Startup Check-In

Startups See Tech Fix For Card Declines

SUCI: Rethinking Card Declines, Data Security

To better serve clients and help make their businesses run smoother and more efficiently, FinTech startups are tackling an array of challenges, from data security to card declines to clunky customer experiences.

Last month, Modo helped merchants find ways to reduce card declines, DadeSystems sought to make data more secure through a “security by design” approach to development and AvidXchange looked to improve the customer experience by listening to suppliers. Here is the latest October news out of Startup Land.


With DadeSystems’ “security by design,” data privacy is not an afterthought, and FinTech startups may do well to take a similar approach. The startup encourages the incorporation of data security every time an enhancement is made or a new product is released.

“It’s really built-in by design,” DadeSystems CIO Mike Capote told PYMNTS in a recent interview.

When FinTech startups adopt a “security by design” approach, they take data privacy into consideration when making updates and seek to ensure that they are not sacrificing security when they make software implementations — an important tactic in the ever-evolving cyber threat landscape, where new challenges arrive daily.

“It seems like every day, there’s a new exploit,” said Capote, who recently joined the firm as CIO after the company hired his former firm ProPrivatus to help with IT security and compliance. But there is an opportunity for FinTech startups when it comes to adapting to this new cyber threat world, as they don’t have 20 years’ worth of code that they need to retrofit. Instead, startups are able to meet this challenge as they go, without having to address them with technology that is two decades old.


When it comes to the customer experience, AvidXchange’s Denise Leleux looks through a few different lenses. Leleux, a former Tesla executive who AvidXchange recently hired as its senior vice president, sees it this way: What is the need in the market, what can a product do and what is the customer’s point of view?

On the supplier side, for instance, companies want to get paid quickly and accurately. They also want to be able to use AvidXchange’s network to win new business or find new places to work. To better this customer experience, Leleux seeks to find her customers’ pain points and determine how her company can build solutions to help them be more successful.

“I think it’s critical to actually start listening to our suppliers,” Leleux told PYMNTS in an recent interview. Her company can then use those insights to develop products and services.

She also noted that the company is focused on growing its presence and market share by attracting buyers of services in areas such as real estate and homeowner association-type verticals. Overall, the company has 400,000 suppliers in its network, and Leleux is seeking to be her company’s internal voice to help ensure that its products help improve the businesses of its customers.


For merchants, card declines pose a sizeable problem, stubbornly averaging around 15 percent. That challenge is not lost on FinTech startups.

“Merchants are now getting swamped with declines,” Modo Chief Executive Bruce Parker told PYMNTS in a recent interview.

Yet around 12 or 13 percent of them fall into a general bucket of declines provided by issuers. As a result, merchants can’t always discern why exactly a decline occurred based on the transaction codes they receive. At the same time, merchants are learning a decline is not the end-all be-all, and the merchant is left on the hook to figure out if it should reprocess a transaction.

Why? The merchant is concerned about how reprocessing a transaction might impact its relationship to the card network and to its processing partner. That’s where FinTech startups like Modo come in. The company knows why declines happen, and so is able to help merchants find out “when is a decline really a decline and when is a decline an opportunity to ask in another way,” according to Parker, indicating that FinTech startups can find new solutions to those customers’ pain points that just won’t go away.



The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.