Blog Article

What to Know Before Starting an E-Commerce Business


Many people underestimate what they need to know before starting an e-commerce business. It's easy to get caught up in the excitement of bringing your business online and growing your sales. After all, people live online, and to remain competitive you need to meet them where they’re comfortable.

What are the advantages of selling online?

There are tons of benefits to starting an e-commerce shop. You can gain customer insights, offer more targeted and data-driven marketing, accept orders 24/7 year-round, expand your reach, and lower your operating costs (if you sell online, you cut costs like staffing and renting a retail space).

Sounds great, right?

But it’s important to understand how e-commerce changes your fees and how to protect your business from potential chargeback losses.


How does e-commerce impact my fees?

Since card-not-present transactions (e-commerce, phone orders, mail orders) have a higher risk of fraud, they are subject to a slightly higher interchange rate or flat rate compared to card-present transactions.

Don’t worry though, your increase in revenue from online sales should more than compensate for these slightly elevated fees.


Why is there a higher risk of fraud?

Unfortunately, since your customers are conducting transactions through a phone or computer screen, there’s no fool-proof way to verify their identity or make sure they have their cards with them.

If someone notices a fraudulent charge on their credit card statement, they’ll probably file a chargeback. This means that you’ll have to pay a chargeback fee, refund the cardholder, and likely lose your original product and shipping fees.

Learn more about the different types of chargebacks.


Luckily, there are a few ways that you can protect yourself from e-commerce-related chargebacks.


Use a reliable payment processor with a good online payment gateway.

Online payment gateways like Converge, use the latest encryption and security techniques to protect your customers from card fraud and ensure you’re PCI compliant.

They also have added security features, including Address Verification Service and Card Verification Value, which make it more difficult to complete a fraudulent transaction.

Using an online payment gateway with these features means you can be more confident that the customer on the other side of the screen is really the credit card holder.


Be responsive to customer complaints.

Just because you can sell online in your sleep doesn’t mean you can give up talking to customers. Good customer service helps reduce chargebacks related to undelivered or damaged products.

Make sure your contact information is easy to find and you’re responsive on all platforms (social media, telephone, email, and Google Business Reviews).


Be descriptive in your online shop.

Write detailed product descriptions with high-quality images to help your customers understand what they're ordering (have you ever ordered a sweater that ends up fitting your cat better than you?).

Accurately describing your products will reduce returns and chargebacks from dissatisfied customers. Bonus points for including product demo videos.

Did you know that including a product demonstration video on your page reduces chargebacks by 60%?


Track your shipping.

Have you ever ordered something that never showed up? It’s disappointing and frustrating when you don’t know the status of your package. Was it shipped? Is it sitting in a warehouse? Was it stolen from my stoop?

Using a tracked shipping method (and getting customers to sign for expensive items) ensures that the product makes it to its intended destination. Plus, if your customer claims that they did not receive their delivery, you can use this as evidence to dispute the chargeback.

Now that you understand the payments side of e-commerce, you’ll be able to better protect your business and focus on giving your customers the best online shopping experience.


Ready to start accepting online payments? Learn more about Paystone eCommerce.


See Our eCommerce Solutions





Adèle Richardson

Adèle Richardson

Adèle is a marketing content creator at Paystone. She likes cats, really good food, and hiking.