Stripe, keep in mind, if you’re in a high-risk industry, that you may be at risk for account suspensions or funds held should you encounter higher than normal chargebacks or refunds. These retailers are not forgiving to merchants who may have had a couple of bad months for risk and fraud so you have to be prepared to have a backup solution or better yet ahead of the holiday shopping season, arm your business with its own merchant account so you can more easily navigate risk and work with a partner who understands the ups and downs of seasonal shopping.

But there’s good news. It’s relatively easy to set up an online store using WordPress and one of its many ecommerce plugins like WooCommerce. We like this option for two reasons. Firstly, you will have more control over the layout and design of your store. You can make it uniquely yours and engage in better search engine optimization (SEO) and digital marketing strategies. Second, you can offer your customers more convenient (and lower risk) payment options. This flexibility in payment options will help you avoid the burden of chargebacks and loss of customers (and reduce the fees from selling on other platforms).

Employing online marketing to grow your business

Your digital marketing strategy will become key as more businesses move to ecommerce options. Marketers know it will take a bit of hard work this season as competition ramps up from non-traditional ecommerce stores.

You’ll want to improve your online presence.

This includes using SEO and paid ads to drive sales. A word of caution. You need to start developing your online store and website content months ahead of time for your products to be indexed in time for the season.

Blogging and content marketing can help as well with SEO. Plus, it’s a useful tool to inform potential customers of what you’ll be doing this holiday season to make their shopping experience safer and more secure. And if you have an email list, start engaging in email marketing sooner rather than later.

Why you need to be worried about an increase in ecommerce activity
The projected increase in ecommerce business is great. According to this Forbes article, they predict increases in the following industries:

Health and beauty – $23%
Consumer electronics – $20%
Fashion – 19%
Home furnishings – $16%
But there’s also the other side of the coin. Your online strategies will be tested in Q4. So will your SEO tactics, social media marketing plans and anti fraud and chargeback measures.

As small online business owners, you must be even more vigilant to protect your income source. Because, with this massive jump in ecommerce activity, you can bet money on it that online scams, fraud, and chargebacks are going to be rampant.

And if you’re not careful, you could lose our ecommerce payment processing capabilities or worse, get MATCH listed or put on the Terminated Merchant File (TMF). And this will certainly tank any Christmas sales you were seeking to rebound from what would have been a sluggish year thus far.

It doesn’t matter whether you’re a tech startup entering the market, a new business just developing your online store, or an established nutra store. You need to prepare to protect your high-risk business this shopping season.

So, what should you be prepared for?

As an online business owner, you need to understand what ecommerce risks apply to your business model. Here are a few that will rear their ugly heads.

Credit Card Fraud

Naturally, if you’re accepting credit card payments, you need to be prepared to address credit card fraud. For the holiday shopping season, implement security measures that will reduce the likelihood of fraudsters or thieves using stolen credit cards to make purchases on your site.

Chargeback Fraud

Chargeback fraud is also known as friendly fraud. This is where persons will request a chargeback after they make a legitimate purchase. This has not changed, and chargeback fraud has even increased with many businesses struggling to contain it. There are a variety of reasons why persons will engage in friendly fraud. So, you need to put systems in place to try and limit this. Or at least keep your chargeback ratio within acceptable limits.

JavaScript Skimmers

This is a practice where cybercriminals plant webform skimmers to intercept credit card information. This dangerous practice was successful against British Airways in the UK in 2019. The company was later fined for the breach of customer data.

Visa has already detected a new JavaScript Skimmer – Baka – which targets ecommerce websites. According to Visa, their Payment Fraud Disruption (PFD) unit “identified this unique skimmer on several merchant websites across multiple global regions.” Baka was identified in 2020, and Visa had reported another one in 2019, ‘Pipka’.

As you can see, these fraudulent tactics are increasing in frequency and effectiveness. So, you want to implement web-based security systems that can help you combat this issue. Nothing tanks a small business’ online reputation quite as fast as a hacking and loss of confidential customer data.

Malware & Ransomware

Ransomware is the practice of stealing confidential or personal customer data and offering it for ransom to the company from which it was stolen. Ransomware is a popular threat across countries and industries. According to TechRepublic, businesses in the retail industry in the U.S. accounted for 7.5% of ransomware attacks in 2019. And the total cumulative cost of these attacks was $11.5 billion in 2019.

It doesn’t matter if you are a small online business owner or operate a Fortune 500 company.

Affiliate fraud

Affiliate fraud is a topic we’ve covered extensively here at DirectPayNet. We’ve seen the damage it can cause to businesses when affiliate marketing uses fraudulent tactics. This often leads to high chargebacks, refunds and losses for your own business. If blogger sites and influencers are among your affiliates and sources of referral traffic, make sure you review their operations and make your affiliate policy clear.

So, given all these possible threats for the rest of 2020 and beyond, how can you possibly protect your online business?

Implement systems to reduce chargebacks

If ever you need to keep within the prescribed chargeback ratios from the credit card companies, it is now.

