In this inaugural episode, Al is joined by co-host Kelly Servos to help ring in the new year and the new podcast. This month's featured interview is with Peter Goldsztajn, Director, Corporate Data Analytics at Moneris. Al and Peter look back at all the data from 2021 to see how Canada is recovering from the economic shutdown.
In this inaugural episode, Al is joined by co-host Kelly Servos to help ring in the new year and the new podcast.
This month's featured interview is with Peter Goldsztajn, Director, Corporate Data Analytics at Moneris. Al and Peter look back at all the data from 2021 to see how Canada is recovering from the economic shutdown.
Also in this episode:
Chapters:
Al Grego: Coming up on Shop Talk.
Petter Goldszta...: Well, the good news is we have actually measured shifts from big box store purchases to shop local. And that's because they are going online, the public is sympathizing for the merchants or the industries that have been impacted the most.
Al Grego: Happy New Year, everyone. I'm Al Grego.
Kelly Servos: And I'm Kelly Servos.
Al Grego: This is the January 2022 edition of Shop Talk with Moneris.
Welcome to the inaugural episode of Shop Talk, Kelly.
Kelly Servos: Thanks, Al. I'm honored to be the first co-host.
Al Grego: Well, you should be, this is a really big deal.
Kelly Servos: Is it though?
Al Grego: It's... Well, it will be.
Kelly Servos: Okay. So what is your vision for this podcast?
Al Grego: Well, as you know, Moneris is Canada's leading payment processor with 20 plus years in the business, over 350,000 merchants processing 3.5 billion transactions every year.
Kelly Servos: Right.
Al Grego: And there are many podcasts out there by financial institutions having conversations about payments, business, the economy, and such.
Kelly Servos: Yes there are.
Al Grego: But we are the leading payment processor.
Kelly Servos: Right. You said that already.
Al Grego: So who better to lead the conversation than us?
Kelly Servos: Good point.
Al Grego: So every month we're going to choose a theme and bring stories, interviews, and real data to support that theme.
Kelly Servos: Sounds good. So what's this month's theme?
Al Grego: Well, this being our inaugural episode and also a new year, I figured we'd look back at the year that was 2021 to see how the economy is recovering from the pandemic and the lockdowns.
Kelly Servos: That's a pretty heavy start.
Al Grego: Well, I'm going more for a hopeful tone here.
Kelly Servos: Yes. A little bit of hope would be nice. Who's up first?
Al Grego: First up, we have our feature in interview with Peter Goldsztajn, director of corporate data analytics at Moneris. We had a great chat about how Canada is recovering from the economic shutdown. Here's my chat with Peter.
Speaker 4: Featured interview.
Al Grego: I'm here with Peter Goldsztajn. He's the director of corporate data analysis of Moneris. Thank you for joining me today, Peter.
Petter Goldszta...: Thanks or having me Al. I'm happy to be here.
Al Grego: We're going to talk about economic recovery. Your team has been measuring it all of last year as we were coming out of the pandemic. But just kind of full disclosure, we're recording right now in January and we know that there's a lot of restrictions have happening in different provinces in Canada once again. So the recovery we're talking about is last year. But I think what that could do is inform us of what we can expect this year. Would that be fair to say?
Petter Goldszta...: Well, every lockdown was different as we sort of progressed through this pandemic. Government policy changed, the way we handle it, people's comforts with exposure to the virus, preparedness of merchants, all things to be considered how each sort of lockdown has behaved so to speak. But generally speaking, yeah, similar patterns with regards to verticals or payment types can be sort of observed throughout the pandemic.
Al Grego: Okay. Very good. So let's talk about last year's recovery for a bit. A lot of this depends on or is measured on something you call the recovery index. What is a recovery index?
Petter Goldszta...: Yeah, good question. So firstly, we are very careful on how we aggregate and utilize this data. As you know, one in three transactions across the country can be attributed to Moneris, and if you aggregate them and across vertical levels or different geographies, we're able to make some assumptions on how we're performing in the economy. We capture the transactions directly on the point of sale so it's very timely, it's very accurate, and we're able to measure essentially how the economy is recovered by geography, verticals, different payment types, that sort of thing.
