Visa: Innovation Boosts Authorization Rates as Merchants Improve the Customer Experience

“There’s a lot going on for merchants today, and they have a lot to juggle,” Saurabh Chopra, head of product, U.S. debit, prepaid and real-time payments at Visa, told PYMNTS.

The juggling act includes everything from running core operations to attracting and acquiring new customers.

And once those customers have been acquired, it’s imperative to keep them engaged, incentivizing them to make incremental purchases, reward their loyalty and ensure they have an optimal experience while shopping online, Chopra said.

The optimal experience includes high authorization rates and minimal false declines with as little fraud as possible in the mix.

“You want to make sure that the transaction goes through with no hiccups, and goes through as quickly as possible,” he said.

In the meantime, consumers’ expectations of their preferred merchants are changing. The value individuals desire extends beyond the confines of rewards points. They want the interactions to be fun and specific. Visa’s own stats revealed that 60% of consumers want a “curated experience” as they browse and buy, Chopra said.

For example, Visa launched its customer loyalty Web3 engagement platform powered by SmartMedia Technologies to create curated experiences and offers for consumers. With the solution, merchants can apply gamified rewards, digital coupons, event access and immersive augmented reality experiences to customers’ digital wallets.

These are not easy tasks, and merchants are looking to the payments networks, Visa included, to deliver the experiences securely, he said.

What AI Can Do

Advanced technologies — including artificial intelligence — can help realize these aspirations.

“AI is becoming more and more important to us, as consumers and businesses,” Chopra said.

Visa launched its Risk Intelligence platform, which helps merchants and issuers strike a balance between approving good transactions and isolating and declining bad transactions.

Leveraging AI to help analyze transaction data and consumer behavior is especially important because fraudsters are growing ever more sophisticated. Ransomware attacks grew by more than 60% year on year, he said, and card-not-present transactions continue to account for most fraud. Bad actors have become adept at spoofing merchant websites, luring unsuspecting victims to part with sensitive personal data and card-specific information.

“Similarly, you have ‘mal-advertising,’ which is when fraudulent merchants are set up online to take customer orders but have no intention of fulfilling those orders,” Chopra said. “They’re seeking out payment credentials.”

Fraudulent gift offers distributed online may deliver malware instead that compromises consumers’ credentials.

Visa’s fraud prevention efforts, including AI advances and tokenization, blocked $40 billion in potential fraud in 2023, he said.

“Merchants who route their transactions to Visa can use all of this to improve their operations, translating into higher authorization rates and lower fraud rates, which ultimately would lead to better transaction activity, more profitability and a happier consumer,” Chopra said.