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Support Services: High Customer Declines: It Can Be a Good Thing

1 Jul, 2013 By: Curtis Kleinman Response

For years, marketers have told me how they want to reduce credit card declines so they can increase sales volume. At the same time, these marketers are trying desperately to reduce chargebacks, returns and fraud. It’s just a thought, but perhaps the increase in credit card declines is representative of the effort to reduce chargebacks, returns and fraud working perfectly.

Remember: your gateway serves as a security measure as well as a funnel to process your customer payments. It allows legitimate transactions that fit the criteria you’ve prescribed to funnel through. The sales that look suspect get turned away or red-flagged. They are not lost. You can E-mail or call the customer — and then often you can accept the sale if you so choose. Sometimes, you may choose to ask for another payment method.

The only way to tell for sure why your customer charges are declining is to delve deeper into the decline codes. There are hundreds of possible reasons why a credit card can be declined. Some settings can be adjusted by merchants to allow them to accept more cards that might otherwise be declined. But the more flexibility and mistakes you allow a customer to make, the greater the chance the sale could collapse — resulting in a refund or chargeback.

If you adjust your AVS settings, you can minimize risk while allowing legitimate sales to be approved. You must also know the full risk of adjusting your AVS settings to a minimal level of security. By allowing things like incorrectly entered addresses, misspelled names and other red flags, you have opened the door to chargebacks and fraud.

Having strict gateway settings can reduce chargebacks, returns and fraud. You can go through your report later to contact declined customers who may have another payment method or may have made a simple data entry error. As the older population purchases more online, declines could occur due to simple typographical errors. Many mistakes come from innocent and heavy-thumbed — but legitimate — customers. Also, the elderly ship many of their purchases to a different address than their billing address. Often they send gifts to their children and grandchildren.

Marketers take safeguards in an attempt to minimize fraud, chargebacks and returns. The goal is to weed out sales that could be risky transactions. There is a fine balancing act between the rate of declines rising while fraud and returns drop. Sometimes the attitude should be, “If it’s working, don’t knock it.”

Some AVS setting adjustments include:

  • Not requiring the customer’s name entered to be the same as the name on the credit card.
  • Not requiring the customer’s shipping address entered to match the address on file for the cardholder.

Common reasons for declines include:

  • Expired preauthorization: Some declines occur if you have taken a preauthorization on the credit card. This only lasts for 30 days. So after 30 days, entering the card number with the previous preauthorization will cause a decline.
  • Credit card past expiration date.
  • Mismatch of the name or home address entered by the customer.
  • Lost or stolen cards.

Sometimes a customer enters a field or two slightly wrong intentionally. Why? So they can claim it wasn’t their purchase later. They are planting the seeds for a future chargeback. Once a suspect customer realizes you have safeguards in place, they will move on to the next merchant.

Remain active and educated when it comes to knowing the decline codes your business is seeing regularly. Take immediate action to save any legitimate sales by placing a confirmation call and E-mail to declined customers — especially if it’s a previously satisfied paying customer. ■

About the Author: Curtis Kleinman

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