So generally speaking, we try to estimate what the normal would be, and we can apply some methodologies based on historical volumes and transactions prior to COVID, and get an estimation of what the normal would look like during COVID. We would then sort of measure what do our actual volumes look like today by these different verticals and aggregations, and then determine a recovery index. And essentially that would tell us, are we over or under, what is the normal.
Al Grego: So this recovery index is kind of that magic number you guys are looking at all the time. And if it's going up, that means the economy is recovering overall.
Petter Goldszta...: Yeah. Overall, yeah. That's a good way to put it. So if I'm at 80%, then I'm 80%. The norm. 110%, I'm 10% above the norm, that sort of thing.
Al Grego: Okay. That makes sense. Because I mean, different kind of portfolios would be affected in different ways, right? Like what would you say have been some portfolios that maybe haven't been as affected by the pandemic versus the ones that have been more severely affected?
Petter Goldszta...: I mean, it's no surprise things like travel and entertainment have really taken the brunt of the impact. Restaurants of course are directly impacted. And then on the other end of the spectrum, you're looking at things like groceries and household, these type of things have actually done well. Alcohol is another category that's done well. And you can really actually attribute this to a substitution effect. You think about it, if a restaurant's closed, I'm going to go buy and spend some money in the grocery store, or more money in the grocery store is now I have to feed myself. Same with alcohol. Bars are closed, you're going to go to the LCBO and buy your products there.
Household is another good one that I like to talk about is people are stuck at home essentially, or spending a lot more time at home with family and they want to make it as comfortable as possible. So a lot of money was spent on home improvements, products to make your home maybe more comfortable, new furniture, that sort of thing.
Al Grego: Yeah, well, I had a major kitchen remodel early on in the pandemic, and for that express reason. We weren't spending money on travel so we might as well put it into improving the house.
Petter Goldszta...: I can totally relate. And so can half my street, by the way, it was a basically construction zone on the entire street.
Al Grego: Yeah. There were a lot of waste bins in our neighborhood last summer for sure.
Petter Goldszta...: That's right. A lot of pools going in.
Al Grego: Yes.
Petter Goldszta...: That type of stuff, right?
Al Grego: Yeah. All right. So we talked about the recovery index and you've described how you arrive at that number. How was 2021 compared to a normal year?
Petter Goldszta...: Good question. I mean, in 2020, it was obviously the heaviest hit, especially in the beginning of it. 2021, digital channels, everything starting to pick up. We saw some card present transactions recover quite aggressively, and that helped a lot. And at certain points even before this recent lockdowns, we were above the normal, very healthy...
Al Grego: Really?
Petter Goldszta...: Yeah, very healthy recovery, but in different segments than you would expect. Like obviously travel is still impacted. But again, I have to reiterate that substitution effect. People are spending their money differently. But overall, we saw some better than normal performance. And obviously some part of that can be attributed to inflation, of course. But generally speaking, more money was spent through the economy as per our merchants performance.
Al Grego: So after a year and a half of lockdowns and of restrictions, there's been a lot of work by a lot of businesses to put more focus online into digital. Do those numbers show that?
Petter Goldszta...: Yeah, of course they do. And I can talk about the larger businesses and the onset of the pandemic. We were most heavily impacted in the beginning of this thing in the early of 2020. We saw almost a direct shift to, or substitution to digital channels. And maybe not so surprising, but interesting to be confirmed at least, is some of the larger merchants, because of their preparedness, if you think about the big box stores, they already have an online presence. They were very quick to enable curbside pickup, these type of things. While some of the smaller business, the independent businesses, they lagged behind a little bit on that topic and had to catch up, so to speak towards the latter half of 2020 into 2021.
It's interesting that you mentioned that though, because if we're talking about this lockdown, perhaps just better preparedness across the board. I'm not sure they can substitute and capture all the transactions that they would've otherwise in a card present environment, but at least it's something and maybe they'll be in a better position to survive the storm so to speak.
Al Grego: Yeah, even those smaller merchants at least shifted some of their business to digital. Restaurants had more takeout and delivery options and online payment options. So yeah, the hope is during this most recent lockdown, they won't be as severely impacted.
