FINANCE: Maximise the Holiday E-Commerce Cheer and Avoid a Fraud Hangover
Recent Western Cape Business News
This year’s sudden spike in online shopping on Black Friday showed the true potential of e-commerce in South Africa. But it also showed that local merchants may not be prepared for sudden spikes in e-commerce trade which will continue into the festive season – and the hospitality industry is one of the most affected writes Rabia Ebrahim.
Local business owners are seeing the benefit of offering online services, allowing their customers to book and pay for flights, accommodation and products whenever and wherever they choose.
Making sure that your site has as many payment options as possible makes good business sense. Not only does this allow freedom of choice, but by ensuring your site has instant EFT options, merchants can significantly cut down on fraud and improve customer service.
Manual EFT can be more trouble than it’s worth
Simply offering a manual EFT option will not solve the merchant’s problems. Manual EFTs can result in more work for already pressurised businesses. Peak season sees a big spike in online activity. Moreover, user error through incorrect capturing of data results in nightmare reconciliation challenges.
The airlines are an excellent example of just how difficult user error can be. When dealing with tens of thousands of online bookings, airlines used to require huge teams just to work on the reconciliations. This was one of the main reasons why they switched to offer instant EFT.
However, this challenge is not the unique concern of the bigger organisations. Smaller businesses also have to ensure accurate records and most simply do not have the staff available to do this.
For e-commerce merchants, manual EFTs also delay their delivery results as merchants will need to wait for the transaction to reflect in their accounts before they release the goods for shipping. Besides delaying the delivery process, purchases via manual EFT often have a high drop-off rate. Many customers select the manual EFT payment method, but then they delay the payment, and often either forget or lose interest in the purchase.
Even cards are a risk
The festive season is a prime opportunity for fraudsters who know how busy the online merchants are and who take advantage of their lack of ability to properly monitor all transactions.
Even with 3D Secure there are still instances of fraud. While South Africa has solid regulations in place from the Payment Association (PASA) Some international issuing banks don’t require their cards to be validated through 3D Secure.
The hospitality industry faces significant risk as South Africans embark on their annual holidays. The small bed and breakfast outfits are particularly exposed to fraud risk over this time. Travellers can easily make use of fraudulent cards, leaving before the transaction can be flagged by the banks. This results in lost revenue and will also result in a chargeback for the merchant.
Manual EFT meanwhile, can delay the confirmation time as the frontline staff may only grant access to accommodation once the money has been cleared into the business’ bank account. This has significant risk from a customer care point of view and puts added strain on frontline staff who, ultimately, have no control over the process.
Third-party bookings also pose significant risk. Most hospitality establishments will request the card that was used for the booking to be presented when guests arrive. However this is not always possible. Students traveling will normally have their parents make the booking and so the card will will not be available when they travel.
Instant EFT solves many of the peak season challenges
Instant EFT has a number of benefits that could limit or eliminate these challenges:
Instant EFT transactions are guaranteed , giving the merchant peace of mind and allowing them to process delivery of goods and services immediately
Instant EFT takes away any manual input, eliminating the reconciliation headache
Instant EFT eliminates the risk of card fraud
Instant EFT can be integrated into the merchant's website in under a week
Some Instant EFT offerings (like that of SID) is backed up by a shopper and a merchant protection programme which safeguards both buyer and seller
The festive season will bring many benefits for local retailers, and if Black Friday is anything to go by, e-tailers can expect a healthy spike in their traffic and sales. Ensuring their payment offerings are up to the challenge will reduce the risk of fraud and ensure a better customer experience – a minimum requirement if they hope to retain loyal customers and avoid unnecessary fraud risk.
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