1.9 Billion Transactions Were Declined. How Many Were Yours?

Posted on August 15, 2018 Peter Mollins

Shoresh Shafei is the Data Scientist for Spreedly. He’s responsible for analyzing and extracting insight from a massive set of transaction data to enhance the Spreedly offer and help our customers (and the industry in general) succeed.

Card Decline Rates are a Massive Challenge

A staggering 1.9 billion transactions were declined in 2015. On their own, these transactions are valued at $146 billion. That’s a gigantic problem. But still more massive when you consider that the lifetime value of a credit card customer is between $3,600 to $48,000. Consider that 475 million customers worldwide can switch cards or use another store — and a bad transaction experience can be exactly the trigger for a customer to make a move. The cost of one transaction goes way beyond one sale.

Addressing Card Declines through Data

The challenge is that the problem of declines is a complex problem. There are so many players in the chain of a transaction authorization. To understand the process, it’s important to think of two end-points: banks and merchants. Shoresh highlights the disparity of approaches by describing a meeting he had with a number of data scientists at a major Canadian retail bank. These banks have teams available to optimize their processes. But merchants generally lack the same level of resources or access to the data needed to see how well transaction success rates compare against other merchants.

Luckily, Spreedly sits between merchant and the rest of the payments process. We collect payment method and transaction data, like whether a given transaction was successful and the amount, currency, and date. And since we work across more than 100 payment gateways, we have a wealth of comparative data. Shoresh and the Spreedly team uses the abstracted data to generate a number of key pieces of analysis. More detail on the research that Shoresh compiled can be found here on how to boost successful transactions.

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