Card Brand Dispute Updates

As mentioned on the October 2021 Merchant Processing Statement, the Card Brands announced changes to their dispute processing rules that may have an impact on your business. These changes are as follows:

Merchants under MCC 4722 Travel agencies and tour operators – Category 13 Consumer dispute:

An Issuer (Card Issuing bank) will be required to wait 30 calendar days from the date the merchant cancelled the services. Note, the 30-day waiting period does not apply if it would cause the issuer to exceed the dispute time limit. Per VISA, the additional time will allow the travel agent time to research relevant information that will avoid the potential of processing additional credits.

Time Frame Reductions for Third Party Gift Cards:

Issuer will be required to file a dispute under code 13.1 within 120-days of the purchase transaction date. Previously Issuer’s had up to 120-days from the date the cardholder expected the merchandise or services not to exceed 540 days.

Compelling evidence use for dispute response on 13.1 Merchandise/Services Not Received or Provided:

Issuer only addresses merchant supplied documentation during the Pre-arbitration phase as it relates to compelling evidence. Effective for dispute responses processed on or after 16 October 2021, the issuer will be required to address all information supplied by the merchant to support that the cardholder (or an authorized person) received the merchandise or services at the agreed location or by the agreed date / time.

Credits/Reversals processed prior to dispute:

Effective on or after 16 October 2021, if the credit was applied by the merchant before the dispute, the issuer must either: apply the credit to the disputed transaction or certify to which transaction/s the credit/s was applied and why the credit does not resolve the dispute.

This can apply to the following dispute code types:

  • 10.3 Other Fraud- Card-Present Environment
  • 10.4 Other Fraud- Card-Absent Environment
  • 13.1 Merchandise/Services Not Received
  • 13.2 Cancelled Recurring
  • 13.6 Credit Not Processed
  • 13.7 Cancelled Merchandise/Services

Misrepresentation of investment products or services: (for example: binary options or foreign exchange trading), where the Merchant refuses to allow the Cardholder to withdraw available balances.

Effective on or after 16 October 2021, an issuer may use proof of lack or inaccessible cardholder’s service account with merchant. Copies of e-mail/s from the system showing cardholder that their account is inaccessible.

Wait time limits for Dispute Conditions 13.7 Cancelled Goods/Services:

Effective on or after 16 October 2021, an issuer must wait 15 calendar days from the date the merchandise was returned, or services were cancelled.

Rapid Dispute resolution (RDR) credit issued:

Merchant should not be issuing a credit if they are responding to accept a Rapid Dispute Response inquiry. An acceptance will debit the merchant’s account. If a credit is issued on top of accepting the RDR case will result in the cardholder being unjustly enriched. Note: there are no re-presentment or Pre-arbitration filings allowed. Merchant must now request a Pre-compliance filing which can lead to additional cost for filing and technical fees for issuing a credit after or during the RDR acceptance.

Social Media eCommerce: A New Contender in “Shopping Wars”

When asked what he thought the top tech trend of 2021 would be, former Apple CEO John Sculley told FastCompany:

“Platforms like TikTok, Shopify, and YouTube have aligned as a third-party ecommerce fulfillment platforms system to compete versus Amazon. In fact, Facebook and TikTok are both expanding into social-media ecommerce.”

The way we see it, the opportunity is undeniable. But do social platforms have what it takes to take on the eCommerce giants like Amazon, Google, and Shopify? Let’s take a closer look at the opportunities and challenges these platforms are likely to face along the way, and what they might do to overcome them.

What Is Social Media eCommerce?

In May 2020, Facebook introduced Shops to both Facebook and Instagram. These online shops offer an improvement on the practice of creating personal posts or even using Facebook’s Marketplace to sell products. The announcement also cited an intention to help small businesses struggling with the economic impact of COVID-19 as a major motivation for the rollout.

With Facebook and Instagram Shops, small business owners can host product pages and make sales within the social media platforms. Customers discover brands, browse, and make purchases without ever leaving the app.

Social apps are popular with key buyer demographics such as millennials. According to Instagram, 70% of shopping enthusiasts turn to the image-based platform for product discovery. Social media is no longer just about keeping in touch with friends. It’s becoming a way to shop.

The rise of social media storefronts signals social platforms are going beyond discovery, enabling retailers to do more than simply pay for ads that redirect shoppers to a website. Rather, Facebook or Instagram hosts the entire shopping experience—keeping shoppers away from Amazon and sites powered by ecommerce providers like Shopify.

In 2020, people became comfortable with online shopping and spent more time connecting on social media platforms due to social distancing measures. Now, the global social commerce market is predicted to grow at a rate of 31.4% into 2027.

