2020 has been a banner year for eCommerce. The pandemic has accelerated the channel with a 32.4% increase in 2020, eclipsing the prediction of 18% by eMarketer. As COVID-19 continues to be a major health crisis, eCommerce will continue on this path as the pandemic creates many new online shoppers. False declines look like fraud but aren't and happen for a number of reasons. These false declines can be frustrating for merchants and shoppers. Let’s look at ways to manage and fight them.
Why Do False Declines Occur?
Online purchases must pass through several gateways before approval. Each step has filters designed to identify fraud. Sometimes these filters aren’t accurate, and they block a legitimate purchase. There are two types of false declines:
- Hard declines: Those in this category cannot be resolved immediately, and the buyer's subsequent attempts tend to continually decline.
- Soft declines: Those in this category are temporary declines, and cardholders can often fix the mistake and confirm their purchase.
False declines are a headache for merchants and consumers. Unfortunately, they are trending up, according to expert research.
False Declines Are Growing in Occurrence and Costly for Merchants
How often do false declines occur? According to the False Declines Industry Report, 62% of merchants reported an increase in the past two years. More than one in four (28%) of consumers said they experienced a decline while shopping online.
These false declines are also extremely costly for merchants. Businesses could lose $443 billion in revenue. These experiences can actually cause consumers to abandon the brand altogether, even though they aren’t the merchant's fault. So, it’s a compounding loss. You lose the original sale and future ones.
These false positives also diminish the accuracy of fraud prevention systems. Then it becomes a snowball effect, leading to more false declines and lost revenue. What can you do to get ahead of false declines?
Finding the Right Balance to Fight False Declines and Keep Consumers Happy
Every eCommerce shop wants to provide an easy, frictionless checkout process. Consumers basically demand this and may abandon their cart if they feel it’s too intrusive. Instead of putting more burden on the customer, merchants should employ better technology tools and comprehensive fraud prevention.
Look at Your Data
You should be able to determine the root cause of false declines. If you find patterns, you can then adjust your rules engine.
Adjust Your Rules Engine
Every eCommerce website uses some type of rules engine to make decisions on fraud. It’s possible these might be too aggressive and are blocking purchases due to common human errors. If possible, create popups that identify the specific problem.
Considering the changing buying patterns of the 2020 online consumer. You may need to adjust rules that take consider these. Should you automatically flag when the shipping and billing address are different? In many cases, this isn’t fraud. This type of transaction will only grow during holiday shopping, as consumers are shopping online more and will use the option to ship the gift directly to the recipient. Including a step where the shopper checks “this is a gift” is an easy step to keep these from becoming false declines.
Reach Out to Customers
You can also create outreach emails to customers with a possible false decline to determine the problem and offer assistance. This could go a long way in ensuring they don’t desert your brand completely.
Work with Experts
Support from your payment processing solutions partner in managing false declines moves this off your plate. Companies like Pinpoint have comprehensive fraud prevention and chargeback management solutions.
Learn more about how we can help, please contact us here.