Payment processors are already experiencing alarming levels of chargebacks from merchants. As a result, high-risk merchants like yourself must keep your payment channels protected going into and during the holiday shopping season. You need to explore a few options to protect your business and to keep chargebacks at an all-time low.

Verify chargeback reasons

One of the best ways to tackle chargebacks is to assess why customers often request a chargeback. Then you can put in place measures to prevent this issue for future purchases. For example, is your transaction description clear or your business name unfamiliar when it shows up on their statement? Make sure to clarify these things up-front.

This is one of the strategies that DirectPayNet can help you assess and implement to improve your chargeback ratio.

Make cancellations or amendments to subscriptions easy

Many high-risk online business owners and startups like to use a subscription business model.

If you do, check that it is extremely easy for customers to locate how to change their billing or cancel their subscriptions. These self-service features can do wonders for reducing chargebacks. Your customers don’t want to go digging for how to cancel or amend their subscription. Ensure your customer service are adjusted to include as many hours as possible that your customers can reach you and add an online chat function if you can to answer your customers questions quickly.

Add e-checks and ACH payment options

Fraudulent transactions are much lower for ACH payments/e-checks than credit cards. This is good news, especially for high-risk merchants watching their chargeback ratios. This is not to say that ACH fraud cannot happen. But the likelihood is much lower than credit cards.

So, you can significantly decrease your processing risk by including this option in your online payment. ACH and e-check also provide a significant saving over credit card processing fees. To offer these options, you need specific merchant account processing capabilities, which DirectPayNet can help you access.

Implement EMV 3DS, anti-fraud software

Some merchants may want to shy away from certain anti-fraud systems because they see it as a barrier to sales. So, the card companies have enhanced their options for security measures which reduces payment friction.

EMV 3-D Secure was the result.

EMV 3-D Secure protects merchants and cardholders alike from card not present (CNP) e-commerce fraud.

Another important place to start is Know Your Customer (KYC) requirements. KYC solutions have gotten more user-friendly and take less time to implement and use. Invest in advanced tools and KYC solutions that can help you beat ecommerce fraud for the upcoming holiday shopping season. If you have large transactions over $1000, adding additional measures to verify your customers identity will help decrease chargebacks and fraud.

If you’re thinking, “I am still worried about introducing friction into the sales process,” consider the alternative. Lose less than 1 in 5 sales or your entire ability to collect a sale? Which odds would you prefer? I know we would prefer being able to access and accept payments. So, high-quality security software just makes sense.

Manage your order fulfillment process

If your business uses Amazon, you can opt to use its fulfillment centers for order deliveries. But what if you don’t want the hassle and the overly competitive landscape that’s Amazon?

You can embrace your own WordPress store. And when you do, make sure your delivery process is solid, especially if you’re managing a dropshipping online store.

Order fulfillment is another reason cited for high chargeback rates. So, improve your order fulfillment and make sure your delivery times are explicitly stated. It’s also best practice to have deliveries signed for by the recipient. This helps in disputing chargebacks for online business owners.

Cut out or cut down subscriptions

Reduce risk by offering straight sales or bulk buys instead of only subscriptions. Subscription-based business models have a higher chargeback ratio than other business models. Users forget to cancel and instead engage in friendly-fraud and dispute the charges at the bank resulting in a chargeback on your account.

Eliminating subscriptions removes this hassle. Otherwise, make sure to remind subscribers when payment becomes due so they can opt-out, and make cancellation easy.

Get rid of free trials

Especially ones that require a credit card to participate. Free trial subscriptions carry one of the highest chargeback rates for high-risk businesses. Customers miss the end of the trial period, their cards get charged, and they don’t want the service or product. They’ll immediately respond with a chargeback request.

Or, if you have free trials, don’t request a credit card to access. Instead, allow patrons to sign up. When their free trial is ending, ask if they want to subscribe. Only then, when they say yes, should you collect their payment information.

Idiot-proof your business policies

K.I.S.S. – keep it stupid simple, keep it short and simple, or keep it super simple. However, you interpret the K.I.S.S acronym, your policies need to be simple. So, ensure website policies are written in plain language that is easily understood. You can try the free Hemingway app to check readability.

From your Returns Policy to your Privacy statement, Terms of Service, and Cancellation policies, all need to be easy to understand and access.

With clear terms and conditions, and refund policies, online shops can better navigate refund requests and reduce chargebacks.

Make your pricing clear and transparent

If you’re offering recurring billing, make sure it’s explicitly clear to your customers that they are signing up for recurring billing. From the pricing page, to the product/service page and the shopping cart, where recurring billing is required, make it clearly known.

In conclusion

Online fraud typically jumps during peak shopping seasons. And since COVID, online fraud and chargebacks spiked as more people move to online transactions. You can expect online fraud to be even more rampant during the 2020 shopping season.

So, prepare well. Put in place solutions to deal with fraud, reduce chargebacks, and improve your online business performance.

If you’d like guidance on implementing the solutions we’ve highlighted above in your own business, contact DirectPayNet. Let us evaluate your current payment processing systems and find a solution that protects your business and increases customer security. We are ready to help you make money this 2020 holiday shopping season.