Card transaction approval rates are a mirror of how successfully your company does business online. In this age of technological progress, cards are a fundamental part of payment transactions. Although technology develops further every day and we are getting solutions such as “digital wallets,” cards remain part of our everyday lives. That is why we think it is very important for you to be familiar with the various situations that can arise when processing card transactions.
Let’s be clear: although it might seem logical to expect your bank to advise you on how to run your online point of sale in the most optimal way, this is often not the case. Banks are usually not technically equipped to recognize all the details of card acceptance issues. Banks are traditional institutions, and as such they endure and know they will continue to endure. For this very reason, they are under little pressure and see no great need to improve a system that has served them well so far – at least not yet.
The Most Common Causes of Low Card Transaction Approval Rates
For every declined transaction, you potentially lose a sale, and possibly a customer as well. That is why it is crucial to know what can lead to a higher decline rate during the online payment process.
Outdated Technology
Using outdated technology in an industry whose main characteristic is precisely its technical sophistication is certainly one of the main causes of lower approval rates. Technology advances every day. If the systems you use do not keep pace with these changes, you will have more problems with the number of approved transactions – whether it is a frustrated customer abandoning the purchase due to a complicated or outdated user experience, or technical issues during the payment process that can occur when outdated technology is used.
Weak Fraud Prevention System
Consumer trust is priceless. Only a loyal customer will buy from you again and again. Various discounts and perks while shopping are not the only way to make shopping a pleasant experience and gain loyal customers. On the contrary, research shows that there is something the average customer values even more than price benefits: the customer’s confidence that they are protected. A good fraud detection and prevention system allows the merchant to apply only those tools and rules that make sense for their specific business model. If your screening system is not tailored to your business model or, even worse, if you do not use a fraud detection and prevention system at all, the end result will be a higher number of unnecessarily declined transactions. And that is something no merchant wants.
“High-Risk” Merchants
Operating in the high-risk category has numerous advantages, but also disadvantages. If your online business has been officially categorized as “high risk” by the card brands, you already know that the approval rate is lower. You must also be prepared for obstacles that may arise in the form of rigorous multi-level screening of every transaction. Simply put, the greater the chance of abuse, the lower the percentage of approved transactions.
How to Improve Card Transaction Approval Rates
In this article, we have listed only some of the factors that cause low payment approval rates. In addition to these, there are also many other factors that negatively affect your online business. Despite this, however, you can take certain steps to increase your approval rate. In this article, we will suggest 5 ways that could help you raise your card approval rate.
Always Know the Details of Your Transactions
As an online merchant, you should always be familiar with the important details of every aspect of your online business. A good provider’s job is to give you this information in a way that makes these facts easier to understand. High-quality payment platforms are always ahead of their time and provide information on all types of transactions, as well as details of processed transactions, whether approved or declined. This kind of insight helps you compare your approval and decline rates and identify the main reasons for declined transactions. For example, if the details of processed transactions indicate that the technology your provider uses is one of the causes of a higher number of declined transactions, it is time to switch to a provider that uses superior technology solutions that have a positive impact on your business.
Know Your Customers
If you have customers from different countries, you should certainly adapt your approach to e-commerce to this fact. It often turns out that the approval rate for foreign customers is lower than the approval rate for transactions made by customers from your own country. The best way to improve your approval rate is to work with a provider that can enable you to process transactions in different countries and regions using languages and payment methods specific to customers in different markets. Otherwise, you can expect a lower payment approval rate.
Do Your Transactions Contain the Correct Indicators?
What are transaction indicators anyway, and why do they matter for your online business? Simply put, every transaction contains a large amount of information that is exchanged with various participants. One of the important elements is the transaction type indicator. If the wrong indicator is sent with a transaction, there is a greater chance that the customer’s bank will decline the transaction. For example, if you send a monthly recurring transaction, but your provider sends it with the indicator of a standard e-commerce transaction, there is a high chance that the customer’s bank will decline it every time due to potential card misuse. The procedures are complex and often hard to understand, but they are put in place and used to protect both the customer and the merchant. That is why it is important for you, as an online merchant, to know how to apply these procedures to your advantage, so that you do not end up in a situation where a trivial mistake costs you a transaction and, with it, a customer.
Use Transaction Data Correctly
Before sending a transaction, online merchants collect various information about the order and the customers in their online stores. This information is often used completely incorrectly. The impact that the EU payments directive (PSD2) has had on the entire electronic payments industry, including merchants operating outside the EU, has been exceptional. One of its most visible consequences is the implementation of the security system known as 3D-Secure version 2. It protects customers from misuse of their cards by requiring two-factor customer verification. So that this does not make purchases overly complex and, at the same time, reduce payment rates, 3D-Secure version 2 has enabled merchants to send the customer’s bank, as part of the transaction, various customer details that allow the bank to recognize the lower risk of a particular transaction, which in turn leads to an improved and simplified shopping experience.
So, in short, the more data about the customer and the order itself the merchant sends to the customer’s bank, the more the bank will be able to “take on the risk” and reduce the number of steps needed to approve the transaction. It is up to you to use this collected information properly and legally to your advantage. You should expect your provider to enable you to submit as much information as possible in the right way using next-generation technology solutions, with the aim of increasing your payment approval rate.