When it comes to digital commerce, there’s considerable emphasis placed on optimizing the checkout journey for customers. Typically, teams focus on building awareness and streamlining the later stages of the payment journey — but sometimes they overlook the critical authorization phase.
Herein lies the opportunity. When authorization is optimized, it can lead to significantly improved outcomes.
For acquirers, improving authorization rates can be a significant challenge. As commerce becomes more sophisticated, acquirers are increasingly evolving their approach to safeguard against fraud, protect their merchants’ ecosystems and prevent false declines.
More and more, acquirers are tapping into advanced fraud technology to help their merchants reduce fraud and approve more legitimate transactions.
An efficient authorization process can enhance the overall customer experience and reduce the likelihood of abandoned carts or failed transactions. Merchants can increase conversion rates, improve customer satisfaction and drive revenue growth. A seamless authorization process can also improve trust and confidence among customers, leading to repeat transactions.
How fraud solutions can improve authorization rates
Cost of false declines comes to $443 billion annually1
$443B
Advanced algorithms have emerged to help analyze customer data points such as transaction history, location, device information and user behavior patterns in real time. In particular, the implementation of advanced machine learning algorithms is helping to enhance authorization rates by quickly analyzing data from a multitude of sources and detect patterns or anomalies that could indicate fraud.
By continuously learning and adapting to new threats, these solutions can stay ahead of evolving fraud tactics. This helps merchants stay vigilant and minimize false positives, thus reducing the risk of legitimate transactions being declined. And because they proactively screen risky transactions before submitting for network authorization, the overall approval rates get a significant boost.
This is true for solutions such as Transaction Risk Management, powered by Mastercard’s Brighterion AI, which screens and evaluates based upon a real-time artificial intelligence model to help prevent payment fraud.
Transaction Risk Management augments its AI model score with customizable rules and thresholds that can be fine-tuned to suit acquirers’ specific needs and the risk tolerance of a business. This flexibility allows businesses to strike the right balance between maximizing authorization rates and minimizing fraud losses. In fact, it can detect incremental fraud by up to 40% — with minimal impact to the customer experience.
The impact in real life
For the National Bank of Egypt, authorization rates were top of mind. The bank was looking for an advanced fraud prevention technology that could help it enter new markets and support different sales channels, both of which come with challenging authorization issues.
Mastercard equipped the bank with Transaction Risk Management, helping it stay one step ahead of cybercriminals. It also prevented fraudulent payments by monitoring all transactions and blocking certain IP addresses and emails, and even some merchants. The results speak for themselves. Merchants within the bank’s portfolio were able to gain stronger control over fraudulent payments; in one case, an airline merchant in Egypt increased its approval rate by 23% the year after implementation.
By combining advanced technology with robust authentication methods and proactive monitoring, fraud solutions can significantly improve authorization rates and protect businesses and customers from fraudulent activities.
The digital dilemma: Improving authorizations in a digital ecosystem
RISK
1. https://ekata.com/resource/false-declines-and-false-positives-are-costing-you-revenue/
The digital
dilemma: Improving authorizations in a digital ecosystem
RISK