Recently, TikTok announced that it, too, is entering the social media ecommerce ring to contend with Facebook and Instagram.

The race is picking up speed.

Shops Allow Merchants to Create New Customer Experiences

If popular social platforms in other countries are any indication, Facebook and Instagram Shops are poised to ride this growth. Social media accounts for one-third to one-half of all e-commerce transactions in Thailand. In China, WeChat and Little Red Book have already demonstrated the potential of social media ecommerce, and the results could be bigger in the U.S.

Compared to other countries, consumers in the U.S. tend to buy directly from brands more often. Amazon owns 37% of all US ecommerce sales, while 50% of all retail ecommerce in China goes through Alibaba.

If American shoppers continue to spend directly with brands more than they spend on Amazon, that’s a good sign for social media ecommerce. Brands can cultivate an online presence and build customer relationships on social platforms. When users are ready, they can make a purchase without ever navigating away from the place where they connect digitally with friends and family.

Social media ecommerce brings online connections and the shopping experience together.

Other social media platforms are poised to join this trend. People already use Pinterest to “pin” photos of things they like, for instance—and 40% of Pinterest users have an annual household income of over $100,000.

Adding eCommerce is a no-brainer, and Pinterest knows it. The platform’s “Complete the Look” feature recommends relevant home decor and fashion products based on what a user is looking at, linking users to product pages where they can buy what they see in-app.

Are Social Platforms Equipped for the Challenges and Opportunities that Lie Ahead?

As Facebook and TikTok prepare to square off in an era of shopping wars, it’s important to consider what hurdles the social media giants will face.

For example, social stores are sure to increase the number of messages merchants receive in-app. Offering chatbots that use AI to handle simple questions and requests would go a long way to ensure merchants can easily manage their store’s communications.

According to Azoya International director Franklin Chu, the biggest obstacle is actually a lack of easy mobile payments.

Payments are still largely driven by credit cards, which users have to input manually for mobile payments. This creates friction and room for errors. In China, mobile payments are simpler: customers simply authorize a card transaction by inputting a 6-digit code they’ve memorized.

What social media platforms need to overcome this challenge is a payment solution that streamlines in-app checkout. Facebook is introducing its own cryptocurrency, Libra, which may serve to meet this need in the future. In the meantime, however, an on-the-ground solution ideally would leverage digital wallets, virtual cards, and/or other secure in-app card storing options.

For social media providers looking into how ecommerce fits into their business model, the right partner makes all the difference. At Kunai, we build payment solutions to meet complex needs and provide smooth user experiences. Reach out to learn about how we can add payment functionality to your platform today.


Card Brand Changes

The Card Brands recently announced that there will be some changes to certain interchange categories for April 2021 as well as some new fees to be added.  Visa is eliminating certain B2B rates and is   increasing rates on certain business Card Not Present Transactions.   Additionally, many Visa interchange rates will increase depending on a merchant’s MCC code or transaction size.  Visa is also introducing a transaction fee for any merchant that tries to charge a declined card more than fifteen (15) times in thirty (30) days.  Discover is implementing a five cents per transaction  program integrity fee on downgraded transactions.    In addition, Discover will be removing their MID Submission Level (MSL) interchange program and all transactions that qualified at these levels will see significant increases in interchange.  American Express will be increasing their assessment fee and raising their rates on foreign cards accepted at U.S. merchants.  As always, we here at CWA do our best to ensure that our merchant portfolio has a minimal impact when the Card Brands announce their  compliance updates.  Many additional changes by MasterCard and Visa have been postponed until  2022.  However, because of these current  changes you will see a small  increase on  your Mid-Qualified Rates of  0.0007  and your Non-Qualified Rates of 0.0014.   Qualified Rates will not changeWe have tried to keep these unfortunate increases to as low as possible.   We strongly recommend that you visit  our website, under Industry News for compliance updates that are announced by Visa, MasterCard, Discover and American Express.  You also can visit the Card Brand sites to see a list of their interchange rates and other fees and expenses that they charge to merchants.

It’s Time for Merchants to Enhance the Customer Experience with BOPIS and Curbside Pickup Offerings

With the growth in online shopping triggered by the pandemic, there has been a huge surge in customers leveraging buy online, pickup in store, or BOPIS, and curbside pickup options. This surge is unlikely to go away, making it critical for merchants to offer unique omnichannel shopping experiences to stay competitive.

