On the surface, the process of accepting payments from your customers appears fast and straightforward – until they are rejected. Declines can happen for numerous reasons, and can severely impact your profits and customer relationships.
The good news is that implementing a combination of smart transaction routing and cascading payments can significantly reduce the impact of declines.
Payment routing enables funds to be channeled through the optimal pathway. Using data about cost, speed, and risk factors, it evaluates possible routes to choose the best course.
Routing begins when a customer initiates a payment in-store, online, or through a mobile payment app. Once the merchant’s gateway has received the request, the system picks the best routing channel. It looks at factors like amount, currency, processing fees, required processing speed, exchange rates, location, risk levels, and compliance requirements.
In conjunction with intelligent routing, cascading payments represent the next step in authorization optimization. They create backup plans if the original smart transaction routing fails.
As any businessperson knows, even the best-laid plans can go awry, and the payments ecosystem is no different. For that reason, it is essential to have an alternative in place should the original route fail in spite of how well-conceived it may have been. Cascading payments fulfill this crucial role.
With this mechanism in place, declined payments automatically flow to backup providers in a specific, predetermined order. No matter what the roadblocks might be, the system continues to navigate around them until success is achieved or a permanent decline is issued.
The majority of declines are considered soft, meaning that they are temporary authorization failures that may require cardholder authentication. Cascading is not triggered for hard declines, including those for insufficient funds or reported lost or stolen cards.
Typically, the payments cascading software first reattempts the original payment method. If that fails, alternate channels are then tried sequentially until all are exhausted or the payment goes through successfully.
When intelligent routing and cascading payment protocols are combined, a business will experience several key benefits. These include reduced declines, higher profits, and increased speed and reliability.
Some merchants mistakenly believe that they must choose between implementing smart transaction routing and cascading payments technologies. In reality, companies gain the most when they incorporate both into their systems.
When a decline inevitably occurs, intelligent routing acts as a GPS for the funds. It analyzes pathways and chooses the best options most likely to ensure a smooth funds transfer. As a result, potentially lost revenue is recaptured, boosting your bottom line, eliminating customer frustration, and elevating the client experience.
In those cases in which the initial payment channel fails, cascading steps are initiated to fill the breach. Again, it rescues revenue from the void by directing the process to other equally affordable and effective channels. The merchant can even customize the predefined rules used by cascading in accordance with business and customer needs.
Optimizing your payment success rates is one of the most dramatically effective actions you can take to amplify your company’s performance and raise client satisfaction levels. Implementing a solid intelligent routing and cascading strategy can drastically reduce decline rates, giving you the revenue you deserve and providing buyers with a fast, reliable, and totally streamlined purchasing experience.