What Payment Challenges Do Online Businesses Face & How Can They Overcome Them?

Establishing an online business is an exciting venture, but also presents many challenges. Implementing a secure platform for payment processing can be surprisingly difficult regardless of whether you’re a large company or a small business. The ever-changing world of modern technology means that there are lots of new digitals wallets being introduced, which can be hard to keep up with. On top of that, protecting yourself from fraudulent transactions can feel like playing whack-a-mole; there are always new scams out there, or hackers figuring out ways to break down safety walls.

Faulty payment platforms that some online businesses have are not just annoying technical issues for owners, they can drive customers away from making purchases or discourage them from ever visiting the site again. We’ll discuss all the unique payment challenges online businesses can face and the ways in which they can overcome them.

Digital Wallets and Other Methods

Making an online purchase has changed over the past few years, due in large part to the emergence of digital wallets and other contactless payment methods. These apps and websites are great for the customer because of their convenience, but they can complicate things for online businesses.

Digital wallets are online services that allow people to connect their bank information in order to perform simplified transactions. They eliminate the need for re-entering basic information over and over again when buying things from different websites. Additionally, they can be used on phones for in-person transactions with a handful of big companies like Starbucks and Home Depot.

Become Familiar With Them

They may become the norm someday, but at the moment they present a couple of hurdles for online businesses. First of all, all payment gateways and digital wallets will charge a service fee during any transaction. Also, any online business using this service will have to share all of their transactional information with the company. Additionally, simply deciding which digital wallets you accept or don’t accept can be a headache in and of itself.

It’s best to familiarize yourself with the digital wallet industry if you’re an online business owner. Based on the way things are going with Apple and Paypal, eventually, we will all be using them for most online and in-person purchases. Here are some reasons you should get on board with them.

• Quicker Transactions: Quicker transactions are great for everyone involved. They’re convenient for customers, improving the site’s overall user experience.
• Additional Security: Digital wallets offer an extra layer of verification for payments. If someone is paying with one, their banks and credit cards need to be pre-checked by the company before using them with other online businesses. This means you’re less likely to encounter fraudulent purchases.
• Growing Popularity: As we mentioned earlier, digital wallets are steadily growing in popularity. It only makes sense to join in on the trend as it will likely take over traditional payment methods. They already dominate with younger demographics like millennials and Gen Z, and they are expected to eventually replace physical cards.

Fraud

The most obvious payment challenges affecting any online business are fraud and cyber attacks. While lots of advancements have been put into place to prevent large-scale attacks from happening, almost every single e-commerce brand will still experience them at some point. There are a couple of examples you should look out for as a business owner.

Credit Card Fraud

The first form of fraud is the most classic of them all: credit card fraud. It used to occur when someone’s wallet or credit cards were physically stolen, and the thief would make purchases without the person knowing right away. Nowadays when it happens, it’s a little bit sneakier. Hackers can steal credit card data stored online, either from your database or the customers, and make fraudulent purchases. This results in chargebacks, meaning an obligation to return money to a customer. Chargebacks hurt the reputation of businesses in the eyes of banks they do business with.

A severe case of this type of fraud happened to Chipotle in 2017. Hackers installed credit card stealing malware on the company website, resulting in thousands of stolen credit card information. People claimed orders were made from their accounts and delivered to addresses that weren’t theirs.

Protect Yourself

When online attacks like this happen, they aren’t just a headache for the business, they can seriously scare customers away from continuing to purchase from your business. People want to trust that their information is secure when they’re entering it into website forms, so it is crucial as an online business to remain vigilant about potential fraudulent attacks. There are a few ways you can protect yourself from fraud and cyberattacks:

• Strong Passwords: This one may seem obvious, but it’s important nonetheless. If you’re an online business owner, using strong passwords can make a huge difference in your cybersecurity. It’s tempting to want to use memorable ones, but they’re incredibly prone to being hacked. Make sure your passwords are 12 or more characters, consisting of lower and uppercase letters, numbers, and symbols. Additionally, you should consider changing them regularly to add an extra layer of protection.
• Firewalls: Installing firewalls are crucial for any online business. They are software designed to check all the incoming traffic to your website and can prevent malicious malware from getting through. Think of them as little security guards that stand at the doorway of your website to stop the bad guys from getting in.