To learn more about the massive growth of curbside pickup and BOPIS in 2020 and how they will be areas of continued innovation in the new world, PaymentsJournal sat down with Jennifer Philo, GVP of US Digital Commerce and Loyalty at Blackhawk Network, and Raymond Pucci, Director of Merchant Services at Mercator Advisory Group.PaymentsJournal It’s Time for Merchants to Enhance the Customer Experience with BOPIS and Curbside Pickup OfferingsPaymentsJournalAudio Player

The pandemic accelerated BOPIS retail and curbside pickup… permanently.  

By now, it’s been well-established that COVID-19 accelerated changes in the ways U.S. consumers shop and pay. “It’s been such an interesting time for us to see the changing dynamics with the consumer and how quickly they’ve adapted to changing shopping behaviors as a result of COVID in 2020,” said Philo.  

Pucci agreed, adding that in the past year, “[Mercator Advisory Group] has really seen a tremendous acceleration of, whether you want to call it buy online, pick up in store [BOPIS], or click and collect. That was a trend that we were seeing pre-COVID, but I think that what would have been a two, three, or four year trend has been compressed into the past year, and we’re really seeing consumers adopting this so much.”

Blackhawk Network saw similar trends emerge. “We saw 85% of our customer base select digital over plastic, which was pretty staggering for us here at Blackhawk, to see that shift so quickly,” said Philo. “And as the consumer is spoken to and asked, most of them tell us that those shopping behavior changes and preferences will be permanent after the pandemic.”

More specifically, 78% of surveyed U.S. consumersexpect permanent changes in the shopping experience, with 44% saying they’re unlikely to shift back to their former shopping behavior once the country reopens. The lasting nature of changes caused by COVID-19 is what makes it so important for merchants to meet consumers where they are to provide the best possible shopping experience.

Convenience and speed matter more than ever.

In 2021, two specific aspects of the customer experience—convenience and speed—will matter more than ever before. “We know through our research that convenience and speed are the two motivators for shoppers. Seventy-six percent of consumers that we surveyed reported convenience as their top motivation for shopping in-store, and 56% cited speed of purchase as a top motivator,” explained Philo. “[Retailers] need to take those convenience and speed factors and now incorporate them into new shopping behaviors like buying online and picking up in store.”

In other words, retailers need to implement quick and convenient features like BOPIS and curbside pickup. “And in many ways, consumer comfort is built along streamlined payments and gifting technologies that can integrate into the fast paced nature of today’s consumer,” she added.

As a result, retailers need to engage with customers in new ways.

With what are now established customer shopping behaviors, retailers must be proactive in adding and optimizing omnichannel capabilities and experiences like BOPIS and curbside pickup. Luckily, there are some easy ways that retailers can do this.

For example, something as simple as signage or other awareness pieces can go a long way in letting consumers know that new ways to buy and pay are available. Even consumers who are proactively looking for new shopping experiences benefit from these reminders.

It’s also important to make sure that the retail experience is as frictionless as possible, which ties into the customer demand for convenience. Beyond making BOPIS and curbside pickup available, updates to internal systems and POS, employee training, and transaction protection efforts can set retailers apart in the market.

“We’re just seeing all these systems converge [and] they have to work,” said Philo. “We are very focused on that seamless interaction for touchless, contactless, fast payments, leveraging gift card rails, to make sure that this is seamless for the customer so they trust it and adopt it and it becomes a part of how they interact with retailers moving forward.”

Gift card offerings are a unique way to enhance curbside pickup.

Part of creating an omnichannel customer experience for customers is being able to provide the same services online that are available in-store. This includes gift cards, a staple offering for grocery retailers. But historically, there wasn’t a way to include gift cards in a BOPIS or curbside pickup shopping experience. Rather, customers had to leave their car to go in-store, pick up a card, and load it at the cash register.

Recognizing the need for a better process, Blackhawk quickly adapted to offer a quick and seamless curbside pickup, at-home activation solution to allow shoppers to continue buying gift cards at grocery stores without having to leave their cars.

“We’ve been working really hard with our retail partners to train and make sure they deliver this in a really safe, secure manner for the customer that feels similar to the original shopping experience. But it’s fast. It works. It’s safe,” explained Philo.

Although there are a few upfront considerations for merchants to offer such a solution, such as inventory management, fulfillment, and customer service, the end result is a win-win for retailers and their customers. “Merchants have to be able to respond to [the rise in mobile purchases] and have the technology where consumers are used to shopping,” said Pucci.

The takeaway

Curbside pickup and BOPIS are two contactless shopping experiences that grew rapidly in 2020. While retailers did a great job pivoting to support this, investing in solutions like Blackhawk’s can enhance the omnichannel shopping experience even more.

“Those are the retailers that are going to win—the ones that are looking at consumer behavior and driving innovation to keep that consumer moving,” concluded Philo. 


