How Retailers can minimise the impact of COVID-19

By Mike Goodenough, General Manager for the EMEA region, Ingenico ePayments

Over the past few months, many industries, including retail, have had to operate differently due to the COVID-19 outbreak. With countries going into lockdown, shops closing and many consumers flocking online to buy goods and services, retailers are having to adapt to this new way of doing business.

However, some retailers operating in China are showing signs of recovery. Now that countries in Asia-Pacific (APAC) have started to recuperate, the West, who are months behind them, can begin to learn how to survive the outbreak from their counterparts in the region. Here are our key learnings.

Soaring refunds

Due to multiple travel bans imposed by governments and airlines, the retail industry will see more cancellations and refunds as the impact of COVID-19 on logistics, transportation and shipping creates stock shortfalls.

To maintain good business-consumer relationships, retailers should make refunds within 30 days of a purchase. Furthermore, to ensure consistency throughout this period, it’s paramount that businesses review their refund processes with their payment service providers (PSPs), to estimate the total refund amounts they’re expecting to see, while preparing cash reserves to make up for the funding shortfall.

Chargeback programmes

In retail, a slowdown of the global supply chain and stock shortages can also create the risk of unnecessary chargebacks as delivery timeframes are pushed out, resulting in unhappy customers. Combined with a drop in sales, it is far easier for merchants to breach the threshold where card schemes enact penalties.

Therefore, retailers should keep a close eye on chargebacks and take prompt actions to optimise their listings – for example, removing out-of-stock items in a timely manner and training customer service teams to explain supply shortages to customers, whilst giving them flexibility to refund when necessary. Also, it is imperative that they monitor their chargeback rates daily while keeping an eye on changes to card schemes’ rules during the outbreak.

Cash flow

The virus outbreak has impacted consumers’ willingness to spend, as well as the global supply chain. As such, many businesses have already experienced a dip in sales and profits, especially when strict controls have been implemented. As a result, merchants in some countries may experience a worrying drop in cash flow.

To ensure that they are protected, they now need to consider how to shorten the settlement cycle while reducing the cost of payment processing. Reducing deposit requirements, costs and optimising conversion rates by adapting to local preferred payment methods will help businesses achieve this. Working with a PSP that can offer daily settlements and ensure liquidity, to make payment processes as efficient and lucrative as possible is essential to this process.

Fluctuation in the Foreign Exchange (FX) market

The outbreak has caused dramatic falls in global stock prices and bond yields. Also experiencing extremely high volatility is the FX market, with currencies fluctuating in value significantly from day to day and therefore impacting the value of overseas receipts in foreign currency. It’s a difficult time for retailers to set the right prices for cross-border commerce.

In order to tackle this, businesses should seek FX Guarantee services from their PSPs, or reputable financial institutions, to lower the FX risk. They will be able to minimise currency-induced friction, reduce shopping cart abandonments and allow merchants to profit from smart currency pricing strategies.

Overcoming COVID-19 by working together

As the global spread of COVID-19 continues, it’s important that the entire industry is working together to implement solutions that mitigate the impact of this rapidly changing situation. Ultimately, we must remember that it is possible to overcome the pressure that the entire globe is experiencing as a result of the outbreak.

To learn more, please contact us at: ingenico.com/global-epayments.

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