payment solutions and chargeback management

From Chatbots to Chargebacks: Recent Developments in Payments’ Innovations

Now that we have emerged from the dark recesses of the pandemic, commerce has changed yet again. Post-pandemic, consumers are unwilling to relinquish the comfort and convenience of digital shopping that they grew to love while on lockdown. However, at the same time, physical shopping has seen a resurgence, and brick and mortar locations are not just purchase points. They have become showrooms, fulfillment centers, and pick-up locations. 

In a short period, merchants have navigated from traditional commerce to digital commerce to omni commerce, where customers are served through many channels. So, what should merchants be doing process and technology-wise to respond and keep up with these significant changes? 

This article explains some of the trends that are influencing the business models of both ecommerce and brick-and-mortar purveyors, and the tools that merchants can use to stay competitive.


Quick Payment (QR) Codes
QR codes, or quick payment codes, came to the fore as a payments channel similar to barcode technology during the COVID-19 pandemic. They were widely used before that for marketing and information sharing, but they became a popular way to make mobile payments during the pandemic. QR codes can store large amounts of secure, encrypted data, and they can be scanned from a screen or paper. 

An iPhone or Android smartphone scans the QR code using their camera. This triggers a push notification to guide the user through a transaction. QR codes make contact-free payments easy because individual product QR codes can be printed and displayed on store premises. Hence, the popularity of QR codes since COVID. 

Merchants typically choose a solutions or payments provider to integrate the required software. For example, a restaurant that uses Square can create a menu with a QR code for table-side ordering or takeaway. There are many solutions that display QR codes in a point of sale (POS) app that customers can then scan from a screen. 

Now that socially distanced payments have boosted the use of QR codes, they are convenient and safe payment method that consumers have warmed to. The technology has also been helped along by social media influencers who stream videos of products and display QR codes in their content.

QR codes are one way merchants can streamline the customer experience to boost loyalty and sales. According to Juniper Research, by 2025, close to 30% of mobile phone users are expected to use QR codes to pay for goods and services.


Pay By Links
A pay by link is essentially a URL code that takes customers to a stand-alone web page where they can check out using their preferred payment mode. Links can be sent in a text, email, or social media message, and payment solution providers provide the links usually at no extra cost.

The advantage of payment links is that they are customizable and there is no need for additional digital infrastructure. The disadvantages include that they won’t allow the merchant to track multiple invoices or send automated reminders. Therefore, they are useful for vendors who have sporadic invoicing rather than regular sales.


Buy Now, Pay Later (BNPL)
Buy Now, Pay Later (BNPL) financing allows customers to pay for goods in installments. BNPL is under scrutiny because it can lead to spiraling debt for some consumers, particularly in times of rising inflation. Despite this, BNPL is a common offering among merchants and one that consumers love. Ecommerce giants like Amazon, Target, and Walmart all offer BNPL, where customers choose their preferred payment plan from the platform when they check out. 

With BNPL, customers don’t have to pay the full amount at checkout, but they do have to commit to paying in installments over time. For merchants, it’s a source of additional revenue. For the consumer, they can shop and get financing all from one place and without having to digitally or physically visit the bank for a loan. BNPL payments are expected to increase to 24% of all global ecommerce transactions by 2026, up from just 9% in 2021.


Keeping customers loyal is a focus of merchants regardless of whether they do business digitally or through a traditional store. To that end, building the customer relationship through automated emails, loyalty programs, streamlined payments, and BNPL financing are ways that merchants can improve the customer experience and build connections.

Amazon does an excellent job of staying connected with its customers through many channels. It even helps them to manage their lives. Take Amazon’s Alexa. Without any prompting, Amazon’s Alexa reminds consumers that they might be running low on household items, dog food is a good example, and it might be time to place an order.  

According to the research company Forrester, one customer service megatrend that emerged in 2022 is directly related to customer connectivity. The trend is merchants “future-proofing their customer service stacks.” In other words, merchants are not investing in lock-in solutions from vendors but are making sure their tech infrastructure is adaptable and API-based so that it can integrate with the latest innovations. 