Women Small Business Owners Are Optimistic About a Post-Pandemic World

New Visa research for International Women’s Day reveals female founders adapt to adversity, are dedicated to safer shopping.

It takes optimism to get through a pandemic. And if you’re a small business run by a woman, odds are you’re optimistic about what’s ahead. Eighty-three percent of female respondents to a Visa study indicate they are hopeful about the future, with many indicating they are adapting and even growing in the new business climate.

These were the findings from the new Visa Back to Business Study – 2021 Women’s Edition, published as Women’s History Month begins — a pivotal time for companies to support female-owned and operated firms with financial and educational resources. The report features data collected from 2,250 female small business owners and 5,000 female consumers across nine markets around the globe.

Female business owners may be optimistic, but that doesn’t mean it’s going to be easy to keep their doors open. The vast majority of respondents said they had to take measures to adapt to challenges presented by COVID-19 and 84% of female small business owners took steps to adapt their payments methods to meet evolving needs of shoppers.

Despite the challenges of 2020, it’s clear from the data that savvy female owners realize new business opportunities and leverage technology and online selling to stay connected to customers.  

This includes Ngina Shulman, founder and owner of Lotus Media based outside of Seattle. The mom of two started a business converting old video tapes to digital a few years back when she saw a market opportunity to help families preserve their memories.

“What started as a local business quickly spread thanks to the power of the internet. Positive online reviews from customers helped generate more than 20,000 orders, according to her web site. Tapes came in from as far away as Hong Kong.”

Like any small business owner, Shulman felt the uncertainty brought on by the pandemic, but also pivoted to take advantage of technology to keep the orders coming. She spent more time networking online to connect with other business owners outside Washington State. In the process, she was able to find new customers and rethink her business approach.

“We are an online company with a local focus, but now we are seeing that we can go global, she says. “I’m sure there are people all over the world that could use our services.”

Going global, staying local

Shulman’s observation would be shared by many of the respondents to the Visa Back to Business Study – 2021 Women’s Edition. More than a third of female respondents (37%) saw COVID-19 as more of an opportunity than a challenge. Of those, 42% said they were able to focus on new or different products and another 37% expanded their sales channels.

Despite the rapid acceleration of online sales and digital payments, in-person shopping is poised for a comeback: consumers still want experiences in the real-world, especially in sectors like retail and apparel. Just over half (51%) of women who responded to our survey indicated they intend to do most of their shopping in-person after a vaccine is widely available.

That’s good news for entrepreneurs like Shulman who pride themselves on their personal service and community connections. “We have people who have called us up and want to make sure we are a local business, they want to support local businesses,” she says.

“We have the best customers.”


Venmo Users Moves Beyond Person-to-Person Transfers

PayPal’s Venmo recently conducted a survey of over 2,000 of its users and found that many of its app devotees that use Venmo for person-to-person (P2P) transactions trust the app for purchases with merchants. And that’s good news for Venmo as they look for sources of revenue.

Venmo P2P transactions only generate fees from customers when they pay for an instant transaction, so in total are not profitable. By adding the option to pay with Venmo, they can now collect fees from merchants for transaction processing services.

Venmo discussed some of its findings in a blog:

Several years ago, we extended its use to our merchant community, offering them the ability to add Venmo at checkout to create a quick, simple and seamless experience. In this time, the community has grown to more than 65 million people who are looking to make Venmo a greater part of their everyday spending. For merchants who are interested in connecting with Venmo’s highly social and engaged audience, and find a way to rise above the competition, the time has never been better based on demand, market conditions and people’s interest in transacting with Venmo.

According to a new study of Venmo customers, nearly half (47%) of customers are interested in using Venmo as a payment method when checking out with merchants, ranging from merchants in everyday spend categories like groceries to those offering clothing, shoes and fashion apparel. The data shows that 89% of customers prefer to pay with Venmo because they trust the brand, it’s easy to use and because it allows them to split transactions.

Venmo has been progressively adding more and more services to its brand including credit card and check cashing options. Looks like Venmo has its sights set on becoming a neo bank.


The SPENDemic: Holiday Shopping During COVID-19

COVID-19 has changed everything about the way we live, and this trend doesn’t seem to be pausing for the holidays. Parties are significantly smaller or nonexistent, many out-of-state family members won’t be returning home, and tree lighting ceremonies have gone virtual.

And while the spending habits of gift buyers have also changed, consumers are still shopping for presents for their loved ones. The infamous Black Friday shopping has been slowly moving to a more virtual market, but this year has seen the highest increase in e-commerce retail sales.