Petter Goldszta...: Well, good news is we have actually measured shifts from big box store purchases to shop local. And that's because they are going online. The public is sympathizing for the merchants or the industries that have been impacted the most. I see a lot of restaurants that say you can get a discount to buy online on their website versus one of the big agility distributors or delivery services. And I think that's a good thing and we should continue that because it'll help support the smaller merchants and hopefully they can brave the storm so to speak.
Al Grego: Great. Thank you so much for your time, Peter.
Petter Goldszta...: No problem. Thank you for having me.
Speaker 4: Ask an expert.
Al Grego: I'm joined by Maria Cameron, director of portfolio and process risk management. How are you doing today, Maria?
Maria Cameron: I'm great. How are you?
Al Grego: Not bad. Maria, we're on the other side of the holidays now, and for consumers, that usually means credit card bills that need to be paid off, and gift returns. But if you're a business owner, especially in retail, it could also mean a lot of chargebacks. So for those of us who aren't business owners, what is a chargeback?
Maria Cameron: Great question. So a chargeback is a credit or debit card charge that is reversed by a bank. This often happens after a card holder contacts their bank to dispute a transaction, claiming that it resulted from fraud or abuse or the products were not received. The funds are then pulled from a merchant's account and return to the cardholders account as part of the chargeback process.
Al Grego: As a business owner, chargebacks are, I guess, a fact of life, but they can pile up at the holidays, right? So how many chargebacks do you get around the holidays compared to the rest of the year?
Maria Cameron: Oh, interesting. So we see an increase at this time of year, just after the holidays of over 2%, especially for delivery not received or fraud-related chargebacks. So in comparison, the average chargeback ratio across all industries is about 0.6%. This is according to Visa and MasterCard. And retail and travel industries usually have about 0.7% chargeback rate. What does that mean for the average merchant at this time of year? They can lose over 1.8% of total revenue due to fraud.
Al Grego: And I imagine that with more and more sales going online, we've seen an increase there as well.
Maria Cameron: Correct. As e-commerce has now increased, especially in the last couple of years because of COVID and more and more merchants are transitioning their business to e-comm, we're getting a lot more fraud related disputes on our merchants that have started processing on e-commerce because they're not aware of the fraud protection they should take.
Al Grego: Well, so you mentioned protection. I mean, you can't really mitigate chargebacks, they're going to happen. But you can mitigate the impact on your business. So how do we do that?
Maria Cameron: So merchants should have a clear return policy first of all, on their website. They should always provide an email address and phone number for customers that have a dispute to contact them, because it will usually eliminate a dispute.
They should also include detailed product descriptions on their website. Avoid keying in card numbers on their own. Have them go through a gateway or through their e-commerce account with user address verification services like ABS, add their CVV codes, their service codes, and also add a 3d secure. This is a great way to mitigate a lot of those chargebacks.
In addition, since they're shipping a lot of products, they should always use shipping insurance or shipping confirmation to track the receipt of the products that they've sent.
Al Grego: It’s a whole new world now with so much shipping happening.
Maria Cameron: Again, you want to be able to analyze key data points to make sure that the cardholder is the cardholder, the address is the verified address, and the card is in hand of the shopper with the CVV code.
Al Grego: Okay, well, thank you very much, Maria, for taking time today.
Maria Cameron: Okay. Thank you for having me.
Al Grego: And that's all we have for this month. I hope you found this episode informative. If you haven't subscribed yet, please do so wherever you get your podcasts. And make sure you don't miss out on all the tips and tricks from our payment experts, and insights to help grow your business. If you'd like to support this show, share this podcast with your network or review us on Apple Podcasts.
Kelly Servos: If you have a payment related you'd like to submit to one of our experts, you can email us at podcast@moneris.com.
Al Grego: Kelly, thank you so much for co-hosting.
Kelly Servos: It's my pleasure, Al. Any time.
Al Grego: On behalf of Kelly, myself and the rest of Moneris, thank you for listening to Shop Talk. We'll be back in February with another jam packed episode.