Gabe McGloin, Head of International Merchant Sales and Business Development at Verifi
Christmas is approaching faster than many of us are ready for, but one thing is certain: the e-commerce world is heating up with Christmas shopping well underway. Looking back to 2017, mobile sales accounted for 34.5% of all e-commerce sales. By 2021, mobile sales are forecast to account for 54% of total e-commerce sales. Whilst these figures present exciting growth opportunities to any merchant operating within an omnichannel structure, the potential should be approached with caution. Because nothing can detract from a successful holiday sales period more than transaction disputes, fraud, and merchant errors.
Data Is Key in a World of Frictionless Payments
Today’s e-commerce shoppers expect a smooth, efficient, and trouble-free transaction, and fraudsters see this as an opportunity. This balance between security and frictionless purchasing creates an environment for technically savvy opportunists to engage in thievery and deceivery. It’s unfortunate when all merchants and most customers are concerned with is ensuring the purchase and delivery of gifts, winding up festively wrapped and under the tree before December 25.
Once the Christmas rush is over, merchants should be able to look ahead to post-holiday sales. However, it is typically not until celebrations come to an end that merchants have to deal with customer billing confusion and fraud. Storing detailed purchase data gives merchants the information needed to track transactions, stop fraud and prevent chargebacks where possible. Unfortunately, this data is useful only when a customer contacts the merchant as the first point of contact in a payment dispute – but this is rarely the case.
Customers bypassed merchants, going directly to their issuer in up to 76% of dispute cases, according to a Javelin Strategy & Research report commissioned by Verifi. Although this course of cation may seem logical to the customer, it’s not ideal as issuers don’t have the same detailed transaction data as merchants, making it hard for issuers to effectively resolve the dispute. The result is often a provisional refund and a costly chargeback. For the business fraudster, this means “free” merchandise and unwarranted refunds. However, there are opportunities for merchants and issuers to share transaction data, resolve disputes, and prevent chargebacks.
Data-Sharing is a Double-Edged Sword
Customers trust merchants to protect their data, and in turn merchants must do everything in their power to maintain that trust. A data breach broadcast in mainstream news and circulated via social media can be devastating to a merchant. Complacency in the card-not-present (CNP) marketplace is the greatest threat to detecting, deterring, and preventing fraud in digital and mobile channels.
Fraudsters cleverly look to exploit gaps in a merchant’s security policies and procedures. They understand that merchants struggle to keep up with evolving payments innovations and make their living pouncing when merchants are most vulnerable, such as during the ultra-busy Christmas season. Before partnering with an issuer to share data and resources against chargebacks, merchants need to ensure that their security standards protect against any breach of customer data.
Protecting the crown jewels – the data
To benefit from the best practice of sharing data, merchants need to ensure a multi-step process has been conducted and is regularly audited. This includes:
- Conducting a data privacy audit: Identify what data your business needs and the actual data you are collecting.
- Only keeping necessary transaction data: Key transaction details, such as product purchased, merchant name and contact information, type of device used for the purchase and customer name, username, IP address, location, phone number, and email address. To help identify true fraud, retain customer information including their transaction history, previous transaction disputes, and refunds issued.
- Protecting all data you collect: Ensure your network, databases, and website are secure from hackers with regularly scheduled reviews and testing.
- Securing customer data: The customer service team needs to be up to date with best practices and current technology. Train your customer data team never to give out credit card information, addresses, phone numbers, or passwords unless they can verify the customer’s identity with security questions before proceeding with discussing their account.
Maintaining joy and good tidings post-holidays
Merchants and issuers have a vested interest in preventing chargebacks and fraud – but they must be especially vigilant during the busiest shopping period of the year. Fraud and mass scale chargebacks not only affect profit but can also result in reputational damage to merchant brands. By capturing, securing, and sharing transaction data with issuers, merchants can leverage their most fundamental tool to maximise profits and minimise disputes, during and following the holiday shopping season.
HOW TO MANAGE YOUR CASH FLOW IN UNCERTAIN TIMES
While the world is constantly changing, probably at a faster pace now than ever before, businesses need to manage cash flow and costs to drive success in uncertain times, says Matthew Thorpe, partner at Haines Watts Essex.
Managing people and expenses
There are certain costs that you just can’t avoid as a business – to keep your operation running seamlessly, but scrutinise the detail and cut down on any non-essential expenses. Check things like your SaaS subscriptions and look out for costs that auto-renew and if you do cancel, remember to also cancel your direct debits too.
You might want to put a freeze on hiring new people, but ensure that other roles and responsibilities are clearly and efficiently assigned across your team. The Coronavirus Job Retention Scheme (CJRS) has been introduced by the Government to help UK employers access support to continue paying part of their employees’ salary to avoid redundancies. Affected employees are classed as “furloughed workers”.
Once furloughed, the employee cannot work or they will not qualify for the scheme. For businesses that perhaps need to go further, there may be some roles they don’t need any more, but businesses should work sensitively with people to manage this.
Cash is king
In uncertain times, owner managers will need to keep operations going to ensure financial stability. You should look to manage debt more efficiently by negotiating extended payment terms with creditors. You could also renegotiate loans for longer repayment terms to give yourself a lower monthly payment, helping the business to set some cash aside each month.
