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Authorisation

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Data &. Services

Economic institute

The digital dilemma: Optimising authorisation rates

3 min read · 2024

 

 

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Optimising the checkout journey for customers

When it comes to digital commerce, there’s considerable emphasis placed on optimising the checkout journey for customers. Typically, teams focus on building awareness and streamlining the later stages of the payment journey — but sometimes they overlook the critical authorisation phase. Herein lies the opportunity. When authorisation is optimised, it can lead to significantly improved outcomes.



An efficient authorisation process can enhance the overall customer experience and reduce the likelihood of abandoned baskets or failed transactions. Retailers can increase conversion rates, improve customer satisfaction and drive revenue growth. A seamless authorisation process can also improve trust and confidence among customers, leading to repeat transactions.



For acquirers, improving authorisation rates can be a significant challenge. As commerce becomes more sophisticated, acquirers are increasingly evolving their approach to safeguard against fraud, protect their retailers’ ecosystems and prevent false declines. More and more, acquirers are tapping into advanced fraud technology to help their retailers reduce fraud and approve more legitimate transactions.

 

 

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How fraud solutions can improve authorisation rates

 

Advanced algorithms have emerged to help analyse customer data points such as transaction history, location, device information and user behaviour patterns in real time. In particular, the implementation of advanced machine learning algorithms is helping to enhance authorisation rates by quickly analysing data from a multitude of sources and detect patterns or anomalies that could indicate fraud.

By continuously learning and adapting to new threats, these solutions can stay ahead of evolving fraud tactics. This helps retailers stay vigilant and minimise false positives, thus reducing the risk of legitimate transactions being declined. And because they proactively screen risky transactions before submitting for network authorisation, the overall approval rates get a significant boost.



This is true for solutions such as Transaction Risk Management, powered by Mastercard’s Brighterion AI, which screens and evaluates based upon a real-time artificial intelligence model to help prevent payment fraud.



Transaction Risk Management augments its AI model score with customisable rules and thresholds that can be fine-tuned to suit acquirers’ specific needs and the risk tolerance of a business. This flexibility allows businesses to strike the right balance between maximising authorisation rates and minimising fraud losses. In fact, it can detect incremental fraud by up to 40% — with minimal impact to the customer experience.

 

 

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The impact in real life

 

For the National Bank of Egypt, authorisation rates were top of mind. The bank was looking for an advanced fraud prevention technology that could help it to enter new markets and support different sales channels, both of which come with challenging authorisation issues.



Mastercard equipped the bank with Transaction Risk Management, helping it stay one step ahead of cybercriminals. It also prevented fraudulent payments by monitoring all transactions and blocking certain IP addresses and emails, and even some retailers. The results speak for themselves. Retailers within the bank’s portfolio were able to gain stronger control over fraudulent payments; in one case, an airline retailer in Egypt increased its approval rate by 23% the year after implementation. By combining advanced technology with robust authentication methods and proactive monitoring, fraud solutions can significantly improve authorisation rates and protect businesses and customers from fraudulent activities.