Today’s retail landscape requires merchants to focus on improving all aspects of the customer journey in order to be successful. To ensure a seamless and efficient user experience, merchants must double-check that everything works seamlessly and efficiently from the time a customer browses their website to the point where they complete a transaction.
The latter part of the customer journey proves to be most challenging for most retailers. And that is directly related to authorisation rates. The importance of this metric is often overlooked, but it has a direct impact on revenue.
What are authorisation rates?
The authorisation rate is the percentage of a merchant’s transactions that successfully pass through the authorisation process. In order for consumers to make purchases on e-commerce websites, each transaction must be approved by their card network and issuing bank. The payment will be declined if the authorisation is not successful, and the consumer will be prompted to use another payment method, which can become a point of friction for them, potentially leading to abandonment.
How to increase authorisation rates
To increase your authorisation rates, here’s a basic checklist to go through:
Use Visa’s Account Updater (VAU) and Mastercard’s Automatic Billing Updater (ABU) to ensure expired card-on-file details for your recurring payments are updated. More about VAU and BAU here.
Use tokenisation methods for your payments. This mechanism produces a unique credential that differs from the 16-digit number on consumer credit cards, and this credential can be used for transactions.
Give customers the option of using a digital wallet during checkout, such as Google Pay or Apple Pay. Besides being increasingly popular, these forms of payment are also more likely to be accepted.
Check that your merchant category code (MCC) isn’t being flagged by your issuer and use a payments provider to bridge this relationship and automate the process.
Make sure you support international payments. With cross-border transactions, cards often get declined because your system only accepts payments in a particular currency or from a specific geography.
Improve approval rates by using data-driven services offered by a leading payment processing company. They have access to large data sets that can help you attain better approval rates by modifying key attributes in real-time before you submit the transactions to the card networks.
Keep up with the regulation in this sector. Regulations like the Payment Service Directive 2 (PSD2) can lower your authorisation rates because they have new requirements, such as Strong Customer Authentication (SCA), which can complicate authorisation procedures.
Improve your fraud screening processes. Poor fraud prevention will result in more declines since more transactions will be flagged as potential fraud or suspicious. Having more declines also affects your authorisation rate.
Upgrade your tech stack. You will see low card authorisation rates if your payment provider is using older technology, which does not address all the new requirements, such as fraud screening.
Know your customers better. You can determine whether your declines originate overseas or if they’re routed through multiple countries. If the authorisation rate for those transactions is lower, consider modifying your payment solution’s functionality to account for this international customer base.
Properly classify transactions. Transactions might be declined due to incorrectly labelled network tags. You might be unable to accept future payments if a sale was classified as an eCommerce transaction instead of a recurring/merchant-initiated transaction, for example.
Track your authorisation rate. This rate varies depending on your Business Model (Direct Sales, Subscriptions), the Issuer of the Shoppers card, the PSP and or Acquirer, and several other variables. You can build a dashboard that reveals what percentage of transactions are actually authorised by tracking your Authorization Rate every day. This will help you better understand your PSP/Acquirer’s performance.
Choose a payment provider based on what you need. When your payments’ provider is responsible for or contributes to your low authorisation rates, they are holding you back and costing you customers. A business that has improved its methods shouldn’t be required to settle for lower authorisation rates.
Low authorisation rates can be a significant problem for merchants, leading to poor sales performance and unhappy customers. Use the tips we’ve shared in this guide to boost your authorisation rates and reach out to our team if you have further questions or need help improving your authorisation rates.
Security is our top priority at Trust Payments and we strive to ensure that all data is kept secure at all times. We keep all customer data safe with AES256 encryption, SSL Certificates, and a minimum of TLS1.2 between your website and our datacentres.
Our systems are scanned quarterly using the Qualys PCI Platform, an independent Qualified Security Assessor (QSA) and approved vendors – Omnicybersecurity (UK) & Forgenix (US) – to ensure compliance with the security requirements of the card schemes.
We follow a number of rigorous security procedures on a daily basis including, but not limited to, continuous monitoring of our perimeter, dark web monitoring, and internal checks to ensure that CIA triad is maintained at all times.
Trust Payments Ltd 2023
Trust Payments Ltd, No.1 Royal Exchange, London, EC3V 3DG. A company registered in England and Wales with Company Number 11976895.
Trust Payments (MALTA) Limited, Reg. No. C 56013, Ewropa Business Centre, Triq Dun Karm, Birkirkara, BKR 9034, Malta VAT number: MT23440004