credit card declined

Decrease the risks of decline rate spikes

Caroline Bagby Education 0 Comments

The merchant
Multi-billion dollar, global retail brand.*

The issue
The merchant saw a dramatic spike in decline rate over a two month period coming out of Sweden. Typical decline rates for the merchant are between 10-12%, but over two months declines skyrocketed to 36-39%, an over 200% increase in declines, resulting in lost revenue and increased costs.

The solution
Using Pazien as an automated analytics solution, the merchant had visibility into the unusual activity. Alerts from Pazien showed the spike and representatives from the Pazien team helped determine the cause and provided next-step recommendations for the merchant to bring to their provider to remedy the problem and prevent unnecessary declines from doing more damage.

The outcome
PSPs typically don’t surface payment operations issues and things are easily overlooked, especially for large, global merchants. To avoid the problem in the future, the merchant mapped out their key performance indicators (KPIs) with Pazien so they could efficiently stay on top of their payment operations and simplify tasks like tracking dips in authorizations, for example.

If alert-based analytics solutions aren’t a part of your payments operations, internal IT resources can be leveraged to automate reporting and design alerts to identify trends.

With this particular merchant, a specific bank was responsible for the surge in declines. Persistent bank declines can occur for a variety of reasons and are often frustrating as decline reason codes tend to be vague coming from banks. In the case of ongoing declines there are several likely scenarios:

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    Lack of security information

    Given the rise of breaches in recent years, many banks pay more attention to security. One such measure includes only approving transactions with valid security codes (i.e. CVV or CVC), matching Address Verification Service (AVS) and requiring 3-D Secure (3DS - i.e. Verified by Visa and MasterCard SecureCode). Ensuring all security data is provided and supporting 3DS for banks that are known to require it can significantly increase approval rates.

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    Card not supported

    Some banks put restrictions on how and where their cards can be used. For example, some banks put limits on the amount of a debit card transaction and others decline transactions with certain kinds of merchants. Understanding if a specific type of card has a lower approval rate can inform the methods of payment accepted on-site.

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    International payments

    Typically the issuing bank declines suspicious international payments, but international declines can also happen when using local acquiring banks that don’t support payments from certain countries. A rare instance, but be sure to check if banks used have any restrictions so routing transactions can be done effectively.

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    Bank network down

    While this doesn’t happen too often, and certainly not for a long duration of time, system outages can happen, especially when there are surges of transactions, like around the holidays. To lessen the blow from such an instance, set up an alerting protocol with the bank or an automated internal alert system for when declines surge and ensure transactions are retried at a later time.

Automate processes
Declines can create a huge blow to business. Not only do declines result in lost revenue and increased costs, but also the potential for loss of customers. Every business aims to optimize authorizations for revenue sake and for a solid customer service experience, so check out your options for keeping on top of declines with minimal effort.

*The name of the merchant is currently protected under a non-disclosure agreement.

Internal systems can be built to manage authorizations, but are often time-intensive and difficult to update along with ever-changing industry regulations. To completely automate analytics with no IT help, try Pazien today.

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