Are High Decline Rates Causing You to Leave Money on the Table?

Most e-commerce merchants are aware of the risks that fraud and chargebacks pose to their business. But what they might not realize is that false declines are a far bigger problem.

In fact, for every $1 they lose to credit card fraud, merchants lose a staggering $101 to false declines.

Unfortunately, merchants might not know they’re accidentally rejecting good orders — that is, until those falsely declined customers start to complain.

By the time merchants realize they have a problem, there’s a good chance they’ve already lost these customers and their revenue for good. Not only do 82% of consumers find false declines to be embarrassing and aggravating, but 32% of falsely declined customers choose to never shop with that merchant again.

So when it comes to your orders, do you know how much good revenue your fraud program is falsely declining?

If you’re running an automated fraud program, you should probably be worried.

Most automated programs rely on fraud scoring and fraud filters to generate approve or decline decisions. All orders with a poor score or that trigger a fraud filter will be automatically declined.  

And yet, 58% of these declined transactions are actually legitimate orders. That means more than half of the orders an automated fraud program declines are actually good orders – which means your fraud program could be losing revenue and angering your customers.

But many merchants don’t realize this. They may think these auto-declined transactions are all fraudulent. And when they calculate their order approval rates (or authorization rates), they might not include auto-declined transactions into their calculations.

This is a mistake. Omitting auto-declined orders from the order approval rate formula will give you an inaccurate picture about what’s really happening with your sales.

If you want to understand what is really happening to your business, you must know how to calculate your true approval rate. Here’s the data you’ll need:

  • The average total dollar amount of orders placed each month at your store
  • The average dollar amount of orders auto-declined each month by your fraud filters
  • The average dollar amount of orders approved (i.e., became actual revenue) each month

ClearSale’s new Approval Rate Calculator does the rest, showing you the right way to calculate your approval rate and letting you know if you’re approving as many orders as you think.

Are you declining good orders?

If you find your approval rate is lower than you thought, we can also help you identify where your false decline problem is coming from. We’ll start by analyzing your rejected transactions, reviewing your customer complaints, reviewing your payment chain and even analyzing your existing fraud program.

Don’t let false declines threaten your revenue, your reputation and your customer relationships. Calculate today exactly how many orders you’re really approving and how much revenue you might be leaving on the table — and then get in touch with one of our experts to start building a better customer experience.