The digital impact on authorization rates

The current economy has significantly altered consumer buying behaviors and business operations. The pandemic accelerated the digital shift in payments and increased online and mobile commerce, contactless payments, curbside servicing, and third-party delivery platforms. Additionally, businesses everywhere operate in an environment of record-high inflation, low labor participation rates, and continued global supply chain issues. According to the U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI) was up 8.2 percent over the last 12 months, adding significant strain to small business cash flow.1

With prices rising across the board, you may be looking for solutions to relieve costs and boost your bottom line while still building customer loyalty. Let’s explore ways that you can increase authorization rates, which results in more sales and revenue.

The shift to online payments is here to stay. While essential to meet increasing consumer demand, these methods carry higher acceptance costs for businesses, eating into profits. They also have a higher risk of fraud versus in-store, or card-present, payments. In fact, online purchase decline rates hover around 30 percent.2

Declining purchases from legitimate customers – referred to as “false positives” – creates a bad user experience. Shoppers who can’t complete their purchase are more likely to switch to a competitor to find similar goods and services. It isn’t easy to win consumers back for future business once they’ve had success elsewhere. Worse, these customers may tell others, which results in a negative brand reputation for your business.

The good news is that you can often increase approvals and reduce false declines by simply tweaking a few things in your payment acceptance processes. Many of these steps are especially effective if you keep customer credit cards on file or offer recurring/subscription payment services.

Six simple ways to increase transaction approvals

1. Submit transactions on the optimal day and time

Many consumers are on tight budgets. Timing payments with paycheck deposits helps reduce declines due to insufficient funds. When charging recurring bills, you should let customers specify the preferred billing date that fits their financial cycles.

2. Tokenize payment card data for future transactions

Checkout abandonment can happen when consumers use their phones to shop and don’t have their credit or debit card on hand. You can use tokenization to securely store card details and make future payments friction-free and secure.

3. Use automated account updater solutions

Expired payment cards increase declined transactions and impact cash flow. Make sure you enroll in account updater services to provide uninterrupted service to customers. Account updater automatically checks the expiration dates of customers’ cards on file and updates card account details before processing.

4. Include accurate MCC and transaction network tags

Improperly classified transactions – like e-commerce vs. recurring – result in higher decline rates. Help increase authorization rates by correctly coding your business type and sending the correct network tag with each transaction.

5. Prompt for ZIP/postal code and CVV

Address Verification System (AVS) and Card Verification Value (CVV) help confirm the transaction’s authenticity. AVS checks to see if the customer’s address and zip match the card’s associated billing address. CVV verifies that the customer has the physical card on hand by prompting them to key in a code stamped on the card. These simple proof points help improve authorization rates dramatically.

6. Accept alternative payments

Digital wallets encrypt data, providing additional protection against fraudulent transactions and declines. Make sure that you support alternative payment types like Apple Pay® and Google Pay® so your customers have a seamless payment experience.


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