Say you\u2019re an online merchant who\u2019s done everything right at each step of the funnel: Ubiquitous branding. Targeted advertising. Fluid user experience on the site with a crack team of customer support agents to help when trouble or questions arise. In short, each department (marketing in particular) has done its job well and brought the customer to exactly where you want them \u2014 the payment page.<\/p>\n
But all this impressive, successful execution by your well-oiled machine makes it all the more tragic when you lose a sale because of a declined card transaction. It\u2019s the one part of this business that\u2019s entirely out of your hands, and it\u2019s crushing to see a cart abandoned \u2013 a sale lost because of a frustrating payment experience controlled by a third party.<\/p>\n
To put it bluntly: The ultimate decision-makers of card transactions are the card issuers. Their job is to help you earn revenue, yet sometimes they decide unilaterally not to allow it.
\nNow look \u2013 sometimes you can\u2019t fault them because there\u2019s a good reason for a card issuer to reject that transaction: the customer clearly has insufficient funds or is highly suspicious, even at a glance. The issuer has proven, trusted systems (their own or third-party) to spot the telltale clues, and when it\u2019s unquestionably a high-risk transaction, you can\u2019t blame them for trying to dodge a delinquent payment. It\u2019s their job, but it\u2019s certainly not the path to optimize payments.<\/p>\n
Most banks follow the sage advice of John Stumpf, chairman and CEO of Wells Fargo:<\/p>\n
\u201cIn financial services, if you want to be the best in the industry, you first have to be the best in risk management and credit quality. It\u2019s the foundation for every other measure of success. There\u2019s almost no room for error.\u201d<\/em><\/p>\n Yes, John is right. But very, very often, our \u201cred alert\u201d scenario above is not actually the case; frequently, a transaction is not necessarily high risk, and hence it\u2019s not a black and white decision to reject it. That\u2019s where it gets interesting. Because when it comes to that gray area, all it takes to save declined transactions is some carefully coordinated cooperation and communication that lets everyone win \u2013 you, the issuer, and \u2026 the customer.<\/p>\n You see, as the party with a lot more direct, real-time contact with the customer (and after all that work to attract him, plenty to lose), you \u201cknow\u201d more about him than the issuer can with own more general data sources. You can contribute two valuable pieces to this puzzle to push through the transaction, helping the issuer get comfortable with the potential risk he perceives.<\/p>\n First, you can let him know that you recognize this moderate element of risk (again, not the clear-cut fraudulent charges or those way beyond a spending limit) and are ready to participate in it. In other words, in the interest of making the sale, you can pay a small premium if he\u2019s willing to \u201cnudge back\u201d the boundary on what he will acknowledge is a gray area.<\/p>\n To make that offer, all you need is a heads-up when the issuer is about to decline your charge in a borderline case \u2013 and then you can offer to make it worth his while. Does he have to accept your offer? No \u2013 as a matter of fact, he can even tell you what it\u2019ll take \u2013 say a few percentage points of the total \u2013 and you can decide to pay him that sum. In short, you\u2019re agreeing \u2013 together \u2013 to face a slightly uncomfortable level of risk. <\/p>\n <\/p>\n These are just a few of the behaviors that indicate how dependable the customer is. Some of these basic data points can radically \u201cupgrade\u201d the simpler, more superficial analysis that the credit card issuer can conduct, working with much more limited, simplistic data. With enriched, supplementary data, they can make a better call.<\/p>\n In short, it\u2019s terrific to simply offer to share the risk to approve more payments. And it\u2019s even more compelling if you can supplement your offer with hard facts that back up your belief that this customer\u2019s profile indicates much less to worry about than it may seem.<\/p>\n Kipp does this, by the way. With very minimal integration, we play as the middleman to optimize approval rates, communicating the \u201cbid\u201d and \u201cask\u201d between the two parties to automatically, algorithmically, find the sweet spot. We also collect all that insightful data from you, the merchant, or your own third-party partners, to create a score to enrich the issuer\u2019s decision-making analysis. Our goal is to give them the confidence to accept the transaction, so you don\u2019t lose the sale. All it takes is some well-organized communication, in real-time, to get all parties to work together for that win-win-win.<\/p>\n","protected":false},"excerpt":{"rendered":"
\nWhy? Because banks are, by their very nature, financially conservative. They need to define their limits broadly, creating an \u201coversized\u201d gray area in which they only suspect a problem. Beyond a specific, over-cautious threshold, they simply aren\u2019t ready to authorize questionable transactions and then wait to see how it pans out.
\nAnd that\u2019s their right.<\/p>\n
\nBut here\u2019s where it gets even more intriguing. You actually know plenty about each customer you engage with, as buying patterns and site behaviors give you deeper insight about the person:<\/p>\n\n