Authorization Optimization Boosts Merchant Checkout Conversion

Holiday shopping makes or breaks merchants — who must be ready to offer a myriad of payment options.

As PYMNTS research has found, consumers have been opting to use debit cards more than they have in the past, while credit card use has waned just a bit. Apple Pay, Venmo and buy now, pay later (BNPL) plans are gaining ground.

Cindy Turner, vice president of PayPal Braintree, said younger and lower-income consumers have been using new ways to pay that represent a lower cost of transacting for retailers and brands, both in terms of interest charges and cost per transactions.

But no matter the payment type that is chosen, on the merchant side of the equation, the goal is to make sure that every single payment can be processed in order to clear net new revenue for merchants.

Boosting Payment Acceptance Rates

To get there, she said, authorization optimization can boost payments acceptance rates.

“As merchants are starting to come back into the public markets,” she said, “and need to show they are cash flow positive, they need to drive down their cost of payments and the cost of customer acquisition.”

Larger organizations have been able to take ownership of the payments experience they offer customers. They have deep enough pockets to craft their own checkout flows, with advanced technologies and multiple vendors in the mix across geographies to route payments.

Smaller firms, in contrast, have typically outsourced their payments to a third party.

“So they’re letting a third party drive their checkout, they’re letting a third party drive the entirety of their payments experience,” Turner said. For the small and medium-sized businesses (SMBs) that want to run a payment stack in a way that has a minimal number of engineers (because engineers are hard to find and are expensive hires), “they want to connect to one front end and have one line of technology connectivity that offers the world to them. And they want every single method of payment that’s available.”

Linking up with providers such as PayPal Braintree, she said, gives those merchants the optionality that comes with the ability to route, ability to retry and ability to optimize, payments.

That model, she said, “delivers an excellent technology experience and then a payments processing environment that’s both on our platform and off our platform, because we use a lot of orchestration.”

For example, she said, the authorization authentication efforts can get a transaction to a processor in Africa, use a separate fraud provider, and a separate third-party chargeback provider that needs to see the transaction information in a PCI-compliant way. None of these entities, she said, have to do a direct integration to the merchant.

“Every single merchant out there,” said Turner, “wants to be able to accept every form of payment that the consumer wants to pay with … and they want to make sure that the payment happens, the payment clears and there’s zero fraud associated with the back end.”