As the payments landscape becomes more competitive, it is important for businesses to improve the customer experience by optimizing margins and streamlining operations. This can be achieved by capturing as much data as possible that can support the process, provide more insight, increase approval rates, and even reduce the likelihood of fraud.
However, care must also be taken to ensure that data is not lost between entities in the payment chain (that is, data flowing from cardholder to merchant to card issuer). Otherwise, you won't get enough value from analyzing your transactions.
Improving transaction performance
First, data must be communicated efficiently and securely to avoid the risk of data loss between multiple parties at every stage of the payment process. When a transaction is made to an issuer, everyone in the chain must properly flag each data component. Otherwise, a party may misunderstand the transaction type from one of her many integrations or remove some important data component. Acquirers may also receive integrity fees imposed by card networks.
Ensuring data flows smoothly throughout the chain benefits everyone, including consumers, merchants, payment service providers (PSPs), acquirers, card networks, and card issuers. They will enjoy improved customer experience and increased revenue, and will be able to provide deeper insights into margins and ways to improve their business.
Analyzing declines with more data can also help PSPs and distributors better identify inefficiencies and optimize operations. For example, it is estimated that 70% of carts are abandoned online (of which 6% are due to rejected transactions), so by sharing and communicating the details of every transaction, including the reason for the rejection, May help reduce cart abandonment.
How data analytics can fight fraud
Fraud is a major challenge for e-commerce. E-commerce losses due to online payment fraud were expected to increase from $42 billion last year to $48 billion, while global e-commerce sales were also expected to increase by more than 10% last year. It was predicted. However, despite claims that sharing minimal data can reduce fraud, moving data back from the publisher to the merchant may be the solution.
For example, it can be difficult for acquirers, PSPs, merchants, and risk providers to avoid the fog of suspicious transactions, but having as much data as possible can help identify which are fraudulent and which are legitimate. will help you. This may include unusual purchase amounts, high-risk locations, suspicious transaction sequences, or refund activity.
Moreover, the stringent systems in place are not enough to block illicit fraud cases, as legitimate transactions can also be blocked and some systems are vulnerable to more sophisticated tools. It may not be. However, using data analytics, pattern recognition, clustering, and outlier detection, fraudulent transactions can be blocked in real time before they occur.
While reviewing individual transactions is critical, all transaction events, acquirers, and PSPs combined can help detect patterns of fraudulent activity that may initially seem innocuous (such as money laundering activity). Become.
More data leads to higher customer satisfaction
We've discussed how rich data used to mitigate criminal activity can be extremely beneficial, but how fully enriched transactional data can add value to the consumer experience. also needs to be discussed. Merchants gain insights into market trends, consumer behavior and preferences, which allows them to offer more personalized offers and benefits to their customers. This increases customer loyalty and satisfaction, and helps customers feel heard.
To take advantage of the opportunities presented by data analytics, acquirers, PSPs, merchants, and service providers must efficiently propagate all transactional data through the payment chain. Businesses can enjoy better products, reduced friction, and higher conversion rates by processing transactions more smoothly, reducing fees, preventing fraud, and informing business decisions.