The 2024 holiday season is set to be a blockbuster, with retail sales in the U.S. alone forecasted to hit a staggering $1.353 trillion.
According to Emarketer, e-commerce is leading the charge with an expected growth of 9.5%, as shoppers prioritize speed, convenience, and price comparisons.
Meanwhile, non e-commerce sales aren’t far behind, with a respectable 3.7% growth, fueled by those seeking the in-store magic of holiday shopping.
Great news isn’t it?
But while you’re gearing up for this year’s rush, so are the fraudsters.
They’re not caroling—they’re crafting new ways to siphon your profits.
Hidden fees quietly creep into your payment statements, while online scammers exploit the same digital growth that promises record sales.
So, as the holiday cheer begins, one question looms: How much of your season’s success is truly yours and how much is being stolen by hidden fees and fraud?
In this article, we’ll break down the complex web of threats merchants face and share actionable strategies to protect your profits and peace of mind.
End-of-Year Threats that Could Cost Your Business a Fortune
As you deck the halls and ring up holiday sales, some payment processors are sneaking in fees like unwelcome guests at your party. From sneaky annual PCI charges to murky “security bundles,” these year-end surprises often stay hidden—until they’ve already drained your profits.
Here’s the most subtle threats this holiday:
Hidden Fees That Bleed Profits
For many businesses, the holiday season isn’t just about increased sales—it’s also when hidden fees creep into your statements.
Most small business owners encounter unexpected charges during the year-end, including annual PCI compliance fees and ambiguous “security bundles.”
These fees are often buried in fine print or disguised as mandatory costs.
Processors rely on the chaos of the holiday rush to introduce subtle rate hikes, knowing most businesses won’t notice until it’s too late.
In the course of the frenzy, a typical retailer handling $250,000 in holiday sales could lose up to $7,500 in hidden charges.
These fees don’t just hurt your bottom line; they erode trust in payment processors, leaving you feeling exploited during their busiest season.
Credit Card Fraud Concerns
Beyond hidden fees, fraud is an escalating threat to holiday profits.
A recent survey revealed that 33% of small business owners identify credit card fraud as a major issue, a figure that spikes during peak sales periods.
Fraudsters exploit the same tools that drive ecommerce growth, such as instant transactions and remote payments.
Enumeration attacks, where bots test stolen card details across platforms, are on the rise. According to Visa’s Biannual Threats Report, such attacks grew by 16% in 2024, with restaurants, charities, and small online retailers being among the hardest hit.
For a business processing hundreds of transactions daily, each successful attack compromises customer data, triggers chargebacks and regulatory fines costing $20 to $100 —not to mention reputational damage and loss of customer trust.
Worse, the average business takes 194 days to detect such breaches and an additional 73 days on average, to contain it, giving fraudsters ample time to exploit vulnerabilities.
Why the Holidays Are Prime Time for Hidden Fees and Fraud
The dual threats of hidden fees and fraud make the holidays a precarious time for merchants.
The boom in online shopping, projected to reach $277 billion this season, is a goldmine for cybercriminals leveraging digital skimming and phishing attacks.
Hidden fees compound the issue, turning payment processors into silent profit takers. Together, these forces can siphon thousands of dollars from your holiday earnings.
For small businesses already operating on tight margins, these costs could mean the difference between thriving and merely surviving the season.
The question is: Are you prepared to spot and stop these invisible threats before they drain your profits?
Digital Pickpocketing: Fraud on the Go
It’s certain that the holiday season is also where fraudsters roam with mobile point-of-sale (POS) devices, silently initiating unauthorized payments as they “bump” into shoppers. This form of fraud, known as digital pickpocketing, is becoming alarmingly common.
The simplicity of this scam—using inexpensive, untraceable devices—makes it particularly hard to detect.
For small merchants, even one fraudulent chargeback during the holidays can snowball into higher processing fees or account penalties, a double hit that hurts your profits when sales should be thriving.
How to Defend Your Business
While the fraudsters and processors brace up to leverage the rush and prey on unsuspecting businesses, arm yourself with these simple guide to take charge of your profit:
Audit Your Payment Statements Early and Often
Don’t wait for January to uncover surprises in your payment statements.
Hidden fees like annual compliance charges or unexpected rate hikes often sneak in during the holiday rush.
By auditing statements in real-time, you can catch these charges before they snowball. Tools like Verifee’s AI-powered auditing system analyze statements line by line, flagging discrepancies and unusual fees instantly.
