How to use Payment Optimization to Stop Losing Money
- Increase authorization rates with network tokens, multiple payment service providers, and dynamic routing.
- Reduce false declines with account updating tools and a fraud prevention platform that prioritizes denying fraudulent charges without declining real customers.
- Reduce fraud with both an excellent fraud prevention platform and a network token provider to secure cardholder information.
What is Payment Optimization?
Payment optimization is the practice of identifying areas of opportunity to increase authorization rates, reduce false declines, and reduce fraud within the payment system.
Optimal payment solutions revolve around identifying areas that could be more efficient and identifying the opportunity costs associated with the current payment system. An opportunity cost is a cost associated with the gains lost from choosing a different alternative. An example would be choosing cheaper payment gateways that cost your business more in the long run because of their inefficiencies and fees.
Monitoring payment data can help identify areas of growth that can be used to increase efficiency and lower costs. As you examine your current systems, here are a few highly effective payment method optimization opportunities to consider.
Automatically Update Expired Cards
Not using a tool, like the TokenEx Account Updater, to automatically update outdated cards can lead to more declines and a loss of revenue. An account updater can prevent lapses in monthly payments or other repeat transactions which simplifies digital payments for both the merchant and the customer.
Use the Right Fraud Prevention Platform
The right fraud prevention platform will reduce false declines and reduce fraudulent charges. The financial risk posed by fraud is significant, but the lost sales attributed to false declines can cost companies even more. Here are 7 of the best fraud prevention platforms we recommend for effectively fighting fraud.
Offer Multiple Payment Methods
Not offering a preferred payment method can frustrate international or safety-conscious customers. In North America we are used to the same card brands, like Visa and American Express, being used everywhere. However, this is not a global truth. Different countries utilize different card brands, and not catering to these international cardholders could mean losing sales.
Additionally, offering both NFC payments and chip payments is important for modern brick-and-mortar stores. Both NFC payments and chip payments are safer than manually entered or swiped cards, so it’s important that these options are offered to customers.
Use Dynamic Routing
Dynamic routing enables companies to use multiple payment service providers, which provides flexibility and reduces failed payments. Dynamic routing takes multiple factors into account before deciding how to route a payment and will choose a path based on the fastest transaction approval, best authorization rates, and most cost-effective routing.
Dynamic routing also decreases failed transactions as it can reroute payments if the system breaks down.
Dynamic routing can reduce costs and increase transaction success rates. Utilizing multiple payment service providers allows every transaction to be optimized. If you’re interested in learning more about utilizing multiple service providers, check out our free ebook about the dangers of going all-in with one processor.
Use Local Acquiring
An acquirer is a financial institution or bank that manages the merchant account and accepts credit cards for the merchant. A local acquirer exists within the borders of the country where the transaction takes place. If you have a lot of transactions in a different country, obtaining a local acquiring institution can boost approval rates in that country.
Optimize Payments for Mobile
Not optimizing mobile payments could mean losing out on a large customer base. Take time to optimize the design of the payment page to improve the user experience and increase mobile transactions. Not optimizing the mobile experience could lose mobile customers who expect a seamless experience on any device.
Use Network Tokens
Certain card brands offer network tokens to reduce the risk of fraud facing card-not-present transactions. Network tokens boost revenue by significantly reducing declines and chargebacks. Network tokens can even increase approval rates and lower interchange fees because of the lowered risk for merchants who utilize them.
There are many ways to optimize your payment systems to increase transactions and reduce the cost of accepting payments. While these may seem like small adjustments, if implementing one or two of them boosts your revenue by one or two percent, the results will more than offset the effort.
If you’re looking for the most effective place to start optimizing your payment systems, why don’t you look into network tokenization first? Visit our network tokens page to learn how they can increase your approval rates, reduce your declines, lower your interchange fees, and protect your cardholders from fraud!