For example, web page-based chatbots are a useful tool to respond to customers, but some customers might prefer to communicate on third-party channels like Messenger, WhatsApp, or a mobile app. Verizon is on this in a big way. Says Forrester, “the Verizon Wireless mobile app provides a multitude of channels for customers to engage with businesses, but they can also move seamlessly from one communication channel to another (for example, starting with a voice call and transitioning to chat), or re-engage later.”

For merchants, finding ways to connect with customers over a multitude of channels and maintaining flexible infrastructure is challenging but will build lasting customer relationships.

For more on integrating payments solutions, read “It All Starts with Playing in the Sandbox – A Developer’s Guide to Integrating Payment Processing”


Activating “Dark” Data
Dark data are the data that companies collect through their solutions and customer touchpoints but don’t use because institutional silos prevent the free flow of information. Forrester predicts that companies will use artificial intelligence (AI) initiatives to centralize their data and will build partnerships to better apply that data to the customer experience. 

An example is Scotiabank’s new software called C.MEE. The software integrates AI technology with Scotiabank’s financial know-how. The AI component can better understand customers, and the combination of AI, data, and financial services results in tailored financial advice to customers that is precisely what they need. According to Forrester, “Scotiabank’s Global AI Platform … powers the AI-driven technology C.MEE that analyzes data across all customer touchpoints (branch, contact center, mobile, online).” 

Using similar technology and so-called “dark” data, merchants can transform the customer experience with chatbots and customer service agents who can anticipate the customer’s needs and offer solutions.


Embedded Banking and Fraud Protection
An increasing number of solution providers are offering embedded banking for merchants and incorporating fraud protection with these solutions. Embedded banking providers allow non-fintech platforms to offer their customers streamlined payments, checking accounts, credit cards with reward programs, BNPL financing, even insurance services. Ecommerce merchants that offer these services are a one-stop shop for customers’ buying and banking transactions, and merchants benefit because embedded banking services keep customers loyal and add revenue streams. 

Customers largely overcame their hesitancy to do banking online during the COVID-19 pandemic, so banking and shopping online is now less a concern and more of a convenience. Nevertheless, many embedded banking providers integrate sophisticated fraud protection in their solutions to adhere to industry requirements and assure the customer that their data and money are safe. 


Chargeback Management Technology
All of these innovations are improving the customer experience and facilitating ecommerce growth. Merchants are latching on to new innovations like embedded banking to leverage the digital ecommerce wave. But with more activity and transactions comes a problem—more returns and increasing chargeback costs. 

Card-issuing banks use chargeback fees to cover the costs of processing disputes. A recent Mastercard report estimated that there will be 409 million chargebacks in the US alone by 2023.  Chargebacks can cost merchants from $20 to $100 per chargeback.  

Chargebacks are a problem. But there are new innovations that help merchants to avoid them. Solutions like Verifi by Visa and Ethoca by Mastercard act as early warning systems for merchants. When a customer initiates a dispute, these warning systems give merchants an opportunity to reach out to the customer and intervene before a dispute goes to the bank and results in chargeback fees. 

The process is that the merchant receives an alert from Verifi or Ethoca when a cardholder attempts to file a dispute with their issuing bank. At this point, the dispute is paused, and the merchant can either resolve the issue directly with the customer or allow the dispute to go ahead.

Both Verifi and Ethoca charge a fee for each alert, but it is much less than the bank fees charged in the event of a dispute. 

For more on chargeback management for growth, read “Digital Chargeback Management—A Better Strategy for eCommerce Growth”


Finding Equilibrium for Merchants and Payments
Ecommerce innovations are solving problems for customers, but they are also creating a big problem for merchants. While consumers are enjoying the ease of armchair shopping, streamlined payments, BNPL financing, and lucrative rewards programs, their transactions are creating a tsunami of disputes and racking up chargeback fees for merchants. Verifi and Ethoca are two ways merchants can better serve the consumer as they do what they do best …shop!

Cartis Payments is a merchant services provider of streamlined digital payment gateways Find out how easy it is to integrate chargeback management solutions and fraud protection with your existing infrastructure.