To discuss how the pandemic is affecting both merchants and consumers during the 2020 holiday season and how it will alter future holidays, PaymentsJournal sat down with Jennifer Sherman, SVP of Product at NMI, and Raymond Pucci, Director of Merchant Services at Mercator Advisory Group.

2020 has certainly been an unprecedented year, and as we enter into the final quarter during the holiday season, high e-commerce numbers are expected. According to the chart below, in 2019, when pandemic was just a dramatic word used in cinema, there was already an 11% increase in e-commerce sales.

Retail vs Travel E-commerce Sales

While travel is down a whopping 75%, 2020 is estimated to see a 17% increase in e-commerce sales, 6% higher than the previous, non-pandemic year. “And I wouldn’t be surprised, given that Q4 brings the holiday season, we might even be closer to 20% year-over-year increase in e-commerce retail sales for the U.S. market,” said Pucci.

Although that number is expected to drop over the next two years as the pandemic abates, there is still a predicted 10% increase from 2020-21 and a 12% increase from 2021-22.

Merchant success during this holiday season

While the global pandemic may be on the naughty list, consumers are still buying for those who are nice. Retailers everywhere have had to alter their sales operations in ways that make customers feel that shopping is safe, secure, and hassle-free. This can mean many things, both for in-person transactions and online shopping. “NMI has recently done a poll that showed that 29% of consumers are actually still planning on doing most of their holiday shopping in store,” said Sherman, “where 40% are expecting to do some mix of in store and online.”

For the in-store shopper, everything is about health and safety. Changes can consist of adding appropriate signage indicating the maximum number of customers at one time and the direction of foot traffic, offering masks and sanitizers, and creating a touch-free environment. “That means contactless and touch-free payments, things like QR codes, and ensuring that the devices you use to accept card present payments [also] accept contactless payments,” added Sherman.

In terms of online shopping, merchants must be realistic and upfront with shoppers about shipment times, allowing customers to figure out when purchases should be made for them to arrive on time. This means that earlier holiday order cutoff times must be properly advertised and known.

Convenience is also a major key to a successful buying and selling season. “I was reading in a Salesforce blog a few months ago that they saw over 100% month-over-month increase in purchases from social media referrals at the height of lockdown,” said Sherman. Merchants should prioritize social media buying, making it easy for consumers to purchase directly from sites like Instagram and TikTok. This includes buy buttons on the seller’s account that people can click to order the advertised product without having to go to the retailer’s website to make the purchase.

Preparing for pandemic shoppers

Nobody could’ve been prepared for the chaos that COVID-19 brought to the world. And for those merchants who feel like their technological infrastructure is behind their competitors, Sherman offers two words of sound advice: “don’t panic.”

In many instances, catching up with the competition is not as hard as one may think. For example, an NMI survey found that 32% of merchants reported the main reason they don’t have contactless payment options is because they don’t have the technological capabilities or the time to set it up. “But with today’s cloud based solutions, a merchant can be up and running on a contactless device in as little as 72 hours,” countered Sherman.

The same is true for generating and accepting QR codes and QR code payments, as well as implementing buy buttons on social media. “We’ve always seen those as the domain of big retailers with big budgets to spend money on big e-commerce,” explained Sherman, adding “But it’s just not true. Those solutions are available for the SMB today.” Because the solutions are accessible in the cloud, all of these options can be executed rather quickly.

“You could get started as little as late next week,” noted Sherman. “And you can be up and running by the time your holiday shoppers come knocking.”

Watching the entire season of “Tiger King” in two days, building a home gym, and assembling countless 1,500 piece puzzles are all COVID trends that have come and gone. So it’s hard to say which trends are pandemic-specific and which will become a permanent part of our daily lives.

“I think COVID has created changes in behavior that we are going to see for years to come,” said Sherman. Consumers are going to continue to look for both speed and convenience when ordering online, picking up in-store or curbside, and shipping goods to friends and family. They will also expect seamless return policies, whether it’s through shipping or an in-store location.

Contactless payments will also continue to be a popular and more broadly adopted payment option. “Consumers are going to see that faster [check out] experience and expect it,” added Sherman. Safety and security will continue to be a top priority, with merchants expected to ensure the data and privacy of customers is well-protected.

 “Safety and convenience are going to reign supreme in 2021 and most likely beyond,” concluded Sherman.


Omnichannel to Omnipresent – How Retailers Should Navigate the Social Landscape to Drive Purchase Decisions This Holiday Season

The holiday season has always held the ability to make or break the year for retailers. A successful holiday blitz can mean the difference between finishing the year in the red or in the black.

Not since the Great Depression has that statement rung so true.

