5 ways to improve your authorization rates and reduce card-not-present (CNP) declines

Wednesday, September 13, 2023 4 minute read

4 minute read

When a customer uses a debit or credit card to pay for something, the transaction requires an authorization 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 authorization 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 authorization 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 authorization rate is the percentage of transactions that successfully pass through your payment authorization process, resulting in a completed transaction.

Having zero card-not-present (CNP) declines—or a 100% authorization rate—is nearly impossible, especially if you process a lot of payments. But closely monitoring your authorization rate can help you identify ways to reduce transaction declines.

To get your authorization percentage rate, you want to divide the number of successful payment approvals by the total number of attempted payment transactions. To get your authorization percentage rate, you want to divide the number of successful payment approvals by the total number of attempted payment transactions.

1. Enable tokenization

Improve your authorization rates by enabling tokenization. That's when a token shields your customer's personal payment data. This substitution makes it much more difficult for an unauthorized individual to access or steal a customer's real data.

Tokenization not only adds security and reduces the chances of identity theft, but tokenized payments also have, on average, nearly 6% higher authorization rates than traditional ecommerce transactions.

2. Accept digital wallets

Some leading digital wallets, like Google Pay and Apple Pay, have tokenization 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 authorization rates—benefiting you and your customers.

4. Add security layers

Have you 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, minimize friction and improve authorization rates. And if you sell to customers in Europe, it complies with the European Union's Payment Services Directive (PSD2) and the enforcement of Strong Customer Authentication (SCA).

By implementing 3DS2, some card processors have reported an increase in authorization rates by up to 10%. This security feature is a simple but powerful way to protect your customers’ transactions. And it allows for higher authorization 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 authorization rates.

Check to make sure your Merchant Category Code (MCC) is accurate. 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 authorization 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 Zip code or CVC. More data points contribute to a stronger and more accurate authentication process. That makes it harder for unauthorized individuals to make fraudulent purchases.

Higher authorization rates mean more revenue

Even slight improvements to your authorization rates can positively impact your business operations: An increase as small as 1% can capture millions of dollars 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 authorization rates. And subscribe to our Payments in Focus newsletter to stay ahead of the latest commerce and payment trends.

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