A monthly summary of emerging payment trends and forecasts to help you protect your payments and boost your profits
The topic for January’s edition of Verifi’s PaymentsTips Newsletter is on the question that is top of mind for many merchants emerging into 2016: What is the forecast for EMV sales, post-holiday chargeback implications, and what merchants should look forward to in 2016?
2016 is here already and you can be sure that we will continue to see numerous changes and evolutions in the payments space. From EMV gaining a foothold to fraudsters migrating to the online channel, merchants will need to be on their toes every step of the way. That’s not all bad, either. Digital payments will continue to gain momentum and the Internet of Things (IoT) will grow and expand, providing consumers with more ways to pay. While 2016 forecasts allude to a positive year in payments, merchants should remember that EMV will continue to push fraud online. Starting the New Year with a comprehensive, agile fraud prevention strategy will prove beneficial both now and throughout the rest of the year, as fraud evolves and cyber criminals find new ways to game the system. This month, we’ll look at how the holidays measured up this year and provide you with tips for dealing with pesky holiday chargebacks that seem to linger into the New Year. (Spoiler alert – it’s not too late to prevent and stop chargebacks). We’ll also look at upcoming payments technologies and predictions for 2016, so you can optimize your payments plan and get a layered, comprehensive fraud prevention system in place.
2015 Record-breaking Holiday Sales. Something to Take Note of in 2016.
Black Friday did not disappoint this holiday season. Between doorbuster deals that started as early as 6 a.m. on Thanksgiving all the way through Black Friday itself sales soared, especially online. In fact, the Saturday and Sunday following the booming brick-and-mortar holiday showed an increase in broadband traffic from e-commerce – up 18% on Saturday and 21% on Sunday compared with normal daily volumes. In fact, according to Statista, online revenues in the US totaled $1.66 billion on Black Friday, an increase from 2014’s $1.5 billion.
Cyber Monday kept the pace with a record-breaking ~ $2.98 billion in online sales – a 12% increase from over 2014’s largest online sales day in history. Online shopping was so heavy, even Target’s website had some trouble keeping up and was temporarily down.
Post-holiday Chargebacks Lurk Close Behind Threatening Profits. It’s Not Too Late to Protect Your Profits.
The period between Thanksgiving and Cyber Monday broke online sales volume records in 2015. While this is great news for CNP merchants, it’s also a stressful time of year. The inflated sales volume along with complex and changing promotions and shoppers that are stepping outside of their typical buying habits for the holidays make it incredibly difficult to separate legitimate from fraudulent transactions. No one wants to let more fraud get through but no one especially wants to turn away good customers. Thankfully, there are things merchants can do to avoid the “holiday hangover” that can linger well into the new year.
Using front-end feedback loops can be extremely beneficial this time of year. By using post-billing chargeback notifications, merchants can prevent and stop the chargeback process and resolve disputes directly with consumers, avoiding costly fines and fees. Additionally, many merchants forget that they are leaving money on the table when it comes to revenue recovery. Not all chargebacks can be stopped, but many can be recovered on the backend with the proper representment strategy or solution in place.
While the holidays brought in record-breaking sales for most merchants, it also brings forth a potential increase of fraud and chargebacks. Most merchants typically face a 50% increase in chargebacks during and after the holiday season, which can eat away at your bottom line. Want to know how you can protect your holiday profits from chargebacks? Read our latest white paper, Millions More Are At Stake This Holiday Season. Are You Claiming Your Share? and get the facts on chargebacks.
EMV Will Not Be A Silver Bullet For ALL Merchants in 2016. Things You Should Watch Out For.
EMV has been enacted for three full months now, but it has not and will not erase all card-related fraud. In addition to the slow merchant adoption rate (only about 1/3 of merchants are currently on board), the shift will actually push fraudsters online, potentially increasing fraud and chargebacks to card-not-present (CNP) merchants.
The other side of the coin is the cost for merchants who still need to upgrade. Terminals alone can be pricey, depending on the type of reader merchants opt for. One merchant reported the cost of terminals to range between $779 and $999 each – a cost that becomes exponentially expensive depending on the size of the retailer, number of locations and ultimately, number of terminals to upgrade. Not upgrading means bearing a significant part of the fraud losses in the U.S. Annually, card fraud costs the U.S. $8.6 – $10 billion.
Want to know more on EMV and its impacts on your business? Read our latest white paper Count Down to EMV. Are You Prepared? and understand the ramifications of compliance, what new fraud and chargeback threats lay ahead, and what you can do to protect your business. Get the white paper here.
Digital Payments Tipping Point. A Opportunity You Won’t Want To Miss Out On.
Experts predict that digital sales will linger around 8% of retail sales in 2016, with consumer adoption slow in certain segments. As devices become a more prevalent way to pay and consumers get more comfortable parting with plastic for more convenient options, 2020 looks to be the forecasted tipping point for digital payments.
While 2020 is years away, payments leaders are calling 2016 the year that heralds “the third age of digital payments”. As mobile wallet use grows, NFC gains traction and consumers opt for more convenient e-ways to pay, digital will progress. According to one report, alternative payment methods have already eclipsed card payments for the first time, holding 51% of market share.
Parting Words
Pat yourself on the back – you made it through another hectic holiday selling season. The good news is that this season broke records in CNP commerce, signaling to a strong 2016 for online merchants. The better news is that it’s not too late to ensure your payments are protected from costly chargebacks resulting from the peak holiday selling season of 2015. By combining pre-sale and post-sale fraud prevention and recovery tools, you can protect your precious holiday sales and start the New Year off right.
Ask us how our Cardholder Dispute Resolution Network™ (CDRN) can help prevent and STOP chargebacks before they happen as well as provide a feedback loop to inform your front-end fraud control tools. Since chargebacks cannot be completely avoided, our Chargeback Revenue Recovery service provides representment expertise so you don’t leave money on the table. We’ll help you decide when to fight and when to walk away, so you can focus on what’s most important – running your business successfully.
What are your thoughts? Ping us on Twitter (@verifi) with #paymentstips and let us know what you think.