• Use An Antivirus Program: If your e-commerce website isn’t using any antivirus programs, you’re practically begging to be hacked. They can help prevent unwanted downloads of malicious software, as well as providing protection from any ‘phishing’ that can occur.
• Update Regularly: Any tech person will tell you that updating your website regularly is one of the easiest ways to prevent cyber attacks from occurring. You can purchase software that will automatically run them in case you forget or don’t have the time to do them manually. Updates can add the latest fixes and security patches to your website to help keep them protected 24/7.
• Keep Your Team Knowledgeable: The best way to prevent suspicious activity from happening on your website is by keeping your team knowledgeable. If they know what to look out for, you’re more likely to catch attacks before things can get too bad. Consider having regular cybersecurity meetings to discuss attempted fraud on the website and to make sure everyone is on the same page.

Chargebacks

Chargebacks are often the outcome of fraudulent purchases, but also non-fraudulent transactions as well, and they’re a huge issue for any online business. They occur when a customer disputes a credit card charge. Sometimes they will claim they don’t recognize the charge because it’s fraudulent, or that they never received the item they ordered. It’s hard to verify the truth behind the reasons for demanding refunds, but in the end, you will usually have to give the money back, resulting in losses for your company.

Many online businesses don’t take chargeback costs into consideration as much as they should. Banks and credit card companies make it super easy for a person to dispute charges, and online businesses end up paying the price. Customers who use their own credit card info and then claim to never have received the items they ordered are known as ‘friendly frauds’. It’s a big issue for online businesses large and small, but there are a couple of protection measures you can put in place to avoid them.

• Make All Information Crystal Clear: Make sure all of your product descriptions and product photos are accurate and honest so customers know exactly what to expect when they receive orders from you. A customer can experience buyer’s remorse because the items they received are disappointing somehow, which results in them disputing the charges and wanting their money back. Avoid this by making all of the products on your website clear and straightforward.
• Provide Tracking Information: Not only do customers enjoy being able to track their packages, but it can also provide protection for your online company from fraud. ‘Friendly frauds’ can’t claim a package never arrived when there is proof that it was shipped and delivered to the correct address they provided.
• Keep An Eye Out For Red Flags: Hire a team to specifically keep an eye on all transactions to screen them for fraud. Look out for things like shipping and billing addresses that don’t match, large purchases by a first-time customer, or lots of small purchases being made in a short amount of time. There are also IP addresses that are more likely to breed fraudulent purchases, so look out for purchases from those areas as well.
• Around The Clock Customer Service: Every business knows that great customer service is crucial to maintaining positive relationships with their client bases. Make sure that every page of your website has a link for customers to reach out to you about any issues. If they know they can talk directly with the business about problems, they will be less likely to run to their banks to dispute charges right away.

User-Friendly Experience

The best way to establish a reliable customer base is to use a familiar payment interface. One of the most attractive qualities of an online business is an easy and convenient payment method for customers, resulting in swift and secure transactions. Similar to what we recommended earlier about getting on board with digital wallets, ensuring that your interface is simple and easy to use is vital.

Technological advances mean that customers are always expecting more from their online transactions, and it’s important to keep up with this ever-changing world. If you design your interface so that it can be easily modified, you can change it as new things come along. The entire cycle for a customer, from browsing your site for products to completing the transaction, should be a seamless, hassle-free experience.

• Ask For Feedback: Ask for customer feedback after a completed transaction. This can provide you with important information about what works on your website and what doesn’t. If a customer was confused about how to find something or complete a payment, they can easily just exit out of your window and you’ve lost a sale forever.
• Look At Competitors: Stay vigilant by looking at competitors’ websites for ideas on how to remain on top. If your competitors are offering multiple payment methods, you should consider allowing them on your site as well. If your online business is limited compared to others, customers will be more likely to use them over you.

As an online business, payment challenges are inevitable and will occur frequently. Digital wallets are the new payment method taking over our lives, so it’s best to familiarize yourself with them. Customers like them because they allow for quick transactions and they’re user-friendly. They do have some drawbacks for online businesses, but it’s best to look past those and get on board regardless.

Fraud Is Unavoidable

Fraudulent purchases and cyber attacks are unavoidable with any online business. The best way to protect yourself from them is by remaining vigilant, installing antivirus programs and firewalls, and using strong passwords. Additionally, you should make sure all of your website content is simple and straightforward for customers so no confusion can occur later on. If they know what to expect from the start, they are less likely to dispute credit card charges or ask for refunds.

Keep Things Easy

Finally, making sure your interface is user-friendly and up to date is the best way to draw customers in. Check with competitors to see what payment methods they offer, and try to one-up them. If your website offers the most, you’re the most likely to win over customers.

Online start-up costs are undoubtedly cheaper than opening a brick-and-mortar store, but you’re also competing with big names like Amazon and eBay. You will inevitably face unique difficulties when it comes to online payments as a smaller business. All you can do is protect yourself and stay knowledgeable.