Merchant Innovation

MasterCard’s Aim To Reduce False Declines

MasterCard is expanding its security offerings with the launch of a new suite of solutions that uses real-time intelligence to improve fraud management decisions.

The pack of solutions, called MasterCard IQ, promises to bring down the number of unnecessarily declined transactions, which have seen a spike in recent years due to increased security efforts by merchants and credit card companies.

According to research company Javelin, one out of six cardholders faced a decline because their transaction was suspected to be fraudulent.

“While the industry has relentlessly worked to reduce fraud, some of these efforts have resulted in an increase in transactions being needlessly declined,” said Ajay Bhalla, president of Enterprise Security Solutions at MasterCard. “Nobody likes being falsely accused of something. Our IQ products leverage technology and insights to deliver merchants and consumers a convenient, uninterrupted checkout experience.”

Authorization IQ, one of two offerings in the suite, provides user spending insights to issuers to help distinguish between authentic and fraudulent transactions. This, MasterCard says, will help reduce the number of false declines, which, at $118 billion, account for more loss than the $9 billion lost in actual card fraud.

MasterCard’s other offering, Assurance IQ, is another tool, which the company says will help merchants make smarter decisions, as it provides a “blended risk score” to a transaction — thereby, decreasing fraud risk, which is notably high among affluent cardholders who tend to spend big and spontaneously, especially when traveling.

Though the payments and commerce space has seen rapid development of anti-fraud security solutions, little has been done to address the increasing rate of false decline transactions, which has now developed into a problem bigger than fraud.

The effects of false declines seem to have a long-lasting effect on consumer psychology, with 39 percent reportedly abandoning their card, 25 percent decreasing their card usage and another 32 percent giving up on shopping at that retailer for good.


Latest Insights:

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. In the November 2019 Mobile Order-Ahead Report, PYMNTS talks with Dan Wheeler, Wahlburgers’ SVP, on how the QSR balances security and seamlessness to secure its recently launched WahlClub loyalty program.