This holiday season, it’s critical for retailers to grab shoppers’ disposable income by marketing effectively on every channel to Millennials, Gen Zers, Gen Xers and more. While each demographic group has unique shopping triggers, what remains true across all of them is that to be top of mind for purchasing decisions, retailers must tell their story consistently on every channel.

Today, it’s not enough to be on every channel. Brands must be omnipresent. And not just omnipresent, but consistently authentic, meaningful and self-aware. It’s a tall ask, but it’s what retailers must do to win this holiday season.

Three tips will help you tell a consistent story that reaps sales this winter – form an emotional connection with consumers; offer items they can’t find anywhere else and that connect with their values and ideals; and engage informal evangelists and micro influencers on social channels.

Form an Emotional Connection

record number of consumers are abandoning brands to which they were formerly loyal. They’re switching based on a variety of factors. Some, like cost, make sense given the current economic environment. Others, such as the desire to try new and different things, may come as a surprise.

Gen Z shoppers in particular are prone to abandon brands on a dime that they no longer perceive as sharing their values or offering unique items that make them feel set apart as individuals. In these cases, cost is not the determining factor. Affinity is.

In generations past, purchase decision was binary. Which brand offers me the best value for the cost? Today, it’s more about feeling.

How does this brand make me feel about my purchase?

Do I agree with their supply, manufacturing, distribution and marketing practices?

Do they share my values?

Do they make me feel unique?

If you want to drive purchase decisions this holiday season, you need to connect with shoppers’ hearts, and not necessarily their pocketbooks.

Offer Unique Items

What is the holiday season about if not finding and giving the perfect gifts to loved ones? More than other demographic groups, Gen Zers are looking for unique items more so than they are brand affinity.

They shop across all formats, from boutiques to online stores. In a single day, they could shop in person, on their laptop and from within the Instagram app on their smartphones.

At every step of the journey, they don’t just watch brands, or consume marketing messages; they experience them. Across America, for retailers to win this winter, they will need to offer the items their shoppers want in ways that simulate the experience of hunting for, and finding, rare and hidden treasure.

Engage Informal Evangelists and Micro Influencers

In light of the fact that COVID-19 isn’t going anywhere anytime soon, retailers must add social strategy to their holiday marketing efforts. People are spending more time at home consuming entertainment and gaming.

Nothing illustrates this shifting reality more clearly than the fact that Fortnite hosted a concert attended by 12.3 million people. The lesson for retailers is clear – we must go where our shoppers are and engage them effectively there.

Social media must be one of those places, because it is where so many shoppers spend their time, especially in the COVID-19 era. Influencers can be particularly effective here, when used appropriately.

Celebrity influencers aren’t the magic bullet they used to be. Gen Z shoppers in particular are leery of celebrities who have just shared their reach to the highest bidder. Instead, they look for micro influencers who carry on collaborative discussions with 30,000 people or less.

Instead of shifting a large amount of marketing budget to one celebrity influencer, look for informal evangelists or brand loyalists who you can partner with to reach your ideal audiences. This tactic should work with Gen Zers and others who want to know and align with who they buy from, and can snag the dollars of those who are discerning and disciplined shoppers.

A Final Word

As you chase limited disposable dollars this holiday season, it will be tempting to run toward one trend after another. Resist the urge to be a chameleon this winter. Even as you develop distinct strategies for various demographic groups, remember that every person is an individual.

No two are alike.

Focus on who you are and how your customers interact with you. True customer engagement comes by how well you get to know them, and how well they get to know you. Bonds are formed through relationships. Get to know your customers so well that you can anticipate their needs, wants and aspirations and then speak authentically to them.


How to Fight and Prevent Credit Card Chargebacks in Your Small Business

A credit card chargeback is when a merchant charges a credit card for a transaction, and the cardholder later disputes the charge. This might happen because the cardholder is truly a victim of fraud.

In other cases, merchants are the ones who fall victim. Sometimes consumers file for a chargeback with their credit card company even if the purchase was legit.

Chargebacks are unfortunately on the rise. According to a whitepaper from Juniper Research, chargebacks are increasing 20% each year — with the clothing, furniture and high-end merchandise sectors at the most risk.

Below, we’ll dive into ways you can fight credit card chargebacks to protect your business, and how to prevent them in the first place.

Why do chargebacks occur?

What causes chargebacks in the first place? Some reasons consumers may request a chargeback from their credit company include:

Credit card fraud – The customer’s credit card information was stolen

Friendly fraud – The cardholder received the product/service but still requests a chargeback); friendly fraud includes:

  • Forgetting about the purchase
  • Not recognizing the merchant name
  • Displeased with product or service
  • Unclear return policy

Merchant errors – This may include double-charging a customer, entering the wrong information, etc.

