How to tackle top challenges in e-commerce payments

Will the e-commerce infrastructure you put in place early on be robust enough to help you tackle payment processing challenges as your business scales?

In a rush getting to market, startups often choose the most basic merchant services setup to start accepting payments. But when it comes to e-commerce payments, thinking ahead can put you in a stronger position to avoid costly bumps in the road like chargebacks and cart abandonment. You’re also better equipped to grow the business to take advantage of international sales opportunities.

Here are three critical payment processing issues and how to prevent the pitfalls…

Prevent chargebacks with the right policies and payment data

When launching your business, opting for the most expedient payment processing solution may have made sense at the time. But bare bones solutions can leave you less able to dispute chargebacks. When each chargeback could cost your business over $190 – your growth relies on being able to prevent disputes altogether.

Besides rolling back sales revenue, chargebacks can cost you in admin fees, potential fines and higher payment processing rates. And ultimately, having too many chargebacks can put your merchant services account at risk or make it difficult to open an account in the future.

Did your e-commerce setup skip the merchant underwriting process that evaluates business risk? If so, you may be missing critical policies that help reduce chargebacks. What do you need?

• Solid policies on your site for returns, cancellations and refunds. Those take some time and attention to create, but you need them when disputing chargebacks. Customers often report disputes to their card issuer to avoid dealing with merchants directly. But if your policies are clearly stated and visible on product listings and checkout, you’re in a better position to win (and prevent) disputes.

• Expert advisory to optimize policies. The right merchant services provider can help vet your customer policies and check whether they meet market standards. At SVB, our experts understand your industry and tailor your payment processing solution to avoid problems and grow along with your business.

• Real-time notifications about chargebacks. Timing can be critical in fighting chargebacks, so you want to work with a partner that notifies you right away and can connect you to 24/7 dispute resolution services.

• Access to payment processing data. Regularly monitoring your e-commerce transactions can reveal insights into why disputes happen to help you solve payment issues faster or prevent them altogether.

Reduce cart abandonment with optimized e-commerce payments

What are the most common reasons customers abandon their online shopping carts? The majority of e-commerce transactions are abandoned due to limited payment methods and a cumbersome checkout process. With a more robust merchant services solution, you can solve both challenges at the same time.

Here are a few key capabilities to look for in your next payment processing provider:

• Accept a wide range of payment options. Today’s consumers and businesses prefer to pay with a broad range of payment types. To maximize checkout completion rates, make sure your payment processor enables you to accept debit, credit and gift cards, electronic checks and digital wallets like PayPal and Apple Pay.

• Streamline your checkout process. Simplifying the payment experience is crucial to reduce cart abandonment. It's important to minimize the need for manual entry, so let customers save their payment and shipping information for future transactions. Another big win is having merchant services that allow you to offer one-click purchasing. The right provider will have robust security and compliance with the most up-to-date Payment Card Industry (PCI) standards, to provide more assurance that you can effectively protect customer information.

• Startup expertise. Innovation economy businesses may have unique business models and diverse needs as they navigate growth. At SVB, our experts are dedicated to helping startups and venture-funded companies, and we work closely with clients to tailor solutions for every stage of growth.

Drive growth with global payment processing

Any company participating in the digital economy — and that's every e-commerce company — needs to be ready to seize business opportunities globally. In fact, over 50% of startups go global on their first year, and up to 86% engage in cross-border commerce by the 3 year mark.

Accepting international online payments

Building your business on an e-commerce payments platform that will let you go global is a smart way to plan for growth. Right now, you may be focused on domestic markets, but international opportunities could come your way sooner than you think – and you want to be ready.

Being able to accept payments in many other currencies and countries is fundamental, and working with the right payment processing partner can help ensure that.

Scaling global payment operations

You’ll also benefit if your provider has the right expertise to help you handle other aspects of multinational e-commerce, including:

• Address issues such as whether to set up shop in a specific local market, local payment preferences, interchange, tax provisions, compliance and banking relationships.
• Explain volume-based pricing for economies of scale and how you can score the most favorable transaction fees.
• Implement advanced fraud management tools and access easy-to-understand reports on global transactions to improve risk management.

Prepare for growth from day one

Growing companies need a fast-moving, agile mentality – but it’s also essential to plan early for scalability. With your e-commerce payments infrastructure, the smartest strategy is to put robust capabilities in place that can grow with your business. That way, you're more prepared to avoid the costs and risks of challenges like chargebacks, cart abandonment, or an inability to make global sales.

Partnering with SVB Merchant Services, you gain payment solutions built for innovation economy companies. Our experts understand your business models and help you optimize payment processing to grow your offerings and customer base.

Frequently Asked Questions

What payment methods should I offer to reduce cart abandonment?

To minimize cart abandonment, your e-commerce payments solution should enable you to accept a wide range of payment methods including credit, debit, gift cards, and digital wallets like PayPal, Apple Pay, and Venmo. For B2B online payments, you may also need to offer ACH and e-check options. And you can support international transactions with payment options such as SEPA, iDEAL or Alipay. Making it easy for customers to pay with their preferred methods reduces checkout friction and improves transaction completion rates.

How do chargebacks affect my merchant account status?

Excessive chargebacks create serious payment processing issues that put your business at risk. If you exceed a 1% chargeback ratio, your processor may charge higher processing fees, hold back a percentage of funding (sometimes 5-10%), or even cancel your merchant account. And this negative payment history stays on your record, potentially preventing your from obtaining merchant services for five years.

Do we need different payment processors for domestic and international sales?

You don't necessarily need separate payment processors if your merchant services provider offers global payment capabilities with localized payment methods. A single processor with multi-currency support, local networks, and dynamic currency conversion can enable you to efficiently accept both domestic and international online payments. Choose an e-commerce payments platform that can scale globally, while ensuring advanced fraud controls and compliance with regional regulations like PSD2 or data residency requirements.