Decision Brief: Optimizing Consumer Authorization Rates in Cross-Border eCommerce

Introduction:

Cross-border eCommerce involves millions of transactions spanning multiple markets, acquirers and issuers, which combined together can significantly increase the occurrence of failed transactions. That, in addition to local payment preferences and varying regulatory landscapes from one market to another can create numerous points of failure along the eCommerce customer journey, making it challenging for multinational merchants to achieve good and consistent authorization rates in new geographies.

Objective: 

This brief explores the concept of “good authorization hygiene” as a strategy that merchants, especially those with recurring revenue business models, can use to optimize customer authorization rates and reduce failed transactions when expanding into new markets. It leverages insights from a recent conversation between PYMNTS CEO Karen Webster and Ariel Setton, global head of FX management and payment performance at the Consulting Services division of Worldline.

Key Takeaways:

• Optimizing consumer authorization rates is complex due to variations in regulations, local payment preferences, and practices across different markets and regions.
• There is no one-size-fits-all approach to improving acceptance rates, which involves tackling numerous points of failure in each eCommerce transaction.
• Leveraging the knowledge and expertise of global payment providers can reduce cross-border complexities associated with payment authorization and drive revenue growth.

1.Points of Failure:

There are over 20 potential points of failure in eCommerce transactions that merchants need to consider. These include:

• Incorrect implementation of checkout process
• Incorrect transaction routing to payment gateways
• Noncompliance with issuer-specific retry guidelines
• 3D Secure validation challenges based on regional availability
• Challenges with currency conversion exchange rates
• Lack of multi-currency pricing on websites which in turn leads to high rates of credit card disputes and customer chargebacks
• Challenges with storage and securing customer credit card data
• Increased fraud risks

2. Practicing Good Authorization Hygiene:

To significantly improve authorization rates and minimize the rate of failed eCommerce transactions, merchants should:

1. Ensure compliance with local payment rules and regulations
2. Ensure compliance with issuer-specific guidelines to guide retry attempts
3. Add multi-currency pricing, including consumer’s home currency, to eCommerce websites
4. Implement effective address verification services to meet issuer expectations and enhance transaction security
5. Tailor 3D Secure utilization to prevent unnecessary hurdles for consumers in regions where the service is inactive
6. Customize features and tailor authorization practices based on regional nuances
7. Establish proximity between merchants and customers and align merchant location with customer base
8. Encourage open communication with issuers for additional transaction insights

3. Provider Relationships and Consultancy Expertise:

Leveraging provider relationships and consultancy expertise is key when penetrating new markets.

1. Partnering with established global providers like Worldline, which offers local expertise and customized payment solutions to over one million businesses around the world, helps to boost payment authorization in new markets.
2. End-to-end payment solutions offered by providers improve the buying experience and help to increase the chances of customers returning to make purchases.
3. Collaborations with expert providers like Worldline help to drive growth and enable merchants to focus on what truly matters — delivering the best products and services to their customers.

4: Impact and Return on Investment:

Implementing good authorization hygiene and leveraging provider relationships can lead to tangible benefits:

1. Increased consumer trust and confidence
2. Reduced cart abandonment rates
3. Enhanced likelihood of repeat purchases
4. Streamlined authorization processes
5. Improved revenue growth rates

Conclusion:

In the fast-growing cross-border eCommerce space, navigating the complexities and friction points associated with global transactions demands a strategic, dynamic approach which involves considering regional nuances, fostering open communication with issuers, and capitalizing on relationships with providers who are experts in end-to-end payment value chains. By understanding and taking the necessary steps to tackle these challenges, multinational merchants can enhance their authorization rates and drive revenue growth, ensuring a seamless cross-border payment experience for their consumers.