This holiday shopping season, Heartland Payment Systems, one of the nation’s largest payment processors, highlights the top five payments challenges affecting consumers and businesses.
According to the National Retail Federation (NRF), sales during this year’s traditional holiday shopping season in November and December are predicted to increase by nearly 4% to $602.1 billion, compared to the same period last year. With the growth of mobile payments, loyalty apps and retailers vying for their share of the holiday revenue, Heartland offers the following tips to help consumers navigate their payment options as they shop during the upcoming holiday season:
When using a debit card, which is better credit or debit?
Most shoppers find themselves facing the credit vs. debit option when using their debit card for purchases on a regular basis. To determine which method is best for their individual usage, shoppers should be aware of the key differences between the two:
Debit – requires shoppers to use their PIN to complete transactions and can be used when they may want cash back in addition to their purchase.
Credit – requires shoppers to sign a receipt as they would with a credit card. The credit option may provide shoppers with extra fraud protection and rewards, but doesn’t offer the cash back convenience.
Both options withdraw money from the shopper’s checking account, but depending on how the merchant processes credit transactions, it may take a couple of days for the funds to clear the shopper’s bank. Consumers should ensure they always have the appropriate funds available at the time of purchase.
The credit option gives consumers stronger chargeback rights, which are particularly important if the product or service is not provided at the time of purchase.
How to shop online — safely
Shop.org expects online sales in November and December to grow between 13% to 15% over last holiday season to as much as $82 billion. By taking a few necessary precautions and safeguards, shoppers can enjoy all the benefits of online shopping while keeping their personal and financial information safe from fraudsters and cybercriminals:
Use familiar Websites and those that use SSL (secure sockets layer) encryption. The site’s URL will start with HTTPS:// and will feature a locked padlock icon in the status bar at the bottom of the web browser or next to the URL.
Use secure Wi-Fi and private computers.
Use strong passwords that mix letters, symbols, numbers and capitalization.
If storing credit card numbers on a Website, shoppers should ensure they have taken the above precautions.
How to get the most bang for your buck when it comes to gift cards:
Gift cards continue to be one of the most popular options for the holiday season, with eight in 10 shoppers purchasing them this year according to the NRF. The good news is, in 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure (CARD) Act, providing consumer protections for gift cards. As a result, gift cards cannot expire within five years from the date they were activated and generally limits inactivity fees on gift cards except in certain circumstances, such as if there has been no transaction for at least 12 months. The federal law does leave room for state regulation on redeeming gift cards for cash and unclaimed property provisions.
When buying gift cards, shoppers should ask:
Is there a fee for activation?
Will a retailer replace a lost or stolen card?
Is the card redeemable at all relevant locations?
Can the card be used at physical stores, online and through a mobile app?
Can the card be used across the different brands of the same company?
Why smartphones are gaining ground as a payment and loyalty option:
According Gartner Inc., mobile payment transactions will total $235.4 billion in 2013 worldwide, a 44% increase from $163.1 billion in 2012. As both consumers and retailers embrace the use of mobile apps, here are some ways smartphones are being put to use this shopping season:
In-store specials only offered via mobile apps.
Line-busting during the busiest shopping times as evidenced in many big-box retailers or offering personal service, such as those offered by Nordstrom or Coach to encourage greater customer interaction and engagement through their own mobile offerings.
Payments at pop-up stores and stands at Christmas villages, fairs, festivals and other small retailers for whom mobile payments are the only option.
Checking product information.
Looking up store locations.
Personalized specials based on previous purchase history.
Why your “security code” is important:
Whether online, over the phone and sometimes in person, retailers often ask for the three- or four-digit security code on the back or the front of credit cards. Known as the Card Verification Value or CVV2, this code is used to fight against the use of stolen credit card numbers and for “card-not-present” transactions to verify that the person using the card is in actual, physical possession of the card.
To safeguard their credit cards and prevent theft, consumers should keep the following in mind when asked for their CVV2 code:
Online retailers will always require the CVV2 in order for a consumer to complete the purchase. For this reason, consumers should only shop with reputable and trustworthy online retailers.
If consumers who are shopping at a brick-and-mortar store are asked for the number, they should ask why the retailer needs it and what they intend to do with it. Just as with online retailers, consumers should only shop at trusted retailers and be wary of pop up shops and stands this holiday season where they may not be sure of the proprietor’s intent.
Note that businesses are forbidden from storing the cardholder’s information and the CVV2 in print or in a database.