How the COVID-19 Crisis is Affecting Merchants [Survey Results]

Sydney VaccaroIndustry TrendsLeave a Comment

In this turbulent time of working from home, social distancing, and increased ecommerce sales, many merchants have prepared and innovated the best they can to maintain cash flow. The ways cardholders are spending during the COVID-19 crisis has already resulted in merchants receiving an increase of disputes. High numbers of ecommerce purchases, possible cutbacks in spending due to job loss or economic fear, high purchase volumes of essential goods, and postponed events creates the perfect environment for an increase in disputes.

To help us all gauge the situation, we asked merchants to share their thoughts on how to COVID-19 will affect their business. Here are those findings.

COVID-19 Impact on Revenue

79% of merchants anticipate a negative or significant negative impact on revenue.

94% of Travel and Entertainment merchants anticipate a negative or significant negative impact on revenue.

Subscription Goods or Services is a mix when it comes to revenue impact. 59% of subscription merchants feel that the virus will have a negative or significant negative impact on revenue. The other 41% feel that their revenue will not change or be positively impacted.

91% of Retail Physical Goods merchants expect the virus to cause a negative or significant negative impact on their revenue.

Pie Graph of Company Revenue: Negative Impact: 33% Significant Negative Impact: 46% No effect: 12% Positive Impact: 7%  Significant Positive Impact: 2%

COVID-19 Impact on Fraud and Dispute Attempts

41% of merchants expect increases or significant increases in fraud attempts.

61% of merchants expect increases or significant increases to dispute rates.

While the majority of Travel and Entertainment merchants expect the virus to reduce or have no effect on fraud attempts (69%). 94% anticipate an increase in their dispute/chargeback rates.

59% of Subscription Goods or Services merchants expect the virus will not affect fraud attempts. 65% of Subscription Good or Services merchants think there will be an increase in their dispute/chargeback rate, and 30% expect no change.

64% of Retail Physical Goods merchants anticipate there to be no change in fraud attempts. Half (46%) of these merchants anticipate increases or significant increases in their dispute/chargeback rate. 36% expect no change in their rate.

Social Impact of COVID-19

28% of respondents know someone that has tested positive for COVID-19.

80% of respondents anticipate either months or many months until social distancing requirements are lifted.

Pie Graph of Fraud Attempts: Significant Reductions: 6%  Reductions: 6% No effect: 47% Increases: 29% Significant Increases: 12%
Pie Graph of Dispute/chargeback Rates: Reductions: 6% No effect: 33% Increases: 37% Significant Increases: 24%

Takeaways

Whether it is from cardholders being unable or unwilling to purchase products or customers only making necessary purchases because of job loss or economic hardship, the majority of merchants are expecting a negative impact on revenue.

While the majority of merchants do not expect the number of fraud attempts on their business to increase, they are expecting an increase in dispute attempts. The card networks have also projected a rise in disputes, which is why they have released updated programs, timelines, and addressed FAQs for merchants during the COVID-19 outbreak. You can read more about the updates here.

As merchants enter a time where many will have their revenue negatively impacted, it is even more critical to retain revenue that is gained. Right now, more than ever, is the best time to take proactive steps to prevent disputes and stop fraud loss. By implementing dispute best practices for your front-end fraud solutions and dispute resolution process, your company will be in the best position to retain hard-earned revenue and protect your bottom line.

This survey data was collected from 85 merchants found through Chargeback’s database and website.