In an effort to counter false declines and prevent unnecessary losses, PYMNTS Intelligence research finds, the vast majority of merchants are encouraging consumers to reattempt the transaction using the same payment method.
The report “The Role of Fraud Screening in Minimizing Failed Payments,” a PYMNTS Intelligence and Nuvei collaboration, draws on insights from an August survey of 300 heads of payments or fraud departments from international eCommerce companies.
The study found that 80% of merchants encourage customers to purchase a encourage customers to reattempt purchases using the same payment method when a given failed payment is flagged as potentially fraudulent.
Plus, merchants that collaborate a lot with payment service providers (PSPs) are the most likely to do so, with 85% of merchants with deep levels of collaboration with PSPs engaging in this practice, versus just 70% of those with minimal or no PSP collaboration.
By encouraging customers to reattempt purchases with the same payment method, merchants aim to minimize revenue loss from failed transactions. Moreover, the correlation between collaboration with payment service providers (PSPs) and this practice highlights the importance of partnerships in implementing effective fraud prevention strategies.
In an interview with PYMNTS last April, Elizabeth Graham, then product manager at Entersekt (now senior product manager), noted that false declines carry significant risks for merchants to consumer loyalty is critical.
“False declines are such a problem in the industry that 80% of merchants use this measure as a key metric within the organization,” Graham told PYMNTS.
Additionally, in a conversation with PYMNTS in December, FlexPay CEO Darryl Hicks discussed the importance of addressing failed payments.
“You can get massive, outsized, sometimes even unexpected gains — second order and third order benefits — from focusing on this and really understanding how much this payments problem, what seems like a transactional problem, is actually really significantly tied to the financial performance of your business,” Hicks said.
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