Four years ago, in August 2015, Javelin Research reported that 1.9 billion online and telephone transactions were falsely declined every year, representing $118 billion in lost revenue for merchants.
In a 2019 report, MasterCard revealed that the false-decline problem has since tripled in size, now costing merchants $320 billion annually.
What is a false decline?
A false decline is a credit card transaction attempt made by a legitimate, credit-worthy, sufficiently-funded individual—that is rejected by the card-issuing bank. It’s called a false decline, because the customer is wrongfully rebuffed.
While decline rates for face-to-face credit card transactions routinely run at 2%, when an individual from this same cohort of customers attempts a card not present (CNP) transaction—either online or over the telephone—the decline rate suddenly spikes as high as 50%. Same customer. Same credit-rating. Same funding capacity. Different decline-rate.
The official excuse used by card-issuing banks to justify this anomalous response is protection from fraud. As a result, detection systems kick into high gear over the slightest whiff of concern involving a CNP transaction, creating 13 false-positives for every valid decline and unnecessarily rejecting hundreds of billions of dollars of potential sales along the way.
Ironically, card-issuing banks hurt themselves, too, with this extreme overreaction. Well-funded customers are annoyed by false declines, with 39% of cardholders abandoning “broken” cards to back-of-wallet, stripping the card-issuing bank of revenue opportunities.
Banks lose. Customers lose. Merchants lose.
Merchants lose in another way, too.
Are false declines eating your bottom line?
As an online retailer, your cost of acquiring a new customer can be 10x more than the cost of retaining an existing customer. This means every time you lose a customer because of a false decline, you also face a threat to profitability.
Which means the false decline problem is a profit margin problem.
- When you reduce false declines, you reduce churn.
- When you reduce churn, you elongate lifetime value (LTV).
- When you elongate LTV, you protect precious profit margins.
So, how can you reduce false declines?
Decline salvage solutions, using AI-driven technology
At LimeLight we asked ourselves: How could we empower an online merchant like you to reduce false declines, without creating unsustainable overwhelm?
And we found the answer: FlexPay.
Flexpay is your machine-learning, statistics-based and risk-balancing best friend, with a track record of salvaging 30-60% of declined transactions!
FlexPay reviews all transactions before they’re submitted for processing, and with lightning-quickness, reviews 70 data points to determine exactly when, where and how to process each one of them.
FlexPay also uses machine-learning to reverse-engineer the Risk Decline System (RDS) used at card-issuing banks, analyzing billions of historical CNP transactions across a wide array of merchants. Every night, fresh datasets are added to FlexPay’s proprietary database, keeping it informed of changes to the issuers constantly-evolving RDS.
FlexPay isn’t just best-in-class, it’s also one of the biggest-in-class.
Integrated with over 120 payment processors, FlexPay is underpinned with the robust infrastructure needed to handle 100’s of millions of transactions per month.
What makes FlexPay different?
What differentiates FlexPay from other decline salvage companies is that it uses AI, machine-learning technology, versus a rules-based approach. That’s why FlexPay consistently outperforms its competitors.
Machine-learning technology is nimble, adaptable and growth-capable.
Rules-based decline-salvage is not.
With an established track-record and Everest-sized experience in merchant processing, FlexPay takes full advantage of long-term relationships with both card-issuers and acquiring banks to help you avoid—and recover when needed—a legendary number of false declines.
Flexpay’s fully-automated solution can salvage between 30% to 60% of your declined transactions, and the best part is that it can run seamlessly, behind-the-scenes, to recover your lost revenue!
Get started and see results
Your designated LimeLight Client Success Manager can review your store’s transactional volume, and see what revenue opportunities you’ll gain from using a Decline Salvage AI tool like Flexpay. It’s easy to get started, as LimeLight has already invested into a deep and seamless integration with FlexPay’s AI-driven decline salvage gateway.
Reduce involuntary churn, mitigate the loss of loyal customers, decrease chargeback rates and lower expenses associated with regaining mostly the same customers again.
Even better, watch as your regular approval rates on CNP transactions increase, due to the safeguards put in place by a new strategic decline salvage plan.