There’s no doubt that false declines can be a confusing problem to deal with.
On the one hand, fraud prevention is necessary. Fraudsters are more prevalent than ever, using stolen credit card credentials to make illegitimate purchases.
However, this same net also manages to capture genuine purchases and good customers in the process.
With COVID prompting a surge in digital channels and online business growth over the past year, false declines are on the rise as well. This makes it more important than ever to stay on top of false declines and gather as much information on them as possible.
Here are a few false decline facts that you may not be aware of already.
1. False Declines are More Common for Newer Shoppers and High-ticket Shoppers
The pandemic has caused an increase in the number of new online shoppers. In fact, the volume of new shoppers is 2x greater than pre-COVID-19 levels. As such it’s important to note that false declines are far more common with newer shoppers than existing customers. New online shoppers are 5-7x more likely to be declined than returning customers by current fraud tools. This is because online merchants have less access to data concerning these newer customers, which makes it tougher to accurately approve or decline their transactions.
The same can be said for high-ticket purchases. Traditional anti-fraud protection often uses a “high-ticket purchase filter,” which ends up causing a higher volume of false declines.
2. Customers Who Experience a False Decline Often Take Their Business Elsewhere
False declines are frustrating for customers. They’ve likely spent a considerable amount of time weighing options, before finally deciding to go with your company. They fill their cart and proceed to check-out, only to be told that they’re using a fraudulent credit card.
It’s not difficult to see why this scenario may have customers looking elsewhere.
In fact, one survey suggests that 33% of customers end up seeking the competition when they experience a false decline. At this rate, it’s in any business’s best interest to keep false declines to a minimum .
3. False Declines Can Be More Costly Than Fraud Itself
Isn’t it ironic that the very same tools used to prevent fraud and the costs associated with it can cause an even more costly issue?
False declines cost businesses in two different ways:
- Lost business – At the end of the day, a false decline means a lost sale. False declines often cost businesses around $118 billion a year.
- Business reputation – Similar to what we talked about above, customers tend to take their business elsewhere after experiencing a false decline. On top of that, there’s always a chance that they’ll take to the internet and share their bad experience with others, further damaging your relationship with potential customers.
There’s no doubt that fraud can be costly, but remember that false declines are equally as, if not more detrimental to your business in some cases.
Merchants can lose up to 75x more revenue to false declines than they do to fraud.
Our current pandemic situation is likely going to stick around for at least a little while longer, which means that false declines will remain a problem to solve.
Thankfully, with tools such as Forter’s Payment Protection service, you can rest assured that false declines are kept to a minimum while fraudulent transactions are effectively dealt with.
Curious About How False Declines Affect Your Business?
False declines mean that you’re likely missing out on new business. Grab our NUMO report to find out how they affect you.