The peak holiday sales period, also known as the ‘Golden Quarter’, provided a big sales boost for many merchants. Mastercard’s own research points out that retail as a whole ‘made a comeback around the world’ with many companies seeing increased profits as pent-up demand is finally released after an extended period of consumer caution.

In fact, further analysis reports that 2022’s holiday retail sales increased by 7.6% during November to Christmas Eve. Shoppers were spending more in many categories – restaurant spending was up 15.1% compared to last year, clothing sales increased by 4.4%, in-store shopping was also up and saw an increase in sales of 6.8%, online sales increased 10.6%, while department stores only had a modest increase of 1% over 2021.

This has been good news for retailers, but the new year can bring exposure to greater risks of customers contacting their issuer to contest a transaction. This is the ‘chargeback hangover’ and it has the potential to eat away at a business’ bottom line, during a time where they should be maximising (and keeping) earned revenue.

Also, with more shopping completed online, brands need to ensure they protect themselves from unnecessary chargeback claims – which are more likely with remote purchases – now and for the rest of the year.

What was different about the 2022 Golden Quarter?

2022 was meant to be the year when we could put the financial disruption caused by the pandemic behind us and return to ‘normal’. However, long reaching impacts caused by supply chain disruptions, the uncertainty about the evolving economic climate in 2023 and other global factors caused a longer-term impact on the economy.

That has meant that the recovery hasn’t been quite a significant as commentators had hoped. Companies like PWC have noted that spending in 2022 was flat relative to 2021. In the absence of growth and with inflation higher than it has been in recent history, businesses need to stay on top of unnecessary expenses this year. Fortunately, there are some learnings that they can be mindful of to help keep things on track.

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Preventing chargebacks at all costs

A chargeback occurs when customer disputes the validity of a transaction with their card issuer. Perhaps – because he or she doesn’t recognise the transaction, does not feel satisfied with the service received or is subject to genuine fraud. Contesting an incorrect chargeback from a customer can be a lengthy and expensive process. Therefore, it’s imperative that brands take steps to reduce the growing chargeback surge from sapping their bottom line.

Prevention is always better than cure, and so it’s better to get merchants and their customers working together to prevent disputes from turning into chargebacks in the first place. Real time alerts from issuers whenever a customer disputes a charge allows merchants to potentially reverse the dispute, normally by refunding a purchase in order to prevent the need for a chargeback. In the case of actual fraud, merchants can stop the order fulfilment or delivery and take other steps to reduce losses.

Enhancing the consumer experience

Those brands that focus on their consumer experience will win more customers overall. In fact, chargebacks are a time when merchants may turn a difficult experience into an opportunity. This process could be transformed in the same way some merchants have turned the burdensome act of returning online goods into a differentiator by making it easy for the customer. Additionally, they will also reduce the risk of negative experiences turning into payment disputes and chargebacks.

Providing customers with recognisable purchase transaction details in their banking app, or via digital receipts is an easy way for merchants to add value, while also preventing transaction confusion that can lead to disputes.

It’s possible to significantly reduce unnecessary disputes and chargebacks by providing details such as an easy-to-recognise merchant name and logo. This is something we’ve worked hard on with Consumer Clarity and also includes purchase location details and itemised digital receipts, all within customers’ digital bank statements. This significantly reduces unnecessary disputes and chargebacks.

Reducing financial risks

It’s hard to analyse the 2022 Golden Quarter. On the one hand, it was clearly different to previous years with the economic impact on shoppers, but many retailers discounted heavily to attract consumers, and this translated into better than anticipated results. Overall, holiday sales rose 7.6% this year, a slower pace than the 8.5% increase in 2021 but better than Mastercard’s SpendingPulse had predicted at 7.1%.

This year, those brands that embrace what today’s shoppers are looking for while also taking steps to reduce financial risks will be best positioned to prosper. And technology has the power to help give consumers more clarity and insights around their purchases, as well as help reduce the potential for costly disputes and chargebacks.