False declines are one of eCommerce’s most pressing yet often overlooked challenges. These occur when legitimate transactions are mistakenly flagged as fraudulent and rejected, leading to lost revenue, frustrated customers, and reputational damage. The numbers tell a stark story: $308 billion in globalrevenue was lost due to false declines in 2023, according to a report by PYMNTS and Nuvei.
For eCommerce businesses, addressing false declines is no longer optional. They are a direct threat to growth and profitability. The good news? With the right strategies and partnerships, businesses can turn this challenge into a meaningful opportunity.
The true cost of false declines
False declines aren’t just about losing a single transaction—they carry a ripple effect. According to our report, 11% of all eCommerce transactionsfail, and for businesses operating in digital services, the consequences are even more severe: 50% of executives report false declines have a very orextremely negative impact on customer satisfaction.
Recovering lost customers is another uphill battle. 67% of eCommerce firms say it is difficult to bring back customers affected by failed payments,while 82% struggle to identify the exact causes of these failures.This lack of clarity not only impacts revenue but also damages long-term customer relationships and brand reputation.
For businesses handling cross-border sales, the stakes are even higher. 72% of firms experience higher rates of failed payments in cross-border transactions compared to domestic ones, further complicating revenue recovery efforts.
Balancing fraud prevention with customer retention
Fraud prevention is essential to protect businesses from genuine threats, but an overly cautious approach can backfire. Many eCommerce firms lack the tools to effectively differentiate between fraudulent and legitimate transactions. Our report shows that only 33% of eCommerce companies have screening mechanisms to identify fraud as a cause of failed payments, leaving most businesses exposed to unnecessary losses.
This imbalance creates a vicious cycle: overly restrictive fraud measures drive away legitimate customers, while insufficient tools allow fraudulent transactions to slip through. Striking the right balance is critical to reducing false declines and improving payment success rates.
Why collaboration with PSPs is key
Collaboration with Payment Service Providers (PSPs) is a proven way to reduce false declines and optimize payment performance. Our data shows that 86% of eCommerce firms that work closely with PSPs report increased profitability,with 90% seeing the strongest results when collaboration is frequent and proactive.
PSPs bring the expertise, technology, and insights needed to fine-tune fraud prevention measures without sacrificing approvals. By partnering with the right payment technology companies, businesses can implement smarter, data-driven solutions that reduce the risk of false declines while improving customer satisfaction and retention.
Driving innovation in fraud prevention
Investing in fraud prevention tools is another critical step. The report highlights that 95% of eCommerce businesses are innovating or plan to innovate their fraud management tools in the next 12 months. These innovations aim to strike a balance between minimizing fraud and reducing false declines, ultimately creating a more seamless and secure customer experience.
However, many businesses overlook the direct link between fraud prevention and profitability. Only 16% of firms see increased profitabilityas a benefit of innovating their fraud tools, even though the evidence clearly shows its positive impact on revenue and customer retention. Closing this gap in perception is key to unlocking the full potential of these technologies.
The importance of local acquiring and data-driven insights
For global eCommerce businesses, local acquiring connections can significantly reduce false declines, especially for cross-border transactions. Nuvei’s capabilities, including direct local acquiring in 50 markets and support for over 200 countries, ensure that transactions are processed efficiently and accurately, minimizing the likelihood of rejection.
Data-driven solutions amplify these benefits further. Advanced analytics and reporting tools enable businesses to identify trends, adjust fraud rules dynamically, and make more informed decisions. The results speak for themselves: companies using smarter fraud prevention and authorization strategies can achieve a 19% increase in revenue, as highlighted in the report.
Turning false declines into revenue growth opportunities
False declines are more than just a financial drain—they are a critical business challenge. Addressing them requires a strategic approach, blending collaboration with PSPs, investment in innovation, and leveraging localized solutions.
For eCommerce businesses, the path forward is about working smarter, not harder. By adopting the right tools and partnerships, they can recover lost revenue, protect customer trust, and future-proof their payment processes. False declines may be a $308 billion problem, but with strategic risk management, they can also represent a $308 billion opportunity.
At Nuvei, we’re here to help online brands strike that balance. Our advanced technology and global footprint are designed to accelerate business growth while reducing the friction caused by false declines, creating a payment experience that delivers—for the customers and the brands’ bottom line.
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