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How can I make more money? Life of a Head of Payments, Chapter 4


How Can I Generate More Income? (Hint: Optimization)

After we successfully “cracked” the Brazil barrier, we realized that optimizing even 0.5% of charges (initial or recurring) translates to a huge amount of money, and therefore investing in a robust optimization process became a must.

Some of the optimizations we did:

Failover Processor for Initial Charge

In each region we wanted to have more than one acquirer, so in case of failure to reach the initial transaction, we would be able to route the transaction to another acquirer. Additionally, in the case of a declined charge, sometimes retrying through an alternative processor can do the job.
We were amazed with how many transactions this saved!

But again- this of course required us to integrate with many separate credit card processors.

Passive Churn Reduction

A Passive Churn is what we called a churn that is caused due to failure in the recurring charge. And this happened a lot- around 20% of the yearly plans that needed to be re-charged, failed!

We tried several ways and best practices to improve the process:

  • Retrying on different days of the month/week, with different spacings (e.g. retrying every 7 days)
  • Sending users reminder emails
  • Testing different “grace periods” (time until cancellation)
  • Changing the expiration period

One other thing we tried was retrying with a different processor than used for the initial charge.

Important: in order to be able to move transactions between gateways, you must have the CC saved with you rather than the processor, otherwise you will not be able to send the CC recharge to a different processor. For that you must be PCI compliant, which in itself was a project that took us a lot of time and effort.  

AB Testing Optimization on Credit Card Success Rate

A large part of our optimization practice was the ability to test the success rate of different gateways/processors, for each charge type (initial/recurring), in each country, for each CC type, then route each transaction to the leading optimized processor. This allowed us to obtain higher success rates and avoid failures (which result in transaction fees).

Apparently, some processors enjoy better success rates with some credit card types, as they have stronger connections with different issuer banks.

Conclusion: if you have the means to AB test all processors you are connected to, after which route accordingly, this could optimize your processing fees and success rate.

The main parameters you can test are:

  • Success rate per BIN number
  • Success rate per CC type
  • Success rate in initial vs recurring payment
  • Success rate in different countries (in case they are in the same region, like in Europe, some processors might be better with some countries)
  • Sometimes even time of day can affect the success rate (in Brazil the success rate was significantly lower during holidays)

After conducting all these tests, we could generate a rule base to route each transaction to the best processor.

Remember: in order to be able to move transactions between gateways, and AB test freely, you must have CC details saved with you and not the processor. Again- for that you must be PCI compliant.

Save Credit Card - Where? (PCI Certification)

Let’s recall the main reasons you would want to save your customer’s/user’s credit card:

  1. To allow recurring payments
  2. To allow 1-click purchases for returning users
  3. Optimization - failover, retries in recurring payments, AB testing and routing optimization

What does it mean for a company to be PCI level-1 complaint?

  • Need to undergo an audit every year
  • Development restrictions when coding in a PCI environment
  • Need to tokenize the credit card number
  • Follow 16 industry best standard practices
  • Ability to show alerts and logs for every action that occurs
  • Other proceedings such as a penetration tests during the year (every month, bi-monthly, biannual)

To become certified, we actually managed 3 projects:

  1. Development Code - mapping and separating our code into what was obligated to be in the PCI environment and what we could leave out. Also, to produce an integrated tokenization solution.
  2. DevOps: Change the server architecture and location to support the servers that are under the PCI
  3. Operational: Apply all 16 industry standards

Without getting over technical on the PCI level-1 compliant project we did at Wix, let’s just say that it was a lot of work, so the amount of time needed to complete the process will depend on the level of your company’s readiness.

A few more interesting reads

COVID-19 Pushes #homecommerce to the Forefront

What fraud trends can we expect to see post-SCA?

Payments 101: Learn the Fundamentals

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