Five ways merchants can increase e-commerce authorization success rates

Practical, data-driven strategies for payments professionals to boost e-commerce authorization rates - from network tokens and 3-D Secure strategy to mobile wallets and intelligent retrying.

Building an ecommerce website and putting it live is quick, but mastering the art of making your customers feel well-treated can take expertise.

While working daily on the best way to help merchants optimize their e-commerce payment solution, I have compiled a few key aspects that every payment professional should consider when aiming to improve authorization rates for your customers. 

1.     Introduce Network Tokens

Network tokens are essentially tokenization with steroids, following standards provided by payment schemes. In different flavors, all global schemes (Visa, Mastercard, American Express and Discover) offer network tokens to replace the Primary Account Number (PAN) with a secure, dynamic token for online purchases. Visa (2024) sources show that up to 88% of online shoppers will abandon their cart if they encounter friction at checkout, and about €16 billion in sales are annually declined due to outdated credentials.

This token is used on future card-on-file transactions and recurring transactions instead of the actual card details, as any other token. Additionally, if a card expires or is replaced, or if the consumer data changes, the same network token remains valid without updates. Shifting from gateway or acquirer tokens into Network Tokens shows an impressive uplift in performance, increasing from 2 to 5% of total sales. 

2.   Know your customer (beyond KYC)

Knowing who your customer is goes far beyond doing KYC. Granular customer profiling reduces friction and builds trust at checkout. If you know the countries where people buy and the issuers behind their payment methods, you can tailor your requirements to reduce checkout friction, increase comfort, and boost stickiness. What do I mean by this? If you have customers in the United States, the United Kingdom or Canada, obtain your customers’ billing address, perform an Address Verification Service (AVS) and avoid 3-D Secure - optional if you sell from Europe and your customer is not there. Your customers’ issuers will be happier knowing you’ve taken steps to verify legitimacy, and that you have avoided shifting liability to the issuer. This can reduce consumer friction and increase authorization rates. Of course, check with your fraud team first.

Also, if you sell to a country where 3-D Secure is not mandatory, review the effectiveness of performing 3-D Secure. In many cases, you will be better off with this validation; in other cases 3-D Secure can create friction that may cause you to lose up to 70% of your transaction attempts. 

3.   Speak to Sell: Soft messages at checkout

Everyone appreciates having more information. Your customers do too. Tailoring checkout responses based on your acquirer’s feedback can improve outcomes. If you respond with something like “your payment has failed” without the specific reason, you miss the chance for the consumer to try again more effectively. The information from your acquirer matters: you might tell the customer they used an incorrect CVV code, that funds are insufficient, or that a card cannot be stored because it’s a single-use virtual card. Either way, a more specific response can prompt a reaction and potentially turn a decline into a sale.

You should also occasionally do audits and act as a mystery shopper in your own site/app and on your competitors’, counting the clicks needed to finalize a payment. UX also plays a significant role not only in the authorization rate but in your entire funnel conversion process.

4.   Use tools to recover failed transactions

You may not be aware, but not all declined transactions are unrecoverable. Some declines are retriable immediately; others are retriable after specific window of time. The number of retries for specific declines also has a maximum, and beyond that maximum amount per month, penalty fees start applying.

Visa splits decline into four categories:

1. Issuer will never approve the transaction – do not retry.
2. Issuer cannot approve at this time –retry up to 15 times within 30 days.
3. Issuer cannot approve based on the details provided - before retrying, adapt the information provided from the first attempt (up to 15 times).
4. Generic response codes - the issuers provide these responses and can also be retried.

Mastercard, instead, created the Merchant Advice Codes (MAC) that reflect additional information not contained in the decline message. This can be that “new account info is available”, or that the card is a “single-use virtual card”, or that the transaction was rejected with insufficient funds and can be retried after a certain period (e.g. in an hour, 8 hours, a day, or beyond).

What is the takeaway? That you can optimize your cost of processing and your authorization rate if you perform a smart reading of your decline reasons.

5.   Add Mobile Wallets

We are all used to entering our physical credit cards numbers (16/17 digits) to pay online, but that will change sooner or later. Some issuers are no longer issuing cards with printed account numbers. Mastercard is working toward 100% e-commerce tokenization by 2030 to eliminate manual card entries. Apple and Google have also been building mobile wallets like Apple Pay or Google Pay to simplify ecommerce. What’s the outcome? The use of solutions like Apple Pay increase authorization rates by 2-5%, reduces the checkout process friction and eliminates incorrect manual input errors. 

Worldline Consulting Services

By combining deep payment data insights, tailored analytics strategies, and practical recommendations, our team helps organisations tackle complex payment challenges and unlock sustainable growth.

Interested in learning more about our Consulting Services? Contact me directly ariel.setton@wordline.com  or Ariel Setton | LinkedIn or visit our webpage for details.