What Holiday Shopping Will Look Like for Merchants This Year

November 20, 2020

The year 2020 has altered the course of the road in many ways for so many of us, from adjusting how we socialize and communicate, to adapting how we manage work and school in a virtual setting. As we quickly step toward the last remaining weeks of this notorious year, one thing undoubtedly will drastically change—holiday shopping traditions.

In 2019, reportedly 189.6 million Americans shopped on Thanksgiving weekend. Consumers took to the streets on Thanksgiving night and in the early morning hours of Black Friday to get a head start on holiday shopping. In fact, this has been a popular trend for many years. Friends and family alike gather with a hot beverage to experience the best shopping deals of the year.

2020, however, will not see large crowds gathering at storefronts waiting for the doors to open, as many are putting holiday plans on hold. This also includes Black Friday shopping. Instead, many are opting to take advantage of Cyber Monday to find the perfect holiday deals online. While this new trend will be incredibly convenient for consumers, merchants need to keep a few things in mind—especially in regard to following guidelines from their credit card processor.

Be prepared for early shoppers

Although holiday shopping doesn’t traditionally start until Thanksgiving, retailers are already beginning to see an uptick in sales. This is likely due to consumers wanting to avoid large crowds, as well as preparing for potential shipping delays. As international shipping faces more interruptions due to the pandemic, shoppers are getting a head start, and merchants need to be prepared earlier than usual to accommodate the early rush.

Contactless payments are beyond necessary

For those who will ultimately brave the pandemic and continue to conduct their holiday shopping in person, merchants need to ensure they can easily accept credit and debit cards, as well as provide consumers with as many limited-contact options as possible. A recent study found that 75 percent of consumers weren’t using cash to purchase goods, while 54 percent reported they were avoiding cash altogether. As the pandemic continues into the holiday season, businesses should equip themselves with mobile and touchless payment options, such as text-to-pay and transactions via QR Codes. This will lessen the risk of exposure for both employees and consumers.

Be extra vigilant about fraud and chargeback increases

Since most shopping will occur online, the likelihood of fraudulent purchases will increase, as will the potential of chargebacks. To further protect your business from such threats, ensure you’re in Payment Card Industry (PCI) compliance at all times. Make sure to contact your processor to review these guidelines and have a backup plan in case you do fall victim.

In addition, monitor transactions to uncover any red flags, such as inconsistent billing or shipping information, and be sure to use the Address Verification System (AVS) with each transaction. This system compares the billing address stored on a card to the address on file with the credit card company. Check with your current processor to see if this feature is supported in your contract, and if not, you may want to strongly consider it in the future.

Chargebacks can also be a threat to your business if you receive more than the credit card industry guidelines allow. Excessive chargebacks not only lead to unwarranted fees but can also result in an account review with your credit card processor.  This can lead to a reserve being placed on your account, or worse, account termination.

In order to avoid such setbacks, confirm all business contact information is correct and up-to-date on both the website and on the descriptor of each credit card statement. If consumers can easily get in touch with your business, they will most likely try to dispute a charge with you first, rather than calling the credit card company. Take some time to update return policies and refunds on your website as well. If all else fails, consulting a chargeback mitigation company can aid in managing and avoiding future chargebacks.

Over-communicate with your credit card processor

If you’re not already in regular contact with your credit card processor, now is the time to start. Touch base with them to make sure your business has the right amount of approved processing, to inform them of any changes (yes, even an increase in monthly transaction volume), and to communicate any other significant changes to your business profile this holiday season.

Failure to inform your processor of changes to your business activity could result in a number of unwanted actions, such as being placed on review or being terminated completely. Since this time of the year is the most profitable for retailers, keep a close watch on the details.  You do not want a tiny change in your business model overlooked and result in loss of revenue for the next month to come.

When it comes to maintaining a working relationship with your credit card processor, communication is key.  And as long as you are informing them and taking the necessary steps needed to sustain your business, this holiday season should be just as successful as years past.