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How To Increase Your Payments Efficiency

27
Nov

The efficiency in which your business processes payments online can have a profound effect on both your profitability and your customer experience. Payments efficiency goes beyond measuring cost per transaction; a truly efficient payments operation takes into account other factors as well, including decline rates and transaction speed.

For example, a lower transaction cost is not efficient if the decline rate doubles; the cost of these lost transactions far outweighs the small savings made on each successful sale. Maximizing your efficiency involves taking into account all these different factors and analyzing them to provide the best overall experience and opportunity for revenue. The best possible outcome happens when each individual customer is routed to maximize efficiency.

Start by offering multiple payment options

The first step most businesses take to improve their efficiency is to provide multiple payment options, often offering 2 or 3 providers or methods that they believe will give the best customer experience and lead to the most conversions. The next step from here is to offer local payment options for customers in different countries. For example, giving customers purchasing from the United States one set of payment options, and giving customers purchasing from Australia another set.

Even by just providing customers with a local payment option can provide significant benefits:

  • Reduced Cost Per Transaction – Providing the right payment option can reduce fees and increase your profit, so you can sell fewer items and make the same amount of revenue.
  • Increased Transaction Approval Rates – Providing local payment options can reduce decline rates and provide a better customer experience. Customers are more likely to make a purchase, and that purchase is less likely to fail.
  • Increased Transaction Numbers – Customers are more likely to make a purchase when they can use their preferred payment method, and that means more purchases and larger market share for you.

Local payment options are a good start, but this isn’t most efficient for each customer. For example, a customer purchasing while traveling abroad will have their transaction routed through a local processor, despite much of their payment history being in another country. The local processor may see this and decline the purchase due to concerns about fraud.

Use our decision engine to route transactions and maximize results

Businesses must find a way to make routing decisions on a per-individual basis if they want to maximize efficiency. Instead of simply routing every customer in a specific country one way, the business routs the customer according to a wide range of factors.When this happens, it is common for two customers in the same country to have their payment routed differently to benefit the business. For example, one of the customers may be making a larger purchase, and it may be more cost-effective to rout these bigger payments differently to smaller ones. To enable these smarter routing decisions, businesses must first add many different payment options covering a wide range of localities and then set up a method of directing transactions according to set rules. Businesses then have the option of routing specific transactions to the acquiring banks that provide the biggest benefit.

This level of granular control takes significant technical expertise, and many businesses use a payments platform, like ZOOZ, to route their transactions for them, rather than creating their own solution.  A payments platform automatically optimizes payments according to set rules established in advance. Every time a customer visits the site and makes a payment, the platform routes the transaction according to these rules, which may change the routing according to factors such as the card issuer, size of purchase, locality, and currency.

Benefit 1: Reduced Decline Rates

Declined payments reduce revenue significantly. By identifying card types and customers who are at risk of decline and routing these to minimize this chance, businesses can increase their revenue considerably. This could include, for example, automatically redirecting a declined transaction to a second processor to give the purchase a second chance.

Benefit 2: Reduced Cost Per Transaction

When a decline is unlikely, payments can be routed to reduce the cost per transaction for the business. This can produce savings in both FX and processing fees.                                                                                                                      

Benefit 3: Transactions Processed Faster

A payments platform can switch provider to improve transaction speed when surges in sales create slowdowns. This is essential for providing a great customer experience.

Increase payment efficiency with easy custom routing

ZOOZ is a one-stop shop for international payments, allowing businesses to leverage a network of dozen of payment providers through just one connection. Conditional routing rules enable businesses to optimize payment performance, reduce fees, and increase acceptance rates.

Features include:

  • Optimize payments performance by setting conditional routing rules between multiple processors.
  • Add conditions based on factors such as transaction size, currency, card brand, country, issuer, and more.
  • Block specific payments according to pre-defined conditions to help defend against fraud.
  • Setup fall-back processing so that payments are routed to a pre-defined second option if the preferred processor is not available.
  • Get access to a network of dozens of global and local providers.
  • Access data from all providers to gain insights into your payments, then use those insights to create additional rules that further increase your performance.

Contact us today, and a member of our team will be in touch.

A few more interesting reads

International Payment Preferences part 1

International Payment Preferences part 2

Six Ways to Increase Your Approval Rate

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