Ethoca, the industry standard for collaboration-based technology solutions that enable card issuers and online merchants to increase card acceptance and stop ecommerce fraud and disputes, today announced an expanded global search for participants in ongoing Ethoca pilot programs focused on solving the multi-billion-dollar false decline problem.
Holiday shopping and gift giving is a high stakes affair for cardholders, taking place during a stressful season where time is short and the worry of gifts not arriving on time results in emotional distress and anger. At this critical moment, few experiences cause buyers more pain than being turned away falsely or unnecessarily.
Ethoca’s newly released research report - Solving the CNP False Decline Puzzle: Collaboration is Key - sheds new light on this growing problem. Among the report’s key findings:
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.
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.
A ‘false decline’ occurs when fraud detection systems - whether at the card issuer, merchant or at other points in the value chain - reject a good transaction due to the suspicion of fraud. This happens because parties with a stake in the transaction are experiencing growing fraud losses and increasingly high costs to recover them. To stem the tide of losses, fraud detection systems and processes overcompensate by unintentionally declining valid transactions - effectively turning away good customers who may never return.
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.
“There is little doubt the payments industry is looking at the increasing CNP fraud problem through a different lens - and what we’re seeing is alarming,” says Keith Briscoe, Chief Product & Marketing Officer at Ethoca. “Our research bears out much of the recent findings around the false declines problem, but reveals new insights that are key for understanding - and combatting - this increasingly costly problem. Ethoca believes that the only way to effectively solve this problem is through industry collaboration at the transaction level. We invite card issuers and merchants around the world to join in our active work to eradicate it and help increase acceptance for every participant in the ecommerce ecosystem.”