How a credit card chargeback hurts your business

Credit card chargebacks are detrimental for small businesses for obvious financial reasons: You lose the money from the transaction. But there’s more to it than that. The 2016 LexisNexis True Cost of Fraud Study reports that for every dollar of nominal loss, merchants lose a total of $2.40 due to chargebacks, fees and stock replacement.

And if it happens too frequently, you could face long-term challenges, Jacob Lunduski, financial industry analyst at Credit Card Insider says. “If a business accumulates too many chargebacks, they can lose the ability to accept credit cards from their consumers.”

Krista Fabregas, ecommerce analyst at says that credit card processing companies and financial institutions may also consider this a black mark on your account. “If the chargeback rate is deemed high, processors will consider the account high-risk,” she says. “This can lead to withheld deposits, account suspension, higher processing rates, and even closure without warning.”

While you might think that you can operate without accepting credit card payments, you could be wrong. Trends indicate we’re moving to a cashless society. “In this day and age, when many people prefer cards, that could put a big crimp in the bottom line,” says Ellen Cunningham, marketing manager at CardFellow.

It’s a balancing act of what works for your business and what works for your customers. “On one hand, businesses want to please their customers and address their return issues, but at the same time handling large amounts of chargebacks becomes a timely and costly process,” says Chris Marchand, VP of business development at Verifi.

How to fight credit card chargebacks and deal with disputes

In the unfortunate circumstance that you do find yourself facing an invalid credit card chargeback, there are a few steps you can take to increase your odds of winning.

“Don’t just automatically assume that all chargebacks are valid,” says David Bakke, personal finance expert at Money Crashers. “If you’re fairly certain that you can state your case and get the chargeback attempt denied, go ahead and do so.”

Let’s look at ways to increase your odds at winning the case — and keeping your money.

Contact the customer directly

“Most of the time, customers bypass merchants when doing chargebacks and go straight to the card issuers,” says Marchand. He’s not wrong. In fact, one eConsumer Services survey found that more than 80% of shoppers have contacted their bank before trying to deal directly with the seller in cases of chargebacks.

That’s why he and many experts agree that merchants should get in contact with the customer directly to understand the issue and see if there’s a way to solve it. Fabregas recommends doing this BEFORE reaching out to the bank.

“Contact the customer to see if there’s simply confusion on the charge, or another issue, like a defect, that you can resolve outside of the dispute,” she says. “A retailer can call a customer to see if another family member made the purchase using their card. This happens often in families with teens, and usually the purchase is legitimate.”

If this is the case, Fabregas says it’s still important to respond to the dispute. “Don’t rely on the customer to call their card company and approve the charge,” she says. “Clearly describe your conversation with your customer in your response documentation.”

Once you’ve updated the dispute, you’ll still want to maintain those open communication lines with customers. “Keep them informed of the status,” says Marchand. “Nothing frustrates a customer more than a lack of communication about their dispute and/or forcing them to contact you over and over again to find out what the status is.”

Remember, the communications with your customer can — and should — continue to be friendly. “Use the chargeback engagement process as an opportunity to improve customer service and brand relations,” Marchand recommends. “If you don’t view them as the enemy or automatically presume fraud, you’ll be able to work out the chargeback by helping the cardholder find a solution that will appease them and stop the dispute.”

Act quickly

Time is of the essence when it comes to credit card chargeback disputes, and you’ll want to act in a timely manner to have the best chances of winning.

Pay careful attention to deadlines and timelines. Mark them in your calendar and set alerts to remind yourself. “If you miss the deadline, you have no recourse,” says Fabregas. She also points out that merchants who fail to respond could receive an additional bad mark on their account.

Cunningham recommends completing everything AHEAD of the deadline to even further increase your odds — and to limit the risk of a bottleneck somewhere along the process. “There are usually a few companies involved in passing along documents to fight a chargeback,” she says. “The sooner you provide the information, the better your chances of having everything submitted on time.”

One key: “Don’t rush so much that you forget something,” Bakke says. Which brings us to our next tip …

Be thorough in your documentation

Jeff Neal, owner of The Critter Depot, has had to deal with credit card chargeback disputes in his business. “We normally win because we’re able to provide the documentation that banks need to confirm the customer actually received the product,” he says. They’ll use screenshots of email correspondence and tracking information, along with any other relevant documentation available.

But merchants conducting in-person transactions don’t always have digital correspondence or tracking documentation to provide. In these cases, you’ll likely have to submit your documented return policy and signed charge slips.

