Food and alcohol delivery is a convenient service. Most consumers have utilized food and alcohol delivery services at least once since mobile devices have made them more accessible. In fact, 112 million Americans have stated they’ve used a food delivery service in 2021 alone.

The majority of food and alcohol delivery businesses rely on card-not-present transactions to fulfill orders. Additionally, there are more parties involved than just the merchant and customer. Delivery businesses employ or contract with drivers, making them the middleman. This makes them susceptible to miscommunication and customer dissatisfaction.

If you are a food or alcohol delivery merchant, chances are you’ve seen a recent increase in demand. This 26 billion dollar industry comes with major benefits as well as some challenges.

Why are Food and Delivery Businesses High Risk?

High risk businesses are those that incur more chargebacks than the average company. High risk merchants have a more difficult time gaining the trust of banks and payment processors. Several factors make food and alcohol delivery businesses high risk.

Reliance on Technological Accuracy

Same-day food and alcohol delivery was made possible by mobile apps and systems. Customers can receive hot, fresh orders within an hour of ordering online.

This fast-speed process requires communication across multiple parties. The ordering customer sends in a request via the delivery service which will then contact the corresponding store or restaurant. Then, the service must get in touch with somebody to deliver the items.

Ease and speed comes with a high chance of mistakes. Mobile apps, especially for services that are still new, may transfer inaccurate order details. The technology may have the wrong information about the order, the restaurant’s hours, availability of items, customer address, and more.

It’s more likely that a customer may encounter a missing or wrong order with delivery services. It becomes even more difficult to fix a mistake than it would be if it happened in-store.

The complications of a speedy delivery process that relies on technological accuracy will result in disgruntled customers. Disputes and chargebacks become likely unless businesses have an airtight customer service protocol in place. Even then, delivery services are bound to incur more disputes than a traditional food and alcohol business.

Requires Quick Communication

Fulfilling a mobile delivery order already has enough room for error. An additional complication is when ordered items are unavailable. The restaurant or store may not have updated the delivery service, which then results in customers ordering unavailable items.

It’s up to the delivery service to provide an easy way to alert the customer. They must plan workarounds for when clients do not respond on time as well as communicate protocols to order originators. Miscommunication in any business can cause delays, impacting customer experience.

Alcohol

Alcohol delivery requires deliverers to be of a certain age. Additionally, the service will have to enforce checking the buyer’s ID to confirm that they can legally buy the alcohol.

The alcohol industry itself is high risk, so adding a delivery aspect as a business increases risk exponentially.

Delivery businesses will also need to make sure that alcohol sellers have the correct liquor selling permits.

Contractors

Food delivery used to be limited to local pizza joints with their own employees driving company cars to deliver. Now, most delivery services employ independent contractors to complete deliveries.

Utilizing contractors is simple and cost-effective. However, the option is unstable and doesn’t guarantee that there will always be enough contractors available to complete deliveries. This can cause fluctuating revenue which make banks unsure about the business.

Need Merchant Services for your Delivery Business?

A high risk merchant account gives food and alcohol delivery merchants the ability to process payments and accept transactions. Revitpay provides basic merchant services like accounts as well as tools to decrease chargebacks. Contact us today to find out how we can support your business.