Optimize Your Payments System to Increase Authorizations and Revenue

By: Jeremy Waxman
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Payments systems are incredibly complex, involving not only payment methods, but also reconciliation, settlement, when the payment capture happens, how you handle recurring and nonrecurring payments, and how you manage billing optimization. But because payments are so central to the success of your business, it’s critical you get it right.

Brands need to be equipped with the right billing optimization toolkit — including strategies like dynamic transaction routing, retry logic, and machine learning — if they want to boost authorization rates, increase customer satisfaction and engagement, and optimize revenue in the long run.

In the final virtual event of our Commerce Passport series, we brought together payments experts for a panel discussion titled Boost Authorizations and Optimize Revenue: Put Some Intelligence Behind Your Transactions. This live event was sponsored by Docmation and speakers included:

  • Jay Sappidi, Principal, Co-founder | Docmation
  • Geoff Stewart, Director of Product Management | Fiserv
  • Jeremy Waxman, Head of Payments Strategy | Digital River
  • Mike French, Vice President of Partnerships | Digital River

These industry experts shared the tactics brands should focus on now to increase their authorization rates and how strategies have shifted with new technologies.

To watch the on-demand version of this webinar, click here.

Mitigating false declines

False declines are legitimate credit card purchases that are incorrectly declined by the credit card issuer. Also known as false positives, false declines occur when an online shopper makes a legitimate purchase using a valid credit card, but that purchase is declined when it should have been approved. These situations happen much more frequently and are a much bigger problem than you might think. Here’s what the numbers say:

  • False declines are projected to grow to $443B by 2021, far outweighing the impact of actual credit card fraud
  • An average of 10% of ecommerce dollars are declined during payment authorization, but up to 70% of these declined orders are from good customers who can afford to make the purchase
  • Up to 40% of consumers say they won’t shop again with a merchant that falsely rejects their order

This means that false declines not only have a meaningful impact on your near-term business results, but also on your overall brand experience. This is why it’s so important for ecommerce brands to do everything they can to limit these occurrences and increase authorization rates for legitimate purchases. Machine learning is a great way to start – and finding the right payments partner for your brand can go a long way.

Machine learning to increase authorizations

Like most things in the digital age, technology offers brands a solution to billing optimization. Machine learning and advanced artificial intelligence systems have led to strategies like dynamic transaction routing, which allows merchants to automatically route payments in such a way as to maximize the likelihood of authorization.

These systems have also improved retry logic, which means a merchant will reattempt a payment after it has been declined, choosing the optimal time and date to improve the chance of success. This is particularly important for subscription providers who rely heavily on recurring revenue and where any increase in subscriber churn make it difficult to succeed.

Because these advanced AI systems are often expensive and complex, our experts recommend finding a partner that can optimize payments for your D2C ecommerce channel for you. Your partner should also be able to advise you on how manage your billing systems and how to structure your payments system components to achieve the best authorization rates possible. For example, making sure you have the right merchant category code that aligns with your product offerings and optimizing the payment methods you offer to best meet customer expectations.

Boost revenue with the right B2B payment options

The payments requirements for B2B customers are slightly different from the B2C space in that B2B customers often look for different options. Instead of credit cards and digital wallet payment methods, B2B customers want to see ecommerce brands offer the purchase order (PO) options and automated clearing house (ACH) options they’re accustomed to.

Today, many brands still don’t have such capabilities available online, instead requiring B2B customers to call a sales line to make these kinds of purchases. Companies that can automate this process and offer PO options directly on their ecommerce site will be better positioned to capture those sales. By understanding the full depth of consumerization in the B2B space and what that means for your back-office operations, you can create a premium experience for B2B customers and increase revenue long-term.

More expert insights

Our experts had more insights to share than we could capture in a single event. So, we recorded a podcast with these same experts immediately following our webinar. You can listen to that episode below, and then be sure to subscribe to our Commerce Connect Podcast so you never miss the inside scoop on great ecommerce strategies from industry leaders.

Want to increase global authorization rates for your brand? Connect with us today and see how Digital River can help optimize your payments system to increase revenue and improve customer satisfaction.