How SME retailers can ensure smooth online payments

Credit card payment

COVID-19 has led to huge changes in our work and personal lives, with the retail sector facing particular challenges.

Despite this, there may be some bright spots for UK retailers, with our research finding that more than half (55 per cent) of Brits chose to buy locally and support independent businesses in March 2020. One of the main ways SME retailers have adapted is by shifting to selling their products and services online, with some opening e-stores for the very first time.

David Jeffrey, Director of Product, Barclaycard Payments explains that setting up an online shop for the first time provides a range of opportunities to increase sales and reach a wide range of customers across the world. However, it is essential to bear in mind the importance of ensuring a smooth and secure payment process. Fraud prevention is particularly important now, as data shows that criminals are taking advantage of coronavirus fears, with around £2m having been stolen recently in COVID-19 related scams.

An online store that offers a quick, secure route from browsing to basket, and finally payment, will ensure that customers have a positive experience and are less likely to abandon their baskets at the final hurdle.

By getting the right payment systems in place, SMEs will also increase the likelihood that transactions are approved by the payment processor (known as the ‘acquirer’) and the customer’s bank or credit card provider (the ‘issuer’) – reducing the cost and wasted time spent in following up on any rejected transactions.

There are a number of ways to make this process as smooth as possible. First, ensure that you have the right tools in place. From September next year, Strong Customer Authentication (SCA) regulation will be enforced in the UK, while European payments will need to be SCA compliant by the end of 2020. This means that retailers need to verify the customer’s identity in at least two different ways when taking payments. For example, by asking customers to enter a password, or confirming the transaction with a code sent to their mobile phone.

3-D Secure Version 2 (3DS2) is the new ‘SCA-compliant’ payment security infrastructure. It will require that retailers send additional data with each transaction so that the issuer can check this data against their own records. It offers some significant improvements and benefits to businesses and consumers. For consumers, it’s much easier to make payments when shopping on a mobile device, such as a phone app or tablet. For retailers, it helps to limit friction and potential customer drop-out, meaning fewer shoppers abandon their online baskets and more go through to complete the payment process. By adopting 3DS2 now, retailers will take advantage of these benefits, while ensuring that they are prepared for when SCA comes into place.

Second, make sure that your transactions are flagged correctly to improve the payment experience for customers, and reduce the chances of the issuer disputing a transaction. Under SCA, some transactions, for example, those under a specific amount, or those checked by a fraud solution provider and deemed to be ‘low risk’, can be granted an exemption, ensuring that the customer does not have to go through the two-factor authentication process. Your payment acquirer may be able to help you manage flagging and exemptions, for example, Barclaycard offers Transact – a suite of tools to help in this process and find the balance between security and customer experience.

Finally, the payment process shouldn’t just be seen as a way of transferring money from a customer to the retailer – it provides a vast amount of valuable data that SMEs can use to improve their processes. SME retailers can work with their supply chain and acquirer to interpret, understand and optimise their data to reduce any recurring ‘pain points’, and minimise the number of transactions that need further authentication.

There’s a balance between ensuring that the customer payment experience is quick and easy, and making sure that the right fraud checks are in place. As SMEs look to set up online stores for the first time to take advantage of the opportunities available, it is worth following the above tips, speaking to your acquirer and getting the right processes in place. There are a lot of uncertainties for SMEs in these times. But establishing the basics, like a good payment system, is one way that you can help lay the foundation for a more certain future.