Before you send everything off, give it a final quality assurance review to make sure you’ve been thorough. “Check and double check the chargeback notification letter to ensure you’ve provided everything the bank requested,” says Cunningham, “If you don’t know what a particular document is, ask your processor.”

And if you have additional documentation that further helps your case, feel free to send it along. In fact, Cunningham recommends sending more information than you think you need to. “I sometimes hear from businesses that thought simply sending over a signed receipt was enough proof, only to lose the chargeback,” she says. “Send signed receipts, email correspondence, delivery tracking, anything you have to prove the legitimacy of the transaction.”

How to prevent credit card chargebacks

While there’s not much you can do to prevent a chargeback after the fact, you can take steps to prevent future instances.

Update your merchant account

Sometimes, a credit card chargeback happens because a shopper doesn’t recognize the name of the business on their statement. You might have a parent company name or a former business name that doesn’t resemble your brand now. Fabregas says this is something that many merchants forget.

“A surprising number of businesses don’t check this with their processor,” she says. “Having your exact website or store name appear on statements prevents most recall-related disputes. Plus, adding the phone number gives customers an easy way to inquire about the charge before initiating a dispute.”

Going a step further, you’ll want to be descriptive in additional billing guidelines and descriptors. This can also help customers better recall the transaction. And although there are character limitations, you’ll want to pack in as much specific information as you can to convince a cardholder that they’ve actually made a purchase.

“Fraud mitigation platforms can address the matter by sharing shopping cart-level data, such as merchant’s name and contact information, date of purchase, name of device used in the order process, and item or service descriptions (size, color, style) between cardholders, merchants, and issuers when a dispute arises,” says Marchand. “By provisioning this data directly into the issuing bank’s call center, online or mobile applications, a questionable charge can be resolved directly with the customer.”

Adopt the right technology

Technology has completely changed the way we do business. And this continues to be true when it comes to credit card payment processing. There are many tools available that can help you prevent credit card chargebacks — the main one being a credit card payment processor from an accredited company.

At a minimum, Cunningham recommends working with your processor to use the best compatible anti-fraud technology. “Some tools, like Verified by Visa and Mastercard SecureCode, reduce your liability in the case of chargebacks,” she says. “If you implement those tools, it’s much less likely that you’ll even get a chargeback in the first place.” But remember that this also has the potential to work AGAINST you, making it difficult to successfully appeal a chargeback.

Verify cardholder identity

According to data from Clearsale, stolen credit cards are the No. 1 cause for chargebacks, accounting for 30% of instances. Verify cardholder identity for every purchase with a photo ID – and don’t forget to make sure the signatures match.

As an extra step, send an immediate email receipt so that shoppers are alert instantly about purchases made on their card. The receipt should be itemized and contain details like items purchased, date and vendor location to help jog their memory.

Analyze your chargeback incidents

When you do have chargebacks, it’s important to conduct a post-mortem to help understand what went wrong and why. This can also give you further insights into how to best prevent chargebacks in your business.

This post-mortem is also an opportunity to see if there are specific issues with your products or services that you might need to address. “See if there are things you can adjust in your business model or level of customer service so a chargeback of that particular nature won’t happen again,” says Bakke.

Get your employees in on it

Your staff are the first line of defense against fraud. Include loss prevention in your employee onboarding so that they start the job with a fresh review.

“Consistently and frequently train employees on operational compliance, specifically as it pertains to points of purchase, returns and exchanges, and managing customer service issues,” says Guillot. If your employees are trained to handle issues head-on, you can avoid the chargeback dispute altogether.

How credit card chargebacks by the numbers: other stats to know:

And if you need even more convincing as to why preventing and handling chargebacks should be a priority, consider the following:

  • Consumers do it because it’s easy. The onus is on you, the merchant, to prove the transaction is valid. 81% of consumers admit that they filed a chargeback simply because it was convenient
  • Most consumers go straight to the bank; 58% do not reach out to the merchant when filing a chargeback. Only 14% of cardholders contact merchants prior to filing a dispute.
  • The top merchant challenges that merchants face when dealing with fraud are: Customer identify verification (60%) Delay in payment confirmation (43%) Confirmation of delivery (44%) Address verification (45%) New payment methods (43%) Limited ability claim products (25%) Fraud assessment (11%) International payments (13%) Lack of specialized fraud detection (15%) Manual order reviews (14%)
  • Un 2019, merchants lost 4.4% of their revenue due to chargebacks.

Final words

While they’re a nuisance to deal with, a little bit of due diligence can go a long way when fighting illegitimate credit card chargebacks. The best way to deal with them? Lessen your chances of falling victim to chargebacks in the first place.