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Marginal Gains #4: Recovering payments

In cycling, coming from behind the pack to win the race is one of the hardest things to do. It’s a little easier when it comes to payments. In this article we’ll look at why payments get declined, how to recover them, and some of the products we’ve built to do it.

11 November, 2021
 ·  3 minutes
Marginal Gains #4: Recovering payments

In the Marginal Gains series so far, we’ve talked aboutaccepting,processing, andprotectingpayments (and shoppers). In this article, we’ll look at recovery, perhaps the area most readily applicable to the concept of both cycling and marginal gains. We’re not talking about ice packs and rest days though, we’re talking about reacting to setbacks; how quickly you can recover from a puncture, a fall, a collision. Or in payments; recovering from failed transactions.

Why payments are declined

We don’t want to state the obvious too much here. But it’s important to highlight that there’s no blame game when it comes to declines.

Insufficient fundsWe’ve all been there. A few subscriptions going out of the bank account just before pay day. In fact, 72% of declined transactions are due to insufficient funds or ‘do not honor’ codes.
Technical reasonsWhat shoppers don’t often see are the errors between the card schemes and issuers. These lead to ‘technical error’ messages. Similarly on the backend, the payment form can time out, and cause the shopper to drop out of the payment flow.
Wrongly formatted messagingEach issuing bank has different risk preferences and technologies, and these preferences extend to messaging. For example data such as CVC, postcode, or expiry data formatting.
bike wheel illustrations showing differently formatted postcodes

Trying different messaging formats, such as postcodes, can help when recovering a payment.

Recovering declined payments

As we covered above, there are multiple reasons why you might need to recover a payment. But it needn’t be a manual process. We have two specific solutions: Auto retries and Auto Rescue. auto-retries are attempted immediately after the first decline whereas for auto rescue this is a longer timeframe (another day/time).

Auto retries

Auto retries are a feature ofRevenueAccelerate, enabling us to retry previously declined payments due to technical errors. The retries are attempted immediately after the first decline, meaning shoppers don’t need to re-enter their details. It’s especially helpful for retail and food delivery businesses.

We do this through the same or a secondary connection, using our platform data to attempt retries only when there is a high chance of success and preventing your business from incurring extra card network fees.

Auto retries diagram with illustrations. payment submitted, payment declined, auto retries, successful transaction

We all know that risk management is a continuous process. Stop pedalling, and you’ll be caught. This is why we’re always improving features like Auto retries.

Not-so-marginal gain: The introduction of machine learning to auto retries

One of the questions we’re most commonly asked is how to keep costs down, especially when it comes to retries. With machine learning we can determine how best to format them, and when not to retry at all. Since we started using machine learning to support auto retries in July 2021,we’ve seen a300% increase of recovered payments.

Auto Rescue

Auto Rescue recovers declined payments through automated, intelligent retries. This is particularly useful for shopper-not-present transactions such as subscription renewals. It uses smart logic, using our wide range of payments data, to decide which declined payments can succeed when retried later, and performs these retries at optimal times on behalf of your business. It’s easy to integrate too; you can simply update the payment API to flag a transaction for Auto Rescue and we'll handle the rest, providing notifications on the outcome of each Rescue attempt. Auto-rescue was originally available for card payments only, but we’ve recently expanded its scope to incorporate SEPA payments as well.

“At Pinterest we know how important it is to factor in payday into our retry logic. Using data that helps us take a country by country approach to determine when to bill our users is really important in reducing customer churn.”

Karla HensleySenior Payments and Fraud Manager

Unlike Auto retries, Auto Rescue re-attempts the payment at a later time or date, making the feature ideal for subscription businesses.

Not-so-marginal gain: Recover payments declined due to insufficient funds

We use our PSP-wide data to schedule retries factoring in parameters such as Bank Identification Number (BIN), country, and decline reason. This enables us to pinpoint what day of the month, day of the week, and time of the day to schedule a retry to match when shoppers are most likely to have money in their bank account.

You've made it to the finish line

The ability to accept, process, protect, and recover payments are four things every business should have at the top of their mind. We hope our Marginal Gains series has given you some guidance on what to think about in these areas and how to harness the technology available to you. You can revisit the previous three editions below.

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