How Do More Payment Options Affect eCommerce Merchants?

The growth of technology has completely revamped how businesses go about their operations . Traditional brick and mortar businesses are not scared to use the technology and eCommerce to grow their business in a profit-driven way. Alternative payment options like Square, Stripe, and PayPal are a testament to this mindset.

This lucrative market entices consumers, and therefore, challenging merchants to evolve together with their needs for faster and easier payment methods. In the arena of eCommerce, more payment choices equals more sales.

However, there are a few payment processing challenges eCommerce merchants face when accepting so many payment options. On top of a traditional merchant account that is needed to accept credit card payments, certain types businesses may need to seek high risk merchant accounts, or get separate merchant accounts for each electronic payment method.

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Alternative payments are changing the transaction procedure for consumers, but what about for retailers?

Amazon is your first example of companies that will provide a costly problem for retailers in regards to filing a chargeback. The business declared additional fees for U.S.-centric merchants using alternative methods such as Checkout by Amazon and Pay With Amazon. Cross-border processing fees will leap from 2.9% to 3.9%, and authorization fees will become non-refundable. Merchants will be in charge of a $20 fee if they want to dispute a chargeback claim, adding more pains to an already expensive procedure.

Although Amazon has promised to protect merchants from consumer fraud chargebacks, retailers who sell on their site are not protected, and therefore, held accountable for common chargeback motives called “friendly fraud.” This type of fraud may result in retailers possibly losing the earnings from the product itself, the product, shipping and processing costs, in addition to a fee imposed by a bank when a chargeback is filed. A merchant’s earnings can be totally diminished by too many chargebacks, and for those who use Amazon’s payment procedures, if they want  to fight the claim, they will see additional fees. Essentially, Amazon is currently protecting their profits with their chargeback dispute fee. But the question remains, why unfairly punish the merchant versus the fraudster?

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Merchants selling online not only have to be on the defensive, but offensive due to alternative payments. As trends continue to show payments will continue to grow both for customers and retailers through the end of the year. However, with new forms of payment comes new forms of fraud, and it can be a problem for the industry. eCommerce retailers should implement preventative efforts in their business practices—especially for those selling on Amazon, since chargeback prevention is a stipulation.

Choosing a range of alternative payment options can considerably increase eCommerce business revenue on account of the fact that virtually every state, country, and industry has a preferred method of payment. Evolving with the needs of their customers, merchants have to embrace a payment solution that has the capacity to detect fraud to ensure that earnings will not just sustain, but increase.

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