Simple, in-store card charges are a thing of the past. In today’s multichannel retail world, processing orders and payments is afar more complex affair, with increased margins of error. Jesse Akre, global president and COO of RetailSystem (and an expert on all things omnichannel), offers an overview on maintaining order in the face of potential transaction chaos …
One thing is for certain – there are no two days the same in retail. Each day a different ‘adventure’. With adventure comes challenge – and a need for change.
One of the major areas in retail today that needs proper evaluating for change is your credit card processing processes, and possibly your merchant partner. Gone are the days of simple in-store charges. Today it is phone orders, internet orders, social orders, orders with several payments due to staggered product arrivals and deliveries … a mess to track – and control.
In that mess and retail chaos are often opportunities for fraud and increased merchant processing fees and rates.
Let’s first touch on possible fraud. We have all noticed the supervisor card, sitting on a shelf somewhere near the PED (formally known as the PDQ). The importance of the security of this card is very often underrated. It needs to be in a convenient place to allow employees to process a refund – ease of “getting the deal completed” and making the customer satisfied, over preventing bad things from happening.
Again, we will have all experienced delays in going home due to cashing up not balancing (especially if you are using a manual system), but this can simply be an honest error in incorrectly recording the value of a sale – for example, inputting £24.90 into the PED instead of £249 – or it could be a dishonest employee using the supervisor card to process a refund to their own card.
Sadly, this has probably happened to most of us. Some will be aware, some not, as you simply write it off because you cannot find it amongst the dozens of transactions in a day. It’s a fact – unfortunately, a situation is abused, and most retailers never catch it.
A proper solution to consider is one where the PEDs are automatically fed with the value of the transaction, thus removing the possibility of manual input errors. Retailers also need to consider a solution where the only refunds that can be processed through the PEDs are ones where the original sale was recorded on the system – as a refund or part refund can only be refunded to the same card used to make the purchase, these details are securely stored on the system. It happens – mitigate your risk with change.
Risk and reward
Now let’s change up the conversation. How about all those new types of charges? Any charge without the person in the store with their card in hand is referred to as CNP, or ‘card not present’. Sounds simple enough – but to a credit card processor, the risk of fraud is exponential, and so are the risk profiles and associated ‘fees’.
Think about it this way. When you take a card from a customer as they are right there, in person, you have a very good idea if that person is who they say they are, and if the card is theirs. It is a lower ‘risk profile’.
But what happens when you take a card over the phone? The ‘risk’ increases.
Even ‘riskier’ is an ecommerce order. Yes, measures and protocols can be put in place to mitigate risk, but credit card processing companies will always ‘risk’ the rates they charge you for the privilege of taking the card. What you will see normally is higher rates and fees for riskier transactions. It’s logical – and, unfortunately, part of doing business.
But beware of the ‘blended rate’. Most retailers take far more orders in-store, yet, although it may appear to be a win as it is a lower rate than online or CNP rates, the ‘blended rate’ (the same rate regardless of the type of transaction) means the financial impact to your business is greater, as the blended rate applies to all the safe(r) transactions in-store as well!
So, to recap. Make sure you keep an eye on possible fraud points and find solutions to mitigate that risk. Also, watch those processing rates – a little saving or loss on each order can add up!
Jesse is an omnichannel expert who challenges retailers to prioritise their focus and pay attention to what matters most in their business. With over 20 years of ecommerce and tech experience in the home furnishings industry, his background makes him a perfect fit on any omnichannel topic. He is widely regarded as a go-to source on retail technologies and the consumer journey. Jesse is currently global president and COO of RetailSystem, where he leads the efforts of the award-winning, cloud-based PoS provider.