4 minute read
When a customer uses a debit or credit card to pay for something, the transaction requires an authorisation to ensure that enough funds are available to cover their purchase. If there are sufficient funds, the transaction is approved. If there are insufficient funds, the transaction is declined. This authorisation is required for card-present and card-not-present transactions.
A high number of transaction declines can disrupt your business. For this reason, you should aim to improve your authorisation rates, which can also help increase customer satisfaction and revenue. While there is no one solution, partnering with the right payment provider—and implementing these five tips—can lead to better results in the long run.
What's an auth rate?
An authorisation (auth) rate is the percentage of transactions that successfully pass through your payment authorisation process, resulting in a completed transaction.
Having zero card-not-present (CNP) declines—or a 100% authorisation rate—is nearly impossible, especially if you process a lot of payments. But closely monitoring your authorisation rate can help you identify ways to reduce transaction declines.
1. Enable tokenisation
Improve your authorisation rates by enabling tokenisation. That's when a token shields your customer's personal payment data. This substitution makes it much more difficult for an unauthorised individual to access or steal a customer's real data.
Tokenisation not only adds security and reduces the chances of identity theft, but tokenised payments also have, on average, nearly 6% higher authorisation rates than traditional ecommerce transactions.
2. Accept digital wallets
Some leading digital wallets, like Google Pay and Apple Pay, have tokenisation built into their platforms. This significantly reduces the risk of cybercrime, resulting in safer transactions.
But that's not all. Digital wallets also provide a faster and more seamless payment experience, which is especially convenient for mobile users.
3. Use card account updaters
Your payment partner should offer card account updater services. These services automatically renew expired cards and update any changes made to the card. This helps ensure your customers' information is always up to date. And it can significantly reduce the number of card-not-present declines and improve your authorisation rates—benefiting you and your customers.
4. Add security layers
You've most likely heard of 3DS2. It’s a multifactor authentication protocol that adds security layers beyond just basic card data. With 3DS2, additional security questions or biometrics are used to further decrease the chances of fraud, minimise friction and improve authorisation rates. It complies with the European Union's Payment Services Directive (PSD2), implemented by the FCA in the UK, and the enforcement of Strong Customer Authentication (SCA).
By implementing 3DS2, some card processors have reported an increase in authorisation rates by up to 10%. This security feature is a simple but powerful way to protect your customers’ transactions. And it allows for higher authorisation rates.
5. Verify the accuracy of your information
It is important to add specific merchant and customer information to help improve the quality of your card transactions and improve your authorisation rates.
Check to make sure your Merchant Category Code (MCC) is accurate. An MCC is a four-digit number that classifies the type of goods or services that you sell. If you are unsure if you are using the correct MCC code, contact your payment partner to get more information or make any necessary updates or changes.
Some card processors have reported an increase in authorisation rates by up to 10 percent, simply by implementing 3DS2.
Be sure to get as much billing information as possible from your customers, including a postcode or CVC. More data points contribute to a stronger and more accurate authentication process. That makes it harder for unauthorised individuals to make fraudulent purchases.
Higher authorisation rates mean more revenue
Even slight improvements to your authorisation rates can positively impact your business operations: An increase as small as 1% can capture millions of pounds in additional revenue each year for a large business.
Contact us today to learn how we can help you reduce your card-not-present declines and improve your authorisation rates. And subscribe to our Payments in Focus newsletter to stay ahead of the latest commerce and payment trends.
