This is why your card acceptance rate matters
Protecting your business against payment fraud does not have to come at the expense of missed revenue and customer loyalty. Read on to find out how card acceptance rates affect your bottom line and what you can do to keep your customers happy.
The ultimate letdown for your customers? That’s easy. It’s when they finally – after much deliberation – decide to purchase a product or service they really want, but their credit card is declined for no apparent reason. That’s what happens when inadequate fraud protection casts too wide a net and blocks legitimate transactions because of ‘potential’ fraud, rather than actual fraud.
The true cost of poor card acceptance rates
When looking for ways to protect your revenue, it is crucial to examine your card acceptance rate. In the ecommerce industry, the focus tends to be on preventing payment fraud, but it’s unfortunate when fraud prevention leads to payment prevention.
Sadly, card acceptance rate is an often overlooked metric. Did you know that a 5% difference in AR can easily cost you over €2.5 million euros* in missed revenue? It really doesn’t do any good if a company charges extremely low fees for chargeback protection, yet blocks legitimate purchases from going through.
Did you know that a 5% difference in AR can easily cost you over €2.5 million euros in missed revenue?
A low acceptance rate means that trustworthy customers wanting to do business with you are getting blocked. Once they realize the issue only occurs on your platform, all trust is lost. Needless to say, once these potential customers go over to your competitors, they may never return. The result is measured in missed revenue and customer lifetime value.
Add to that, the cost of customer care, as well as the time and resources spent on the handling of these blocked transactions, and it becomes clear that the true cost of poor card acceptance rates is astronomical.
*Based on 1 million transactions, AOV of 50
Prevent fraud, not payment
In a world where competitors are always trying to gain an advantage with better service or lower prices, customer loyalty is more important than ever. The easiest thing you can do to preserve loyalty is to make sure that your customers can complete the checkout process easily and secure, without friction.
At Alphacomm, we are proud that we have an average acceptance rate of 99%. We work hard to identify and separate potential fraud from actual fraud. In doing so, we eliminate friction at checkout and help your customers get what they came for. We achieve our results by having in place state-of-the-art fraud engines as well as a team of experts that is continuously monitoring transactions and tracking fraud trends.
Recommended reading:
How reducing friction at checkout boosts conversions
Recap & additional insight
In the world of e-commerce, understanding the intricacies of payment systems is crucial for optimising revenue and customer satisfaction. Here’s a recap & additional insight into the topic of payment acceptance rates and their importance.
Payment acceptance rate explained: The payment acceptance rate is the ratio of successful payments to the total number of payment attempts. This metric is pivotal for businesses because a low acceptance rate can indicate issues with your payment provider, leading to losing revenue.
Why is the payment acceptance rate important? When customers make online transactions, they expect a smooth and seamless experience. If there are failed payments, not only do you risk losing revenue, but you also risk losing customer trust. This is why it’s essential to influence payment acceptance rates positively.
Several factors can affect your acceptance rates. For instance, the payment method used, such as a credit or debit card, can have different acceptance rates. Credit card companies may decline transactions based on credit scores or other risk assessments. Additionally, the type of bank account involved can play a role, as acceptance rates can vary depending on the bank’s policies.
To enhance acceptance rates, businesses should utilize payment data insights. By analysing these insights, you can create custom rules to improve the likelihood of successful payments. For example, recognising patterns in many transactions can help identify potential issues before they affect your customers.
Moreover, having a robust payment provider can make a significant difference. A provider that offers comprehensive data and support can help you troubleshoot and resolve issues quickly, ensuring more successful payments and fewer declines.
In summary, understanding the payment acceptance rate explained is just the first step. By leveraging data insights and choosing the right payment providers, businesses can significantly improve their acceptance rates, leading to increased revenue and customer satisfaction.
Ready to talk AR?
For more information regarding how Alphacomm’s Protectmaxx anti-fraud solution prevents false positives and improves user experience, get in touch with Lisa de Vreede. As our Protectmaxx Product Owner, she knows all the ins and outs of how card acceptance works and can help you identify if your checkout process needs an upgrade.
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What to look out for this 2022 holiday season
This holiday season, we suggest you pay close attention to the following types of fraud in particular; account takeover, synthetic identities and payment fraud. Payment fraud is an umbrella term used to refer to various types of online fraud in which payment details are involved. The most common are friendly fraud and clean fraud.
Account takeover fraud (ATO)
This is when fraudsters use someone’s existing log-in credentials (username/password) to purchase goods, rent services, or get access to accounts to gain more information on the customer, or change these credentials in any way.
Synthetic identities
Whereas fraud using false credentials is commonplace, synthetic identities are the next step in the evolution of the method. When creating a synthetic identity, a fraudster designs an identity by often using a combination of both real and fake personally identifiable information. The result is an implied identity whose authenticity is extremely difficult to verify. Without proper KYC, customer scoring or other checks in place, it is hard to trace or verify this person.
Friendly fraud
Friendly fraud is when a user makes a purchase, but then demands a refund by rejecting the payment. This can be for any host of reasons, both legitimate and illegitimate. The user may claim that the product was never delivered, or that it arrived damaged, and therefore request the funds be returned. Because a chargeback isn’t always with fraudulent intent, this type of fraud is often referred to as ‘friendly fraud’.
Indeed, businesses have also been experiencing a surge in chargebacks and disputes. These so called ‘friendly fraud’ incidents are on the rise for multiple reasons, ranging from pandemic-related travel cancellations to customers not recognizing (or remembering) transactions they made. In some cases, customers might have simply changed their minds too late. This is often the case when customers subscribe to online services that start with ‘free trials’ before charging, but forget to cancel.
Chargebacks are very costly, not just because of the missed revenue of the sale, but also due to penalties, the loss of goods, fees and the time spent on processing the ‘error’.
Clean fraud
Clean fraud, on the other hand, is when a fraudster is able to successfully make a purchase, with stolen – though unreported – credit card details. Since banks aren’t yet aware that the credit card in question has been compromised, the payment is allowed without any red flags being raised. By the time the card has been blacklisted, the fraudster, has already had ample time and opportunity to completely max out the credit card.
Clean fraud incidences have become more widespread thanks to fraudsters’ increasing use of automated card testing. Stealing credit card information is one thing. Testing them to find out which one credit card is still active, is another. This testing process used to be tedious manual labour. Nowadays, however, fraudsters make use of networked computers (botnets) that are capable of attempting thousands of small transactions in a short period of time.
How many forms of online fraud are there, and what are the risks/solutions?
Read about it here: The online fraud handbook.
‘Fraud vs Friction’ is a false dilemma
You only get one chance to offer a positive customer experience. Failure to offer a frictionless experience may result in unnecessary cart abandonment and lower conversion rates. Your goal is to facilitate transactions by removing any and all friction whenever possible, while at the same time, securing transactions with the highest level of security.
The question is, how do you introduce measures to prevent fraud, without adding friction?
At Alphacomm, we’ve developed a smart payment processing solution as well as a frictionless fraud solution that eliminates chargebacks and offers a 100% guarantee to prove it. By being smart about fraud risk and fully understanding every single detail of SCA regulations, we’re able to selectively apply different fraud checks to different transactions and only when required. The result is a customer experience that is smooth, inspires loyalty and significantly increases customer lifetime value.
If you’re looking to review, tighten up or implement payment security measures, consider choosing an experienced partner, trusted worldwide by industry leaders. Interested? Let’s talk! Get in touch with us today.
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Scheepmakerspassage 183
3011 VH Rotterdam
The Netherlands
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