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Digital Identity, Security & Online Fraud

Ethoca explains false declines to enable merchants increase card acceptance

Thursday 8 December 2016 | 09:10 AM CET

Ethoca has conducted a research over the false decline problem and results showed that approximately USD 145.9 billion purchases per year are declined globally.

The report is called Solving the CNP False Decline Puzzle: Collaboration is Key and sheds new light on this growing problem. On a global basis, potentially 475 Million cardholders are at risk of moving a preferred card to the back of the wallet after a decline, abandoning their ecommerce purchase entirely or switching to another competitive online store to complete their purchase.

Furthermore, approximately 1.9 Billion purchases per year, representing USD 145.9 Billion in sales, are declined globally. A growing number of these are false declines.

‘False declines’ are not the only decline problem – grouping all declines under the ‘DO NOT HONOUR’ reason code adds friction to the checkout process and harms the customer experience. Both result in lost revenue opportunities for merchants and card issuers.

For both card issuers and merchants, this problem adds up to a multi-billion dollar lost opportunity. A significant percentage of customers will abandon a purchase altogether, resulting in lost sales to merchants and lost transaction income to card issuers. Many customers will choose another card to complete a transaction, sending their preferred bank card to the back of wallet – a card issuer’s worst nightmare. And for the customer or cardholder it’s a poor experience that erodes satisfaction and drives down overall spending.

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