With nearly four times as many declines for online payment authorizations than card-present authorizations (15% and 4%*, respectively), eCommerce merchants face a challenge their in-store counterparts do not—high false decline rates. Declined authorizations don’t just contribute to the lower conversion rates eCommerce businesses grapple with; they are a true revenue sucker.
The factors leading to higher payment decline rates online
Many issues can prohibit an online transaction from going through at the initial authorization attempt. These include:
- Incorrect or outdated payment card and account information
- Insufficient funds
- Network unavailability
- The issuer’s unspecified “Do not honor” declines
- The merchant’s fraud and risk mitigation tools
- The card networks’ fraud and risk mitigation tools
- The issuer/processor’s fraud and risk mitigation tools
Every bullet on this list can be a legitimate reason for a card decline. However, the ambiguity and misalignment that is common among all entities involved in a payment transaction often lead to transactions that simply should not have failed in the first place. But there are steps you can take to drive higher approval rates.
3 strategies to drive approvals
#1. Apply data to authorization attempts
Using data-informed services available through a leading payment processing company is key to improving approval rates. A payment processor like Worldpay that has access to large data sets can help you achieve better approval rates by using historical transaction data to change key attributes in real time, prior to submitting those transactions to the card networks for authorization. This improves the changes for approval authorizations.
#2. Automate your card updating process
Another way to improve approvals is to use automatic card updating and recycling services. Some payment processors, like Worldpay, offer this type of service that significantly boosts revenue from recurring payments.
Card updating services allow merchants to submit transactions using the original account information obtained from the cardholder, while the provider ensures that the current account information is used for the authorization. While this is particularly useful for recurring or subscription billing, it can also apply to merchants who reduce friction in their consumers’ experience by storing their payment information for use in subsequent purchases.
#3. Get big data insights
As mentioned in #1, data plays a significant role in driving approvals. Payments data provided at a granular level provide insights into inefficiencies in your payments processing. By determining issuer “performance” (e.g. your company’s approval rates at the card products and issuers level) and comparing rates with your peers and other issuers, you can work with your processor to identify problem areas and develop mitigation strategies.
To find out more about how you can use advanced payments data and analytics to achieve higher approval rates for your eCommerce business, download our new eBook.
*2018 Worldpay internal data