Five Questions the CFO Should Be Asking the Payments Team

There’s a critical issue in the finance function throughout the merchant industry. Under your nose, you’re losing earned revenue through gaps in a system nobody told you about.

It sounds impossible, doesn’t it? You run a tight ship, you intimately understand the inflows and outflows across the business. The problem is that this finance problem gets managed across engineering and growth teams to the point that it never reaches your desk.

Payment performance has a direct impact on your bottom line, but CFOs tell us they almost never get briefed on it. That changes today, with this article. We share (and explain the reasoning behind) five vital questions for your payments team that can patch those leaks – fast.

Why payments performance belongs on the CFO's agenda

On the surface, authorization and acceptance rates are the concern of your CTO or payments leader. On closer inspection, it quickly becomes clear that these are finance metrics disguised by an engineering label.

There are two statistics that will change how you think about payments:

First, every one percentage point improvement in your authorization rate translates to the same in your gross revenue. For every $100 million you process in payment volume, you would add $1 million in revenue without any marketing, sales, or additional platform costs.

Then, industry-wide losses to false declines sit at around $50 billion per year. Almost every company is affected. If you can buck the trend, you’re adding a competitive edge.

Once you know how to measure payment performance and its consequences, you’ll wish you’d started sooner.

The translation problem between finance and payments

There isn’t a ‘gotcha’ moment here – finance and payments teams simply speak different languages and take different routes to arrive at a similar destination.

Your world is made up of revenue, margin, and cost per transaction. Payments talk of authorization, decline rates, and intelligent retries. You’re pulling in the same direction, just through different methods and mindsets.

Even CFOs who are well-versed in payments and engineering can miss the full picture with payments. You’re not making any errors, you’re simply not getting the right information translated to you. Bridging the gap between your worlds is simple with five questions you can ask.

The questions worth asking

These five questions will help you crack the payments puzzle and identify the metrics and baselines you should care about. Each one works as a diagnostic to surface weak spots for revenue and unaccounted costs. We also highlight the gold star responses and ones that should prompt you to dig deeper.

Once you’ve queried these five starting points, you’ll have a platform for integrating your payments and finance functions.

"What is our authorization rate and how does it compare to our peers?"

If one in every 10 of your customer payments gets declined, you have a 90% authorization rate. Your authorization rate has a revenue impact larger than many realize.

Payments get declined for input errors (e.g. wrong card details), lack of funds (e.g. a customer can’t afford the payment), platform behavior (e.g. routing an international card via local payment rails) and fraud prevention (e.g. the customer can’t complete multi-factor authentication). Teams should already be optimizing for payment performance, but it’s not a one-and-done task.

A good answer includes: A benchmark comparison; ideally not just a global average. The more granular, the better.

Dig deeper if you hear: “It varies by region” or “it depends on different factors”.

"How much revenue are we losing to false declines?"

False declines are the result of overly aggressive or blunt fraud filters.

Fraud protection is vital to your business and it’s better for systems to be cautious than relaxed. There’s a balance to be struck, though. False declines are toxic to customer retention and conversion. You’ve spent $X to attract and persuade a customer, only to turn them away at the final step in the process. Losing revenue to flaws in your own systems is incredibly frustrating – and recovering it isn’t easy.

A good answer includes: Three simple factors – a decline rate, the associated revenue figure, and a plan to address it.

Dig deeper if you hear: “Our fraud rates are low” is both vague and missing the point of the question. This question is addressing false flags, not successful interventions.

"What happens to a transaction when it fails the first time?"

This question will get your team talking about retry logic. Intelligent retries save you from failed payments and lost revenue – without requiring further action from the customer.

Retries are the safety net between false declines and authorized payments. The right payment infrastructure can dynamically retry, reroute, and recover transactions that fail on first attempt. Best-in-class retry tools use machine learning, iterative knowledge, and local context to pull revenue back from the brink and onto your balance sheet.

A good answer includes: References to specific architecture the payments team uses to win back revenue.

Dig deeper if you hear: “We ask the customer to use a different payment method.” Technology exists that can retry payments automatically. Passing the buck to customers is inefficient and ineffective.

"Are we paying the right amount to process each transaction?"

The costs of payment processing stack up – none of the fees are large, but, combined, they eat into your margins. You’ll be paying gateway fees, interchange costs, and processing rates – all depending on the choice of payment method, card issuer location, and other variables. Some payments will cost you 1% of the transaction value, while others can reach 6% or even higher. 

Managing and scrutinizing costs is your domain, but these may have gone unnoticed under the cover of engineering and customer acquisition. Now that they’re on your radar, you should know that a detailed view of your entire processing structure is essential to understanding your payments ROI metrics.

A good answer includes: A cost-per-transaction figure and evidence that it’s been benchmarked against other providers.

Dig deeper if you hear: Anything non-specific – “competitive rates” are meaningless; you need hard numbers.

"Can you show me where we are losing money we shouldn't be losing?"

This is the best question to ask, because it’s possibly the hardest to answer. We’re not suggesting you grill your payments team, as most CFOs will hear a similar answer: this data is hard to collate and cleanse.

AI-powered payment analytics is changing this, bringing complex data into a single interpretable view in real-time. It’s a new approach that solves one of the biggest challenges in payment operations.

A good answer includes: A live dashboard, parsed with AI trained on company- and industry-specific context.

Dig deeper if you hear: “We update the spreadsheet quarterly.” Payment trends and opportunities move quickly. Old data can be worse than no data.

What a well-instrumented payments team looks like

Your payments team should be able to answer those questions, if not immediately, then fairly quickly after some time reviewing back-end data. Modern payments tech is powerful and pliable enough to provide these answers with new AI-powered tools closing gaps between data and talent.

Intelligent payment optimization is one such development, along with AI-driven analytics. Where payment data used to be either too dense or too fractured, it’s now unified. Machine learning and AI have provided a new data layer that stops teams relying on blind faith and has empowered them to challenge their payment priors.

The quarterly payments review your CFO should be running

Payments might be a new world for you, so let’s keep this simple. Bring these five questions to a quarterly meeting with your payments team. Let the team know the structure in advance and don’t settle for the first answers if they’re too vague.

The aim is to patch leaky revenue, identify opportunities, and improve your margins.

See what payment visibility actually looks like

As merchants explore ways to integrate artificial intelligence into their workflows, payments data should be at the front of your queue. The data is extensive but disjointed across separate platforms – payments-specific AI breaks down these barriers and empowers teams to do more. It also unlocks payment intelligence for finance leaders.

A unified view used to be a pipe dream for payments teams. Now, it’s a plug-and-play solution in a single dashboard.

See what intelligent payment optimization looks like in practice.