Scaling The Acceptance Rate

Payments 101 digest is back with another insightful post for payment enthusiasts. While E-commerce has known a drastic increase in volume this year, an integral aspect is often overlooked. While businesses are often looking at increasing conversion rates, many tend to forget their payment acceptance in the equation. In many occasions, this could have a drastic impact on an online business’ revenues.

What is an Acceptance Rate?

So what is an acceptance rate? It is the percentage of the accepted transaction out of the attempted payments. For example, if your business' payment system accepts 90 out of 100 transactions placed by the customers, the acceptance rate would be 90%.

This is a vital business metric that online businesses must optimize. If your business accepts more payments, it can generate more revenues; in many occasions, carts are abandoned due to inaccessible payment options.

Businesses that operate online must treat optimization of acceptance rate as a core part of their payment strategy. The higher the acceptance rate, the higher the revenue generated.

What does scaling the payment acceptance rate mean for your business?

This means that an analysis should be made around your payment solutions and the typical profiles of your abandoned carts. In many markets, credit cards are not the most popular payment method. Bank transfers, carrier billing, and specific digital wallets tend to be more popular in certain markets. Not catering to these payment methods could very likely lead to a drop in sales in specific markets which translates into a lower acceptance rate.

An example of that would be in the Netherlands, transactions are overwhelmingly made using the iDEAL network. This network basically consists of bank transfers. People within the Netherlands hold a great amount of trust to iDEAL for online payments and not many people actually have a typical MasterCard or VISA credit card on hand. Adding iDEAL to your payment stack could significantly increase your acceptance rate and your sales in the Netherlands.

While your sales funnel is optimized, overlooking your payment offerings can lead to overlooking a significant hole in your funnel. This is why businesses should put in an enormous effort to get their revenue performance better by focusing on payment acceptance.

While there are many other reasons why your acceptance rate can decrease, such as credit card testing and declines due to lack of funds, making your payment stack much more accessible to the global market will most likely have a drastic impact on your revenues.

The truth about adding Alternative Payment Methods through PSPs' hosted checkout

Hosted checkouts are usually offered by Payment Providers to simplify adding new payment methods. With hosted checkout, users are redirected to another page hosted by the payment provider instead of having it built within your website.

Hosted checkouts are fast solutions for your merchants, however, it comes with a cost. For instance, if you’ve added all other Alternative Payment Methods through a PSP, all of them will be unusable during an outage of that provider. The same issue occurs for managing your transaction data - though your PCI compliance scope is reduced, having all data stored in one PSP's token vault brings a whole new level of dependency as this data can’t be reused for another processor making multi-PSP routing impossible and data migration cumbersome.

This challenge is easily resolved through Payment Orchestration at WhenThen. WhenThen allows Multi-PSP Routing Strategy by giving merchants access to a platform where they can easily add multiple Payment Providers and any number of Alternative Payment Methods(APMs) with less tech overhead and use a PCI DSS level 1 vault to store, manage and allow reuse of transaction data.

Additionally, WhenThen provides a hosted checkout that is not dependent on one PSP. This means that you can add any number of Alternative Payment Methods and Payment Providers and make them seamlessly work together.

Leveraging Network Tokenization at WhenThen

Another way to increase your acceptance rate would be by automating the card updating procedures. If a subscriber’s credit card on your online business is about to expire, you can avoid declines by using automatic billing update services that will update the credit card on file with the proper credentials. Similarly, it is also possible to notify customers to update their billing information.

Using network tokens, WhenThen can provide real-time account update capabilities which check with card networks for updated card details to increase authorization rates. Less soft declines, more successful conversions.

The power of buy now pay later solutions

With the rise of financial technology solutions, there are new offerings that could also play a role in increasing acceptance rates. When it comes to larger ticket items, paying for the whole amount up front can be quite intimidating. Offer a buy now pay later type of solution, offers the kind of flexibility to your customers that will make larger transactions more financially accessible.

Summary
To conclude, in order to know exactly what might be causing a business’ payment acceptance to be low, it's important to have access to the proper data sets and reports. WhenThen’s Insights allow merchants to have a full scope of their payments and to see payment behaviors in real-time. WhenThen is able to measure through a full-fledged algorithm how many customers have the intent to purchase.

To know more about ways to maximize your acceptance rate, take a look at whenthen or Speak to our team to see what payment optimization your business might need.