For retail businesses, gearing up for the busy holiday shopping season means setting up support for a heavy volume of consumer activity, as most retailers' annual sales are concentrated during the period that includes Christmas, Black Friday and New Year's.
Of the $605 billion in Canadian retail sales in 20181, one-sixth of those sales took place during the November and December shopping season.2 But with increased spending comes greater opportunities for theft, leaving consumers more vulnerable to payments fraud.
The rate of fraud, including identity theft and identity fraud, has risen for seven years in a row in Canada. And with a 12% rise in 2018, fraud accounted for the most notable contributor to Canada's overall crime increases.3
According to the American Express 2019 Digital Payments Survey, more than half of US consumers say they've been the victims of fraud, with 42% reporting that they've experienced a fraudulent attempt to use their credit card or other payment information.
This time of year is ripe for payments fraud activity, but relying on a combination of security precautions can help make the season safer for your shoppers as they complete their purchases.
'Tis the season to pay safe—here's how.
Modes of Payments and How Safe They Are
To keep up with digital shopping demands, many businesses are offering their customers more choices and a wide range of payment options—all of which come into play during the festive shopping season.
The Digital Payments Survey found that businesses offer an average of six different digital payment options in-store and online to meet customer demand to pay safe. According to the survey, credit cards remain the most popular payment method both in-store and online.
Popular modes of payment include:
- Credit cards: 70% use this method in store and 77% pay with cards online
- Peer-to-peer payments: In use by 71% of online shoppers
- Mobile payment apps: Used by 38% of online shoppers
- Check-out buttons: Used by 37% of online shoppers.
Other payment methods include:
- Bank transfers
- Loyalty program points and credits
When it comes to security, not all payment methods are created equally. Some forms of payment are more secure than others, especially when it comes to ensuring safe online shopping. Two of the safest are:
• Chip cards: Microchip-embedded credit cards have become the global standard for payments, and with good reason. Not only are they more sophisticated than their magnetic stripe counterparts, they were developed for the purpose of making card payments more secure.
Magnetic stripe cards are more susceptible to data breaches because they contain all of the cardholder's information, making it easier to steal. With chip cards, however, the card's microchip creates a one-time-use code for each transaction. So even if someone were to steal this code, they would be unable to use it again.
Although Canada requires that all businesses accept chip cards, these cards still contain magnetic stripes for use in countries and at businesses that do not have chip-reading technology. Many businesses also still have terminals with both types of readers, so it's important to make sure shoppers are inserting their cards instead of swiping them.
• Mobile payment services: Much like chip cards, these services allow for more secure online payments by creating a unique code that works only for that transaction. By uploading their cards to pay with these services, consumers can have all of the same capabilities and rewards they would get from those cards, but with the mobile app's encryption benefits, which are key to ensuring online payment protection.
Regardless of payment method, it's preferable for consumers to use a credit card versus a debit card when making purchases, as charge disputes are easier to prove through credit card payment protection if card information is stolen. Because debit card payments automatically withdraw funds from the consumer's account, the consumer will have to prove there was a breach before the bank will provide any refunds.
Tips to Protect Your Next Payment Transaction During Festive Shopping
The hectic pace of the holiday season can cause consumers to let their guard down at a time when fraud is ramping up. It's important to put yourself in their shoes by arming yourself with tips that can safeguard your festive purchases during the season as well.
• Watch credit activity closely. Turning on automatic transaction alerts for your personal and corporate credit cards can make it easier to monitor credit account activity. It also helps to scrutinize statements, and hang on to receipts to make it easier to spot any questionable purchases.
• Strengthen passwords. The most robust passwords for secure online payments contain a combination of at least eight characters, including lowercase and uppercase letters, combined with numbers and symbols. Passwords containing personal information such as a family member's name or birthday are easier to hack. And be sure to use a different password for each separate account.
• Access only a secure WiFi network. The safest way to pay and/or conduct business online is through personal, private networks. Public WiFi networks such as those in airports and coffee shops can make it easier for hackers to obtain credit card information because more people have access to these networks.
To minimize the risks associated with utilizing public WiFi, consider installing an encrypted, virtual private network (VPN) to wall off all private information.
• Use fewer cards: Limiting purchases to a single credit card or two can make it so that fewer accounts are affected if any personal information is stolen and boost your online payment protection. Using a mobile payment app can make it easier to rely on one or just one or two accounts for holiday purchases.
Ensure a safe festive season for you and your customers
As your small business grows, consider digital payment solutions such as American Express vPayment®. This offers even better payment protection for businesses by assigning a single-use account number to each transaction. Such enhanced security features lower the odds of future fraudulent purchases while facilitating faster payments and more detailed reporting capabilities for businesses.
Through these combined efforts and added vigilance, businesses can help create a more secure holiday shopping experience, leading to greater consumer satisfaction and a stronger reputation for your brand.
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.