Is there anything more painful for a business owner than seeing declined customer transactions on their books during the most profitable time of the year?
Probably not, because they know what it means – lost sales and potential returning customers taking their business elsewhere. Worldwide, almost 8% of all money spent online is declined during the authorization process, so it’s no surprise that, according to one survey, transaction declines are the predominant worry of a more than half of all merchants.
In 2020, losses of this nature are likely to be particularly acute as pandemic-related restrictions have pushed retail activity online to a greater extent than ever before. Deloitte estimates online retail sales over this holiday season to hit at least $182 billion in North America alone, a 25 percent rise. So the stakes are high.
Now, obviously, sometimes declines are necessary. A transaction might be fraudulent. However, that is the only only valid reason for a decline.
What if I was to tell you that there are hacks that let you avoid transaction declines even when a customer’s credit card details aren’t up to date, or if there are insufficient funds in a customer’s account?
The acquiring mire
The fact is, the acquiring stage of a transaction – that is, the transportation of the funds between the merchant and issuing bank – is a path riddled with obstacles. There are many things that can go wrong, and traditionally, the acquirer or issuer will simply decline a transaction as soon as one of those obstacles is encountered.
So, what are these obstacles? It might be that the customer credit card has expired, or that the customer entered their details incorrectly. Declines also occur when there aren’t enough funds in the customer’s account to cover the purchase. Another factor is the choice of acquirer – a merchant’s payment provider could send a transaction to the wrong acquirer for that geographic location, or there could be a compatibility issue with the chosen payment method.
All transaction declines are harmful to merchants, but these ones are particularly frustrating because they are unnecessary. But what can be done?
Clearing the path
Businesses in 2020 are lucky in that they now have at their disposal a number of tools that can minimize unnecessary declines.
Visa and Mastercard both offer solutions to the issue of declines caused by expired credit cards. They’re called Mastercard ABU (Account Billing Updater) and Visa VAU (Visa Account Updater), and they both work along similar lines. Nuvei has integrated both of these services and we’ve already seen major success.
How do they work? The merchant sends the details of expired customer cards to its payment provider – Nuvei, for example – and the provider retrieves updated details from the issuer and sends them back to the merchant.
The result is no more expired card declines, and with an added benefit – customers are spared the effort of having to enter new card details into your payment portal, making their payment journey that much smoother.
“Insufficient funds” – nobody likes to see this judgmental-sounding message when they try to make a purchase. Wouldn’t it be more agreeable to receive a message reading “The transaction was partially approved”? According to research, 80.2 percent of consumers say that they’d prefer such a prompt.
Partial Approval is a solution offered by Nuvei which drastically reduces transaction declines and customer abandonment. It allows the customer to use what they do have. This could mean buying only some of the items in their shopping cart, or topping up their payment with another method.
Partial Approval allows Nuvei to get a significantly higher number of transactions approved by the issuing bank, which for businesses means more revenue and fewer frustrated customers.
Often, a declined transaction is in no way caused by the customer, but by limitations in the payment infrastructure through which their transaction is processed.
A payment provider’s systems might go down as a result of a malfunction or because of a system update. Or that payment provider might only work with a limited number of acquiring partners, meaning that transaction approval is dependent on the conditions set by those parties.
But at the end of the day, it’s the merchant who has to take the hit.
At Nuvei, we’ve worked hard to develop a network which avoids these issues as far as humanly (and technologically) possible. We’re connected to more than 200 acquiring partners worldwide, and our routing process is completely agnostic. This means that we send each transaction to the acquirer most likely to approve it, and if our first choice doesn’t work, we’ll try another, and we’ll continue to do this until it’s approved.
And when we say agnostic, we really mean it – we’re even connected to our competitors in the payment space, further reducing the chance of a decline caused by incompatibility. Our absolute first priority is to our clients and making sure that their revenue doesn’t suffer.
|Lotan Ganot is Nuvei’s Acquiring Platform Product Manager. A certified security expert with degrees in business administration and computer science, he held management positions in tech companies like Nayax, Como, and Verifone before joining Nuvei just over a year ago. He is also a former professional jockey. He lives with his wife and their two dogs, Chief and Zeek.|