Achieving a high authorization rate and getting payments processed in a timely manner is one of the most critical aspects of ecommerce. This is particularly important for subscription providers with high customer acquisition costs who count on recurring revenue to become profitable. But getting payments right is about more than offering the payment methods customers prefer. To truly optimize your payments strategy, you need to embrace the latest technology and digital strategies.
Leverage machine learning
In years past, payments providers used rudimentary business rules to decide the best way to transmit transactions. But now machine learning is transforming that process. Companies like Digital River have developed statistical models and utilized machine learning programs to dynamically route transactions, automatically determining which processer and acquirer to send a transaction to in order to have the highest possibility of succeeding. These systems can also help you manage transaction volume and streamline your back-office operation.
Some merchants are deploying machine learning on their own, but it takes a lot of expertise to leverage capabilities and most companies don’t have the ability or the money to invest in these types of data analytics operations. That’s why partnerships are critical for accessing the latest technology and will allow your brand to focus on your core competencies without wasting resources trying to reinvent the wheel.
Avoiding failed transactions
When a payment fails to go through, your payments provider will try it again. But how and when they try again is critical for achieving authorization, particularly for recurring transactions. The reason has to do with payment cycles and how funds are processed. For example, a small credit union may have limited capacity to process transactions during certain times of the day. In other instances, there may be insufficient funds in an account during certain days of the month.
So, you need to develop what’s known as “retry logic” within your payments systems to schedule the best time and method for reattempting the transaction. Knowing when to submit a given transaction for processing can have a dramatic impact on authorization rates. By choosing the right day and time of day, payments systems can automatically increase authorizations with no change to your front-end systems or customer experience.
Offering a superior customer experience
Payments are a bigger part of the customer experience than some people realize. Not only do you need to offer payment options customers prefer to avoid cart abandonment, you also need the right back-office systems to process payments efficiently. That’s because declined payments not only affect revenue in the short-term, but they can also cause major issues and damage your brand reputation.
Imagine having your antivirus protection lapse, exposing your sensitive data just because your annual payment wasn’t authorized. It’s critical that companies do everything they can to ensure a smooth payments process.
Be strategic (and local)
When you are building out your payments systems, be sure to localize your strategy to the global markets you’re entering and create strong messaging about payment options. Also, be sure that you aren’t cannibalizing your business by adding unnecessary payment methods. Offering all payment methods in all markets won’t improve revenues and may actually hurt profitability as some carry higher fees than others. So, study the data and ultimately look at conversions as the best indicator that your payments strategy is working.
Payment authorizations may not be the first thing you think of when developing your ecommerce strategies. However, they’re crucial for the health of your business. By developing sound strategies, leveraging technology and partnering with experienced payments providers, you can increase authorization rates and ultimately improve revenues for your ecommerce brand.