If you are a business owner, then it would be safe to say that this first quarter has not been what you had expected. As Covid-19 ravages the world and consumers are now tied to the e-commerce world more than ever, so many businesses are losing direct access to their customers. So, what can you do as a business to maintain some sort of operational position? What are the risks associated with these changes? How will this impact your merchant account?
Merchant Account Communication
If you are a standard retail store and most of your debit and credit card transactions are swiped in person then you have probably had to transition to an online or phone order process to take payment. If you haven’t already, you will need to call your processor and let them know about this as soon as possible. Typically, a change in processing style without notice will trigger a risk review. Given the current situation, surely most processors are understanding of unannounced changes, but it is always best to notify them upfront before you run into the possibility of any funding holds for a change in processing.
Update your Terms and Conditions
If you have a standard retail or e-commerce business and you must change your current business practices, you will want to update the policies listed on your website. If you plan on handling returns differently or if you want to extend the return time period for customers, it is best that you update your current policies to reflect this change even if it is only temporary.
Gift Card Risks
Gift cards are fast becoming a viable alternative given the reduced customer foot traffic into brick and mortar stores right now. With the fantastic awareness to “buy local” in many communities, many business owners are trying to help keep their local shops afloat during these challenging times. Shoppers can call or go online to buy gift cards for future purchases if they are not leaving their homes. Some restaurants who can offer curbside side pick-up have also deployed gift cards to assist in supplementing their cash flow. Due to the unknown time frame of the seclusion measures that Covid-19 has caused, there is a risk to your business even from taking gift cards. Most businesses cannot afford to miss 2 or 3 months of sales. With the uncertainty of this epidemic, banks and gift card providers have been wary due to possible chargeback issues should the business never re-open again fully. The permanent closure of a business would certainly increase chargebacks of gift cards that customers would be unable to redeem.
Merchant Cash Advance (MCA’s)
Lately you might have seen a push in people contacting you about getting a merchant cash advance. In short, this is a loan or cash advance that is pushed into your checking account and is tied to your merchant processing. The loan company will pull their payments out of your merchant account deposits. This may seem like an easy infusion of cash; however, the challenge revolves around the repayment and the uncertainty of your continued sales volume. If your sales have dropped or if you have been forced to temporarily close – this may cause an issue with your MCA provider if you do not have the processing funds for them to deduct. Some MCA providers have been more careful about who they issue any advances to in this environment due to the understanding that a lot of business might not be able to reopen.
We all remain hopeful that Covid-19 will soon be gone, and we will be able to resume business as usual. But for now, this is uncharted and daunting times for business owners, employees and customers alike. We want to see everyone make it through this – financially and physically. There are ways of being creative, cautious and smart that we believe can help. Some things may never be the same after this pandemic and that may be for the best. This is a time to reflect on how each of us can bring our businesses into the homes of our customers in a convenient and secure way. Think outside of the box but please stay safe and positive!