As a business owner, you need to create a cash flow projection and update this regularly if you are to improve things. You can do this using financial information to create a picture of how the business will look in the next 12 months. The forecast needs to show revenue sources and expenses, which will show the ups and downs of business income and can be used to make sure that enough finance is in place.
While banks and other finance providers recognise that the cashflow of a business may be disrupted by the impact of Covid-19, they are still going to want to see that you are viable and continue to trade in these uncertain times. Make sure your business is organised and don’t let disorganisation cause unnecessary issues. You can evidence this by having detailed forecasts; current order books and projections (as best as possible).
Having instantly accessible, accurate financial information allows you to plan effectively, spot issues before they become problems and manage your money in the most efficient and rewarding way.
Software is now incredibly user-friendly and accessible from anywhere. For a business owner embracing the technology, this means:
- Invoicing can be done instantly when a job is complete, emailed to the customer with an easy to use link to a payment platform.
- Comparison websites can automatically monitor and help maintain lowest cost for things such as light & heat, insurance etc.
- Technology can be used in place of face-to-face meetings. It can also enable them to adapt production lines to different demands.
All of these things and more, used properly, can make managing your business finances quicker, easier and often cheaper. You will also be able to bring clarity to where your business stands and prepare for the next steps.
HOW FINANCIAL SERVICES CAN GET TO GRIPS WITH RISING SUPPLY CHAIN RISK
By Alex Saric, smart procurement expert, Ivalua
UK businesses have never been more dependent on their suppliers to help them deliver goods and services to their customers. Be it retail, manufacturing or financial services, suppliers have a vital role to play when it comes to innovation and meeting customer expectations. However, as supply chains become increasingly global, businesses are potentially exposing themselves to more risk than ever before.
This is especially true in financial services. Whether it’s the impact of geopolitical events like Brexit or global tariff wars, supply shortages, security or the businesses impact on the environment, an organisation’s failure to identify and mitigate risk could see millions wiped off its share price, and its corporate reputation left in tatters. Risk can present itself anywhere and at any time, so financial services firms must be ready to address it. However, many simply don’t have the ability to evaluate suppliers for risk factors, leaving them wide open to business operations being hindered, or being slapped with financial penalties.
More suppliers, increasing risk
One reason why financial services firms aren’t able to evaluate suppliers is the breadth and scale of today’s supply chains. For example, French oil company Total said in in a recent human rights briefing paper that they work with over 150,000 direct suppliers worldwide. This is just one example of how large and varied the roster of partners has become. Research from Ivalua has found that financial services businesses on average are working with around 3,600 suppliers annually, which is evenly split between UK-based and international partners. That number is expected to rise, with 60% expecting the number of suppliers they work with to rise.
The expanding nature of suppliers is only going to expose financial services firms to more potential risk than ever before, yet 78% say they face challenges gaining complete visibility into suppliers and their activities.
A lack of supplier visibility leaves businesses unable to identify and mitigate against supply chain risk. In fact, almost three-quarters (73%) of financial services firms have experienced some type of risk during the last 12 months. These include; supplier failure (43%), environmental impact, such as pollution or waste (35%) and supply shortages (45%). Supply shortages can be among the most damaging to a business, as seen by both the KFC chicken shortage which closed stores, and the summer 2018 CO2 shortage which caused companies such as Heineken and Coca-Cola to pause production, impacting supply across Europe during the World Cup.
Businesses unprepared for the worst
One way financial services firms can better prepare for risk is to ensure they know what to plan for to reduce the impact. However, whilst some say they have a contingency plan in place to deal with risk, many of them are unprepared. Financial services firms admitted to not having comprehensive and deployed contingency plans in place to prepare the supply chain for risk such as; natural disasters (68%), supply shortages (67%), geopolitical changes (65%), environmental impact (63%), supplier failure (62%) and modern slavery (50%).
In order to effectively prepare for these types of risks, it’s vital that financial services businesses fully understand their suppliers, their business environment, global variations in regulations, geopolitics, and a host of other factors. But for many, there are multiple challenges when it comes to gaining this understanding. A prevailing factor is an inability to gain visibility into all suppliers and activity because supplier management data is stored in multiple locations and formats, making insights difficult to access. This leaves teams unable to review supplier activity and assess compliance.
Making supplier management smarter
It’s imperative that financial services businesses are able to respond or prepare for supply chain risk. Clearly, much more needs to be done to ensure they have complete visibility of suppliers, especially in an era where regulators can levy heavy fines for GDPR breaches and scandals spread in minutes over social media. These types of risks can be reduced in the future if procurement teams have a 360-degree view of suppliers which will help with contingency planning and risk management.
For example, in the instance of supply shortages, plans could be put in place that identify alternative suppliers to ensure any shortages do not impact end users. This type of supplier collaboration is paramount when it comes to managing and mitigating against supplier shortages. When it comes to regulations, financial services firms can’t allow a lack of visibility to limit their ability to ensure all suppliers are compliant.
To do this, teams must take a smarter approach to procurement that gives complete visibility into suppliers throughout the supply chain. This will allow financial services firms to identify and plan for risk, reducing the potential damage, and ensuring they are working with and awarding business to low-risk suppliers. Supply chain risk is rapidly becoming an overarching concern for financial services firms, but by providing the ability to assess suppliers, they will have all the insights they need to mitigate the impact on business operations.
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