Optimize Authorization Rates to Drive Revenue

Why optimized authorization rates are important

Authorization rates are like a batting average. While the latter describes the number of times a player gets a hit out of all the times they’ve been up to bat, authorization rates refer to the number of transactions that are accepted for all the times payments have been submitted for approval. It’s a numbers game, with many potential influencing factors – but it’s also one which can determine long-term success.

Why are some payments declined?

The issuer is perhaps the key player in the process of getting a transaction authorized. After a customer submits their payment information, it is the issuing bank that ultimately makes the decision to approve or decline. So why might they decline?

Insufficient funds: Pretty self-explanatory; the shopper submits a payment but does not have the funds to pay via the methods offered by the merchant. Sometimes offering more ways to pay can help here.

Administrative declines: These may be a result of configuration errors or a particular transaction format and structure.

Lifecycle management declines: Occur when customer payment credentials and information have expired.

Security and policy declines: These include transactions mistakenly flagged as fraud (false positives) which often arise from the fact that issuers lack complete insight into transaction information.

Understanding and solving for decline rates

However, there is hope. Even if a payment is declined, as long as the merchant is able to identify the reason behind it, and provide customers with feedback and/or alternative payment methods, they may be able to save the sale, boost conversion, and drive revenue.

There is where analysis of broader decline trends may help—by providing insight into whether changes to checkout or customer base, seasonal trends, product lines or specific card types are to blame, for example. Here’s what to do in specific cases:

Insufficient funds: Improve communication with the customer on total price or dates when subscription charges will be taken.

AVS/CVV errors: Check the website to see how this information is displayed.

Generic declines: Be sure to send enough high-quality information to issuers in the right format, so that they can accurately evaluate risk.

Using PayPal to optimize authorization rates

PayPal has been managing payment processing for global customers for two decades, giving us unique insight into how issuers make their authorization decisions. We leverage these insights to ensure our business customers’ processes are optimized to maximize approvals. For example:

Insufficient funds: PayPal’s multiple payment options – including PayPal Wallet, Venmo, Google Pay, Apple Pay and local payment types – offer maximum choice to shoppers in order to minimize declines due to insufficient funds.

Administrative declines: PayPal’s integration team works on onboarding and comprehensive testing to mitigate these risks.

Lifecycle management declines: PayPal’s extensive data collection, two-sided network, Vault Technology and Account Updater tools ensure merchants always have accurate and current customer payment details.

Security and policy declines: PayPal’s powerful fraud detection and deep relationships with issuers can enhance the accuracy of merchant decisioning and reduce security and policy declines.