Six Ways to Optimize Credit Card Transactions to Reduce Involuntary Churn
and Increase your MLM Company Revenue
You may think you can’t do anything about credit card declines and the involuntary churn they cause. After all, credit cards are only declined if they’re lost or stolen, expired, or have insufficient funds, right? What most direct sales company owners don’t realize is how many of your declined transactions are false declines. These false declines are transactions declined arbitrarily despite being one hundred percent valid.
Outdated Banking Formulas and How to Overcome Them
Most banks use outdated and incomplete data to determine legitimate purchases. This data does not use the following:
unique customer behavior,
the increasing popularity of online shopping, or
changing economic trends created by recent world events.
Instead, the banks use a fixed formula of antiquated data points to evaluate purchases. This results in the declination of many legitimate transactions,without reason.
False declines are frustrating for you and your customer. That’s because they impact your bottom line. (Mastercard estimates false declines cost more than 440 billion to the US economy each year). And we can’t even calculate the emotional toll on your customer. A false decline puts a roadblock in the customer’s way to the purchase. It erodes their trust in you as a merchant. As a result, you have a greater chance of losing the sale. That means you will spend more time and money earning their trust again, and their business.
Up to 87% of credit card declines fall in this category of “false declines.” You depend, on e-commerce and recurring revenue streams like auto-ship and auto-renewal. It’s no wonder companies like yours are losing customers and profits.
This information may shock you or frustrate you. Honestly, it should. Your company and your distributors shouldn’t lose revenue because of an out-dated approval process. You can limit your involuntary churn and increase your profits. In fact, if you can increase your customer retention by 5%, says Fred Reichheld, you can produce more than a 25% increase in profit. All you need are a few simple strategies for optimizing credit card transactions.
Six Ways Our Direct Sales Companies Reduce False Declines and Increase Their Profits
Understand your Approval Ratios
According to a recent report from Visa, credit card companies decline an average of 15% of e-commerce transactions. Data tells us fraud only accounts for about 3% of those declines. The percentage of declined transactions increases to 23.6% for auto-ship and auto-renewals.
Step 1 to reclaim revenue lost from false declines – know your own approval ratios. What percentage of your transactions are being declined on a weekly, monthly, and yearly basis? If you aren’t sure, ask your transaction processor for a report. You can also connect with a decline salvage server like FlexPay. FlexPay offers data based on your location, merchant type, and more.
Use Account Updater
Do you have customers who fail to update expired cards in your system? Add an Account Updater service to your recurring payment processor. Then you can stop chasing customers for updated payment information. An account updater gives you automated access to the most up-to-date card information for your customers. No more payments and services unnecessarily interrupted.
Account updaters check for new card numbers or updated expiration dates. The process saves you time and money. And, there is no charge to upload a batch of cards on file. No updates? No cost. You’ll only pay about $0.25 per update. An account updater retains the profit on auto-renewals and prevents all the expenses of getting a customer back.
Process Payments During Business Hours
You’ve probably heard, or even used the phrase “timing is everything.” Nowhere is this more true than when you’re processing your payments for MLM Products. Most direct sales companies choose to batch auto-ships and recurring charges in the middle of the night. This lightens the load on their servers so key processes during the day don’t have to slow down.
Unfortunately, most bank approval formulas fail to account for your optimal timing. You need to reduce the stress on your network. Their data flags these transactions as problematic. A customer using their credit card at 3 a.m. seems like unusual activity. Their outdated formula fails to recognize previous approvals of the same charge, at the same time, each month prior.
Quick fix: Process batches of autoships during business hours, preferably early afternoon. You’ll see fewer false declines immediately.
Evaluate Your Acquiring Bank
Issuers and issuing processors use a variety of data points in their risk models. One of the most important data points is your acquiring bank. Believe it or not, not all acquirers are equal in the eyes of issuers and processors. If you are using an acquiring bank who has had problems in the past, you are more likely to experience a larger volume of false declines.
The issues we’ve seen cause problems are those with the following in their past:
Sometimes a higher transaction rate can equal savings. Switching to a high-quality acquirer can decrease your false declines. And the money comes back to your bottom line.
Review the Merchant Category Code for your MLM Product
Your merchant category code (MCC) can have a significant impact on your approval rate. Your four-digit MCC code communicates to everyone in the payment system what kind of merchant you are. It also denotes the types of transactions they can expect from your company. As a merchant, your MCC impacts you in two ways:
If your MCC is commonly associated with high-risk companies you are more likely to experience a higher volume of false declines. So, what is a high-risk company? Those with frequent complaints, refunds, and chargebacks.
Most companies actually qualify for multiple MCCs. Having the right MCC will better reflect what you do AND lower your decline rate. Companies like FlexPay can help you determine the best MCC for your company. Then they offer guidance on how to get it changed.
Integrate with FlexPay
Press the easy button for lower credit card false declines. Optimize your transaction flow and get the highest approval rates. Team up with a decline salvage service like FlexPay.
At FlexPay, we help MLM companies like yours recover declined payments so you can retain your customers and increase your profit. Ditch the outdated, inflexible formulas. Our AI-based system considers risk and value in each transaction. We use over 100 data points to best determine when, where, and how to process.
Our system learns from each transaction. It makes adjustments to the criteria it uses to process credit cards. And that means, our process lets you stay focused on what you do best—growing your business.
Increase your Approval Ratios, Increase your Profit Margins
Partnering with FlexPay reduces your false declines. That means you’ll be able to do more than just recover lost revenue. With your increase in profit margin, you can:
- Invest in your MLM products
- Bring better value to your customers
- Payout shareholder dividends
- Invest in better customer service
- Gain better retention for distributors
Are you ready to stop losing money on false declines? Set up an appointment to see how FlexPay can meet your unique needs. FlexPay can help you retain customers and increase your profits.