This vendor-written piece has been edited by Executive Networks Media to eliminate product promotion, but readers should note it will likely favour the submitter's approach.
Ever had a card declined at the online checkout stage, despite having sufficient funds and a non-suspicious purchase? This perplexing and very frustrating experience is repeated daily around the world. Globally an average of 15 percent of online card transactions are declined. And while the majority are declined for legitimate reasons such as fraud or lack of funds, there remains a 5 percent global average that is declined for no other reason than a glitch in the system.
Look at this in the context of the Southeast Asian ecommerce market. Online sales are the fastest growing segment of the region's retail sector, with an ever-increasing rate of 15.5 percent for the combined retail sales of Indonesia, Malaysia, Singapore and Thailand. In light of these figures, losing 5 percent of this volume due to system failures is no small matter. Equally, recouping a portion of these failed transactions could equate to millions of additional revenue.
The good news is that now it is possible for merchants to generate more revenue without additional investment by using the right payment data to measure performance, track trends and drive conversions. Here's how:
Increasing checkout conversions
The ecommerce industry knows the importance of driving checkout conversions and has long been focused on tackling the abandoned cart epidemic. But when the customer hits 'buy' the story is far from over. What happens next is the 'second checkout conversion'.
The second checkout conversion is the process of submitting a payment request to the issuing bank, which approves or declines the request. This process is complex and contains multiple technical challenges. Many cards are declined due to technical errors or miscalculations by banks. Often this is a result of faulty payment networks, which are, dependent on legacy systems built decades ago.
The key question is: What can a retailer do to reduce the number of transactions that are unnecessarily blocked by issuing banks?
Let your data do the work for you
Forrester found that data driven payment technology has the potential to lift revenue by 1.4 percent. All it needs is a deeper insight into the merchants' payment data and information about the preferred configuration and locality of issuing banks. With this, advanced algorithms can be used to tweak the format of requests to suit the unique preferences of each bank and maximise the chance of an approval without compromising on payment security.
The impact of taking this diagnostic approach can be significant. It means an online retailer with an annual turnover of USD$100 million has the potential to increase its revenue by around US$1.4 million without additional marketing or sales expenditure.
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