As a merchant, there will be many problems throughout your business that you will have to be aware of. Here are some problem examples, and what you can do to overcome them, and prevent them from occurring.
Looking Out For Fraudulent Payments
One of the main problems that faces merchants and retailers, comes in the shape of individuals purchasing fraudulently. There are a number of ways in which you can look out for this, depending on if you’re a small business, online or physical.
Physical stores are generally easier to help prevent fraudulent payments, as they can’t go through without you allowing it, giving you time to work with. However, ecommerce stores are more difficult, as payments generally go through a system that you won’t have direct control over, unless you say otherwise.
Fraudulent payments pose many problems to your business, from a legal standpoint. If you have a stolen card being used, then that money may eventually be charged back, or someone could be crashing your site to make payments lower than they should be.
Asking For Identification When Required
Whilst it can be an uncomfortable question to ask someone, you are legally required to ask those that look underage for identification for certain age restricted products. If you end up selling a product to someone illegally, then you will be hit with a massive fine, and potential shutdown of your operation, depending on the circumstances.
If you think someone may be providing a stolen card, then you could ask to see their ID to verify who is making the purchase. This isn’t always possible, but it is a good idea to be safer than sorry when it comes to financial regulations and laws.
Speak To Your Merchant Services Provider Regularly
You will most likely be using a business partner as a means in order to take transactions, especially when it comes to physical card payments. For online ones, you could decide to do direct debit payments, but most will use something like PayPal.
In order to best protect yourself against any potential problems, you should reach out to your merchant services provider or whoever processes your payments. You could do this as a payment is being made in order to verify it, to know if what’s happening is legitimate.
If you have any staff, you should train them to be able to identify the signs of fraud. Your merchant services provider may be in a position to be able to provide training or resources that you can use to help in this matter.
Cover Yourself For Any Loss Of Income
Whether you’re a new small business, or you’ve been operating for a while, you should still be thinking of your future. Primarily, you should be thinking about what you will do if you suffer any loss of business suddenly.
You could lose business a number of different ways, from the market suffering a dry spell or a competitor getting an edge over you for a while. It all depends on your business and what you’ve got going on. Take the recent COVID-19 pandemic, which saw many self-employed merchants and small businesses lose almost their entire business due to closures and customers not being out and about.
This loss of income could cripple an entire business if there are no savings or plans in place. It’s always a good idea to have a contingency plan in case of disaster and emergencies. What you could do is look into income protection insurance.
This specialised type of insurance allows you to replace a proportion of your current monthly income just in case there was any reason that prevents you from working. Even in personal disasters such as accidents or sickness, you’ll be covered to ensure you can afford all your core expenditure, such as mortgage and utility bills.
In most cases, you’ll be able to cover up to 70% of your gross annual salary, and browse through several policies to find one that suits you. Drewberry are an experienced team of financial planners who work to find you the best quote and policy possible, for either you or your business, you can learn more here.
Problems Associated With Ecommerce Stores
As a merchant in 2021, you will most likely be operating, or wanting to, an ecommerce store. These stores offer small businesses a great way to sell their goods, and you can use a site builder to do all the heavy lifting for you, such as with Squarespace. However, whilst it is easy to set up, that does mean you need to spend time applying extra care.
That’s because the recent increase in ecommerce across the world has opened new opportunities to fraudsters and hackers. They can set up bots to attempt multiple fraudulent transactions at once, which aims to take down a site or apply chargeback fees for payments that never happened.
You should look into security processes that can help manage your ecommerce store, that can stop fraud as soon as it happens, making it easier to manage.
With an ecommerce store, it can be more difficult to manage your stock, which we saw with the launch of the latest Xbox and PlayStation console last year. That’s because people, as mentioned, can use bots to instantly purchase up goods, selling out the stock and then reselling them for their own profit.
This hurts small businesses with their products, as their own customer base isn’t getting any of the goods that they want, which can damage brand reputation. Of course, this doesn’t happen in a physical store, as you have the physical stock on hand, and can’t oversell what you don’t have.
Unfilled orders due to any stock or supply issues can damage your business, and if you do run into any issues with delivering your product on time, then you should ensure you communicate this with the customer effectively. Otherwise, they may cancel and refund the order, leaving a bad review that will put off future potential customers.
Preparing For Holiday Seasons
Related to stock and supply issues, certain times around the year pose unique challenges for businesses, especially around Christmas. There will be different demands that you should prepare for, such as theming your advertisements and products or building up your stock that you think will be popular.
The holiday seasons popularity is not just with the general consumer, it is also popular with fraudsters and tricksters. You should attempt to get your customers to deal with you directly if you’re small, so that you can work with them to avoid fraud, rather than a third-party site.
Watch Out For Chargebacks
As we’ve been touching on throughout this article, many fraudsters will attempt to contact you or their bank for a chargeback, even if they got their product or never even confirmed their purchase.
There are plenty of sneaky ways that fraudsters look to exploit merchants and merchants’ systems, so you should keep an eye out for them. Speak to other businesses around you to find out what they do to prevent fraud, and how you can help stop them before they even happen.
Most of the time, the chargebacks go through a dispute system which can be a lengthy process, so it’s best to try and stop it sooner rather than later. There are systems in place, such as financial software, that look to minimise their impact.