How issuer partnership improves profitability

Issuing institutions, merchants, and payment services providers share a common goal: to permit legitimate payments to flow, and block fraudulent ones. That’s why it makes sense to work together, share useful data, and form a more accurate picture. However, data sharing protocols are not enough. You need strong and continual partnerships with banks to get them to change things within the bank that an algorithm can’t solve.

Everyone benefits from better visibility into the nature and origin of a payment – how did the customer log in and make the payment? Has that card been used to make similar payments in the past? Can we verify the billing address? 

Delegates at Thrive Venice discussed these ideas and more during a breakout session on ways in which working with issuers can benefit everyone involved. This article draws on that discussion to outline how you can earn more revenue, reduce fraud, and improve your profitability through issuer collaboration.

Issuer declines: Why are your payments failing?

When issuers reject payments, it can harm your profitability. Issuer rejection blocks revenue from coming into your business, and could even cause such a negative experience that the customer won’t come back to your brand at all. Of course, it’s vital to block payments which should not go through – for example, if the account is frozen or closed down. Issuers play a truly important role in protecting everyone from fraudulent payments, using a combination of data analysis methods to block payments which seem fraudulent.

So, not all issuer declines are a bad thing. At Checkout.com, we’re pleased to help issuers detect and block online transaction fraud. We have several teams working hard to constantly upgrade our fraud modelling and analysis tools that keep payments safer for everyone. We share risk scoring data with issuers to help them make more accurate decisions on which payments to accept or reject.

This is what we focus on: the false decline – when a payment is wrongly flagged as fraudulent or it’s blocked for another preventable reason. This is where the real damage to your profitability comes in. A false decline represents revenue that should have come into your business, but the issuer did not allow it.

Daniel Linder, Senior Product Director at Checkout.com, put it like this: “Issuers want to accept the payments, but they don't want to risk ending up liable for a high volume of chargebacks.” 

That means issuers have sensible reasons to block transactions. It’s our job to help unblock the transactions which are, in reality, trustworthy. We need your help to do this.

Building a more accurate picture of your payments

As a merchant, you have an important role to play in reducing false declines. You could improve your payment acceptance rates – i.e. your revenue – by sharing additional data with your PSPs (who pass it on to the issuer). The more data the issuer has on a payment, the easier it is to figure out whether to block or approve. Such data sharing can positively impact profitability: for instance, Amex’s Enhanced Authorization program recommends including email address, IP address, shipping information, phone numbers (and others) for a potential +1% approval rate increase and up to 60% less fraud.

“At Checkout.com, we see payment data from across our network,” Daniel explained. “The merchant sees data from customer logins, behavioral metrics, and more. The issuer will see all the transactions done on that card.” That’s why it makes sense for each party to contribute the relevant data.

What data should you share? This depends on your particular business, the types of payments, and the preferences of individual issuers. It could be data you are already collecting, so it may not be too resource-intensive to share it. Helpful SDKs such as Risk.js can automate this data collection.

Payment experts at Checkout.com advocate on merchants’ behalf every day to reduce false declines, helping them gain millions of dollars in revenue that would have been blocked. We’ve seen acceptance rate increases of up to 2% with certain issuers thanks to sharing sessions data. 

“We had some issuers in France reject payments believing there’s no such thing as a recurring payment for crypto,” said Daniel. “And we explained the merchant’s business model to help them understand. Then they understood and changed their internal policy.” This resulted in no more false declines for these payments, and considerable additional revenue for the merchant.

Gaining issuer trust 

Part of our role as your payment performance champion is to facilitate the three-way conversation that helps you to reduce false declines. The goal is to convince the issuer that payment traffic from your business is trustworthy.

We’ve seen cases where an issuer has blocked transactions due to a specific fraud spike. Sometimes it takes dedicated communication with the issuer to explain that the fraud attack has passed, and the merchant’s traffic is now back to normal. With the situation clarified on both sides, such a block can be lifted, and the issuer will accept payments once again.

Because you’re accepting payments via so many issuers, you won’t always notice when one has blocked you. And you most likely won’t know the reason until somebody makes the time to ask. Issuer outreach takes dedicated time and proactive data analysis, which is why it helps to 

have a specialist on your side.

Another way in which we win issuer trust for merchants is by sharing our internal fraud scores with issuers. This enables the issuer to understand how we assess payments for risk, and as a result, we have seen acceptance rate increase of 0.3-0.5% from certain issuers. The result is annualized uplift of tens of millions of dollars in transaction volume for merchants.

How to contact an issuer

While better fraud filtering and data sharing can improve issuer acceptance, it may not unblock all payment issues. Daniel put it like this: “What we're coming to realize is there are payments that you cannot save algorithmically. You have to actually talk to the banks.” 

Face-to-face meetings can be extremely beneficial in resolving persistent payment problems. However, making contact with the right person on the issuer side is a real challenge. It can take a lot of time and effort to resolve the root causes declines – resources you may not have available. One of the breakout participants said he secured in-person meetings with Tunisian issuers through industry introductions.

“You need to have local connections,” shared Boris Montin, Fintech Director, Glovo. “So either someone from the scheme introduces you or someone from a PSP. Talk to whomever you can, and, at some point, someone will answer the call.” Boris mentioned it took over a year to achieve the favorable outcome Glovo needed at the time. This may not be the kind of legwork that all companies could reasonably accommodate while scaling rapidly.

At Checkout, we are growing our dedicated team of issuer partnership specialists. It’s often easier for us to set up a meeting with an issuer – or, even better, liaise on your behalf – than it would be for a merchant without an existing connection.

“ I would only recommend that you have an issuer partnerships team in your company if the problems are acute, they happen very often, and your PSPs aren't solving it,” advised Daniel.

Partnering with Checkout to reduce issuer declines

Communication with issuers can be a challenge. Varying levels of responsiveness and technical understanding across different regions can stand in the way of productive partnership. Direct outreach to issuers is the most direct way to solve issuer declines. However, it’s often hard to know where to start, and it’s generally not scalable for most organizations.

Instead, you can take advantage of the vast network of issuer relationships that Checkout.com already has. Our issuer partnership team is working proactively on addressing potential disruptions to payments through dedicated project work with issuers around the world. This unlocks millions of dollars in extra revenue for merchants each year. As we collaborate with issuers to resolve payment problems and improve fraud filtering, everyone in our ecosystem benefits.