Amid the economic tumult of the coronavirus pandemic, many merchants are becoming all too acquainted with the concept of force majeure – a natural or man-made shock to the system that brings business as usual to a halt and makes it exceedingly difficult or impossible for businesses to meet their contractual obligations.
For merchants and payment providers, the impact is encapsulated in surging chargeback rates. Chargebacks for airline tickets have
As businesses across industries grapple with the pandemic’s economic fallout, maintaining vital business relationships and shoring up the bottom line will require flexibility, transparency, and continuous communication with external partners and customers.
Most important, businesses should find ways of avoiding chargebacks and look to payment providers who provide round-the-clock technology that can power business continuity.
While merchants are already seeing soaring chargebacks, they should still strive to avoid them wherever they can. It’s important to note that if a merchant is unable to pay a chargeback, the acquirer is liable to cover the associated losses. Passing that liability back to the merchant can be a risk to the business relationship at best, and, depending on the merchant’s financial situation, may just prove futile. Should the acquirer find itself financially strapped, card schemes will ultimately become liable.
Because of this, merchants would be wise to select acquirers with diverse portfolios, to ensure that they aren’t hard hit by crises. And if possible, merchants should allow cardholders to reschedule payments, provide refunds, implement fee waivers, and find other ways of working with customers to adjust terms.
A merchant’s payment provider can play a decisive role in determining whether the merchant is able to ensure business continuity during force majeure events.
Redundancy in payment providers’ core systems is critical to ensuring that systems don’t go offline and thereby jeopardize much-needed revenue; additionally, merchants will be better served by providers with geographically dispersed data centers that can power more efficient response times while also maintaining additional layers of redundancy.
Stable, diversified payment providers can offer merchants the advanced technology and business agility they need to navigate these uncertain times. With businesses likely to operate in the shadow of coronavirus for months or even years to come, now is the time to build resilience.
