What is a false decline when you’re talking about credit card transactions? Simply stated, it is when a GOOD transaction (order) is rejected by either the issuer or the merchant, due to suspected fraud.
According to a Javelin study, over 33 million people – or 15 percent of all cardholders - experienced a transaction that was falsely declined in 2014. These false declines totaled $118 billion in lost sales to merchants. This is both frustrating and costly to merchants, who are losing out on sales and returning buyers. Approximately 66 percent of the purchases that are lost are over $100 in value, and 40 percent of declines were over $250. It’s equally frustrating to the issuers, who are losing out on the interchange fees and the possibility that the consumer will stop using that card in the future.
This is a huge problem. Almost 40 percent of consumers stopped using the card that was declined (or stopped shopping at the merchant), and an additional 25 percent decreased usage of that card. Regardless of which party was at fault for the false decline, strategies to decrease false declines will increase your sales, reduce consumer insults and increase consumer loyalty. We’ll talk more about strategies to reduce false positives later in the month
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