Merchant Services Business Owner

Publication Date: March 25, 2019

Author: By Steve Mathison, First Data Product SVP, Core Acquiring


Reduce Passive Customer Churn with Authorization Optimization


Is there a more painfully disruptive message for customers?

And, oh by the way, would you mind fixing it and get back to us?


Merchant Services Business Owner


Card decline has three culprits.

            1. Card Issuers: Changes in card numbers or expiration dates.
            2. Cardholders: No money in debit accounts or above-limit charges.
            3. Merchants: Red flags because of something in the transactional data.


And, when cards are declined, even for simple expiration date changes, you’ve reminded your customers that they’re still subscribed to your service. It’s probably happened to you. How many have HBO and Netflix and Prime Video – and, maybe… Hulu? The first of those to ask for new credentials is the easiest to drop. And that is passive churn.


Who Is Impacted by Passive Churn?

Passive churn inordinately affects subscription services. And, everyone from Adobe to Apple to Amazon has dropped licensing and adopted subscription models and their seamless transactions. In return, companies get a steadier revenue stream, and sometimes, they hope, forgetful subscribers.

But passive churn isn’t limited to subscription services. If retail customers save their card credentials on their favorite site, they expect them to work seamlessly. Payment errors could mean cart abandonment and competition adoption. Consider mobile apps like Uber. Customers who need a ride are not going to wait to update their credentials – especially when Lyft is just a tap away.


Merchant Services Business Owner


What Can Companies Do to Avoid Passive Customer Churn?

So, what can companies do to avoid passive churn? Several things, but (believe it or not) the most effective way is by increasing transaction approval rates. And for that, you need a processor with a 60,000-foot view of the entire transaction process.

Declines don’t just happen when a card expires or a customer gets a new address. In fact, there are dozens of other factors, like:


  • Where the transaction happens
  • Where the cardholder is from
  • Where the issuing bank is located
  • The time of day of the transaction
  • Whether credit or debit is used
  • How much the transaction is worth
  • The status of current card credentials
  • Who is being billed

It all matters.

There are dozens of companies out there that function as simple real-time “card account updaters” who change card expiration dates on accounts. But that only deals with the first culprit of card declines we talked about before – card issuers – and not the other two: cardholders and merchants.

And there are other troublesome truths about these updaters. They often don’t correct the decline in time to salvage and resubmit the transaction. So, your sale is lost, but your next-in-line competition gets lucky.

Other services take it a step further and offer a “debt collection” model. They contact the cardholder and demand information on updated credentials. In exchange for really ticking off your customers, they take up to 50% of the transaction revenue just to recover the sale – that’s your money! Now, you’ve traded passive churn for active churn, when your favorite customers take their business elsewhere.


Mitigate Credit Card Declines With an Authorization Optimization Solution

No plug-in “black box” can solve all your card decline problems. That’s why First Data’s Authorization Optimization Solution is a completely different approach to mitigating declines.

             ✓ Our global footprint covers every major geographical area.

            ✓ We use Data Science to analyze issuer and consumer trends across more than 90-billion transactions every year, far more than                      anyone else in the market.

            ✓ From that data, we extract reasons for declines, and pinpoint their source.

            ✓ Our machine learning Rules Engine also proactively searches for ways transactions could fail and fixes them before they happen.

            ✓ And, we instantly repair broken transactions and resubmit them in real-time.

We look at hundreds of data points on every transaction and manage the complexities so you don’t have to; it all happens behind the curtain. We help your approval rates go up while your passive churn goes down, just enjoy it.

Access to all that data not only reduces card declines, it provides actionable information that can shape future transactions, all aggregated into First Data’s Enterprise Insights.


How Does Authorization Optimization Affect Your Bottom Line?

So, how much does this affect your bottom line? Our Authorization Optimization solution just helped one of the largest digital-gaming brands drive a 10% increase in their recurring card payment authorizations. Over the course of a year, that translates into $99M in new revenue, while decreasing the risk of passive churn.

At First Data, we understand that you’ve earned your customers and want to keep them. Something as simple as a fixable transaction shouldn’t cost you their loyalty.

So, if you’re interested in reducing churn… if you want to boost revenue… if you want positive customer experiences… it’s time to look at how you’re handling your transactions.

It’s time to try something new.

So, say hello… Authorization Optimization.