Sarah Elizabeth
Today’s e-commerce customers have high expectations. They want a seamless online experience that lets them find and buy whatever products they want, whenever they want them. Retailers who can’t deliver this online experience risk losing both these customers and their lifetime value.
But balancing an exceptional customer experience with protecting your growing business against credit card fraud isn’t easy. In fact, it may seem impossible to be able to do both well.
So many merchants find themselves erring on the side of caution and declining every order that appears fraudulent. While this approach can certainly reduce fraud exposure, it can also inherently increase your false decline problem, inadvertently flagging legitimate orders as fraudulent and incorrectly declining them.
When it comes right down to it, these false declines cost retailers more money than fraud. In fact:
- 58% of declined transactions are false declines.
- Retailers lose more money to false declines ($118 billion/year) than to actual credit card fraud ($9 billion/year).
- 32% of customers who experience a false decline choose not to shop with that merchant again.
Think you’re not at risk? Here are two other ways this increase in false declines may already be affecting your order approval rate.
1. You Calculate Order Approval Rates Incorrectly
When it comes to approval rates, accuracy is key. If you don’t have an accurate picture of what’s happening with your orders, you can end up seriously underestimating the revenue you’re missing out on.
Here’s the problem: Declined orders don’t show up on your P&L, and this can make many e-commerce teams, including your own, blind about these numbers and their importance.
You also might be calculating order approval rates wrong — excluding all auto-declined transactions from your numbers because you mistakenly believe all your auto-declined orders weren’t good.
As a result, your approval rates won’t be telling you the whole (or the right) story.
For example, your orders might look like this:
|
$ Orders |
$100,000,000 |
|
Auto-approved orders |
$95,000,000 |
|
Auto-declined orders |
($2,000,000) |
|
Orders needing further review |
$3,000,000 |
|
Orders approved after review |
$2,100,000 |
|
Orders declined after review |
($900,000) |
|
Final approved orders |
$97,100,000 |
If you’re excluding auto-declined orders from your order approval rates, you might think your approval rates are:
|
$ Orders (excluding auto-declines) |
$98,000,000 |
|
Final approved orders |
$97,100,000 |
|
Order approval rate |
99.1% |
However, you don’t know for sure that all those auto-declined orders were in fact fraudulent. In actuality, this is what your approval rates really are:
|
$ Orders (total) |
$100,000,000 |
|
Final approved orders |
$97,100,000 |
|
Order approval rate |
97.1% |
That’s quite a difference in approval rates!
2. You Limit Your International Growth Potential
Although many e-commerce merchants want a slice of the international market, only 20% believe they’re ready to take the risk that comes with international sales. So many companies turn to automated e-commerce fraud prevention programs, thinking that will be enough to confirm global customers are who they say they are.
The problem? This all-or-nothing approach creates a second problem: false declines. Automated programs tend to be built on scoring and filters that automatically decline any and all orders perceived to be high-risk. And for e-commerce merchants with a focus on expanding globally, these declines could end up being a big percentage of their incoming transactions.
A One-of-a-Kind Solution
Preventing fraud and chargebacks doesn’t have to mean autodeclines that insult your customers and result in lost sales.
If you’re looking for a better solution, ClearSale has the answer. One of the best ways to increase order approval rates safely is by using a high-tech manual review process that combines their:
- Proprietary machine learning technology and proven statistical techniques assessing every order
- Team of more than 700 highly trained and experienced fraud experts conducting manual reviews for “gray area” transactions.
Because ClearSale never automatically or incorrectly declines orders, we’re the only solution on the market that can reduce the number of false declines that can cost sales and customer relationships.
So when you’re ready to grow your business and exceed customer expectations — all while benefiting from the resources of the largest fully outsourced fraud prevention company in the world, contact ClearSale.
More order approvals. Fewer chargebacks and declines. Higher revenue. What’s not to love?
