[“3 Crucial Payment Lessons for E-Commerce Businesses” originally appeared on Forbes and is written by Jia Wertz.]
Most would agree that starting a business is a huge undertaking; however, the reward bringing it to fruition makes all the birthing pains worth it. The challenges unfortunately don’t stop at the launch of your business – now you must deal with the issues that arise from trying to manage, grow and sustain it.
E-commerce businesses come with their own unique set of challenges. Customer convenience must always be top of mind for your business, and how you receive and handle payment is critical not only to your customer’s experience, but to the business’ success.
As a business owner, you’re likely very passionate and well-versed about your industry, but chances are you are not a payments expert. You want your business to be successful and make big money, but you probably haven’t spent nearly enough time brainstorming how your business would receive and deal with that money. Unfortunately, this neglect gets many high-growth businesses into trouble because invariably they are not prepared for all the financial implications and compliance rules that come with running a growing business.
Welcome to your next business related hurdle. With the knowledge that a misstep in this area could cost you the race, payment education is imperative.
I recently sat down with Tom Villante, whose company YapStone is excelling in the area of online and mobile payment solutions. YapStone’s success has been widely recognized, including being named on INC. 5000 list of the Fastest Growing Companies in America for ten consecutive years; one of the reasons for the business’ explosive growth is that they specialize in aiding online marketplaces with complex payment requisites.
Villante broke down exactly what new online marketplaces need to consider when it comes to building a successful payment solution.
Simplify Your Online Checkout System
Online shopping cart abandonment should be avoided at all cost. If your customers are making it to your shopping cart only to abandon you in the process, you must take notice of what’s going wrong and course correct.
Villante says, “If you are an e-commerce company, you must make it your constant mission to improve your online customer experience and conversion. Prioritizing mobile over desktop methods, social proof of customer satisfaction, check out page design, account information input practices, and customer privacy are the top ways to ensure your business doesn’t allow the fish off the hook. With all the effort and creativity it takes to create legitimate website traffic, don’t allow shopping cart abandonment issues to steal sales from your company.”
Chargebacks Could Kill Your Business If You’re Not Careful
E-commerce businesses are constantly dealing with the transfer of funds from the customer to the seller, but the reverse of this transaction is also something every online business must deal with.
Whether it’s customer dissatisfaction or fraud, many businesses deal with something called “chargebacks,” which Villante describes as the dispute of a charge by the customer that is either the result of product disapproval, legitimate customer service issue, or fraudulent activity to obtain a refund. No matter the case, your earned money is on its way back to the customer and sometimes with a fee.
These fees can quickly add up and impact the bottom line of any growing business. “Furthermore, depending on the scale of your business’ sales, chargebacks and related fees can equal hundreds of thousands of dollars each month,” Villante warns.
Risks are inherent to marketplace activity and chargebacks will most likely increase as we advance digitally rather than recede; however, Villante insists that the most productive way for a business to deal with this certainty is to do their best to prevent it from occurring in the first place. Securing a merchant of record is one way to do that.
Secure a Merchant of Record
Among the list of “musts” for every e-commerce business is securing a merchant of record. The merchant of record is summed up as the liable organization for every single customer to seller transaction, including all credit card fees associated with company transactions and monitoring systems that deal with the risks and frauds that come along with e-commerce business. Basically, a MOR assumes a lot of your risk.
Building an infrastructure for, or partnering with a payments provider to serve as your MOR is more important than ever to successful and efficient growth. Businesses aspire to grow and with that growth comes greater potential for loss. While not an entrepreneur’s initial concern, Villante doubles down on its importance because the more business you do, the greater the risk of loss. Accepting this reality should be paramount to every business owner.
Online businesses rise and fall under the construct that exchanging monies between the consumer and seller must be frictionless. There is no question that how that money is transferred becomes critical in ascertaining how strong the business to consumer relationship will be.
Strong relationships build stronger enterprises. If you are in it to win it, at some point you must look past the product to the system by which the product will be procured and disseminated. Learning the complexities of a payment system and how it functions in your business is essential in securing your spot in the marketplace stratosphere.