Businesses that conduct regular audits save significant amounts in unnecessary fees annually. Make it a habit to review your statements weekly during peak sales periods to maintain control over your margins and avoid costly end-of-year penalties.
Strengthen Your Fraud Detection Systems
Fraudsters thrive on outdated security measures. Upgrade your defenses with real-time monitoring tools that detect suspicious activity instantly.
Multilayered authentication, such as combining tokenization with Strong Customer Authentication (SCA), reduces fraud risks by up to 26%.
Additionally, deploy bot detection software to guard against enumeration attacks.
For small businesses, real-time alerts can mean the difference between blocking a fraudulent transaction and losing hundreds of dollars to chargebacks.
You’re protecting your business and building trust with customers, who increasingly value secure transactions in today’s digital-first shopping environment by investing in proactive fraud tools,
Train Your Team to Spot Red Flags
Your finance and customer service teams are your first line of defense.
Equip them with the skills to identify unusual charges, phishing attempts, and fraudulent transactions.
Organizations that have anti-fraud training programs experience less-costly losses, quicker resolutions of fraud cases, and an enhanced reputation for customer protection, compared to those without internal safeguards. (SHRM)
Simple actions—like verifying email addresses on invoices or questioning unexpected processing fees—can save your business thousands.
Schedule quick, focused training sessions before the holiday rush and provide easy-to-follow guidelines for flagging anomalies.
Empowered employees not only prevent costly mistakes but also reinforce your business’s commitment to transparency and security.
Negotiate With Confidence
Hidden fees aren’t inevitable—they’re often the result of poorly negotiated agreements with payment processors.
Analyze your contract terms closely and don’t hesitate to challenge unjustified charges. Processors are often willing to waive or reduce fees when confronted with informed scrutiny.
According to a World Commerce & Contracting study, companies can save an average of 9.2% on their total contract value through effective negotiation, especially when they bring evidence of discrepancies to their processor.
Start with the most common culprits: compliance charges, rate hikes, and redundant “security bundles.”
Approach these negotiations with clear documentation, and you could save thousands annually while ensuring a fairer agreement moving forward.
Transparency: the Real Holiday Gift
At Verifee, we believe transparency is the ultimate defense. Here’s how we support businesses like yours, by:
Illuminating Hidden Costs: You Stop Paying What You Don’t Owe!
Hidden fees are the Grinch of your holiday profits, stealing margins while you focus on serving customers.
Transparency starts with uncovering these fees—and that’s where AI-powered tools shine. Platforms like Verifee analyze payment statements line by line, flagging unjustified charges before they dent your revenue.
By shedding light on these hidden costs, you reclaim your profits and can reinvest where it matters most—growing your business. You sure need to start the new year with clarity instead of costly surprises.
Proactive Fraud Alerts: Keeping You Ahead of Scammers
Transparency isn’t just about cutting fees—it’s about spotting threats before they strike. With holiday ecommerce sales projected to grow 9.5%, fraudsters are doubling down on attacks like digital skimming and enumeration.
Our tailored fraud prevention strategies, powered by real-time alerts, can make all the difference.
With most fraud losses attributed to digital channels, 70% of organizations have adjusted their strategies for detecting and mitigating fraud.
When your defenses are clear and responsive, you’re not only saving money—you’re also building customer trust by ensuring safe, secure transactions every time.
Ethical Advocacy: Fighting for a Fair Playing Field
The holidays are stressful enough without predatory practices from payment processors adding to the mix.
From disguised compliance fees to redundant security bundles, these tactics undermine businesses.
Verifee champions ethical advocacy, challenging these practices to ensure fair and sustainable payment systems.
An advocacy partner is the empowerment your business needs to renegotiate terms with processors.
When your processor agreement is transparent, and your fees are fair, you’re not just protecting profits—you’re strengthening the foundation of your business for the long haul.
Transparency is the ultimate gift that keeps giving year-round.
Keep the Grinch Out of Your Registers
This holiday season, let your profits work for you—not for hidden fees and fraudsters.
Hidden charges, fraudulent transactions, and predatory practices can quietly siphon away your hard-earned revenue if left unchecked.
But it doesn’t have to be this way.
At Verifee, we’re here to illuminate the shadows, helping you uncover hidden costs, prevent fraud, and reclaim control.
Don’t let the Grinch steal your cheer—this season, turn your vigilance into victory and make your holiday sales truly yours. Let’s do this together.
