In today’s digital-first economy, the convenience of card payments has led to a surge in digital commerce. For businesses, this growth presents incredible opportunities, but it also introduces challenges like false declines and lost revenue. If your business relies on a single Payment Service Provider (PSP), you might be missing on potential opportunities.
At iServeU, we understand the critical role that a secure and scalable infrastructure plays in your success. That’s why we’re highlighting a powerful solution: a multi-processor payment strategy. This approach can significantly improve your authorization rates, enhance the customer experience, and unlock new revenue streams.
What Is An Authorization Rate?
An authorization rate, or “auth rate,” is the percentage of your company’s transactions that are successfully approved during the payment process. A low authorization rate means lost sales and a direct impact on your bottom line. Even a small improvement can lead to a substantial boost in annual revenue. For instance, a company generates $200 million in revenue annually. Even a mere 1% boost in its authorization could lead to an additional annual revenue of $2 million.
What Are The Limitations Of A Single Payment Processor?
While working with a single PSP may seem simple, it comes with several risks and limitations:
Vulnerability to Downtime:
If your single payment gateway goes down, you cannot process any payments, leading to lost sales.
Missed Revenue opportunities:
 A single PSP controls the routing of payments which can result in missed payment opportunities.
Strict Rules:
And a single PSP may not be globally adaptable to handle all scenarios, leading to transactions being declined.
How Does A Multi-processor Strategy Improves Authorization Rates?
A multi-processor strategy involves working with several payment processors instead of just one. This approach provides your business with increased reliability and improved transaction success rates.
Here’s how it works:
Reduce Downtime:
If your primary gateway is down, transactions can be automatically routed to a different, active gateway, ensuring your business stays operational.
Utilize Automatic Retries:
When a transaction is declined by one gateway, it can be automatically redirected to another gateway.
Intelligent Routing:
Transactions can be routed to the most suitable gateway based on specific characteristics like the country of origin, purchase amount, or risk profile.
A major client using a multi-processor solution saw a 10-15% increase in authorization rates, leading to an additional 5-7% revenue each month. By rerouting declined transactions, they successfully recovered sales that would have been lost.
Improve Customer Checkout Experience And Generate More Revenue With Multi-processor Strategy
A multi-processor strategy doesn’t just benefit your authorization rates, it evidently improves the customer experience.
- Compact and portable platform
Customers can get frustrated when their transaction is declined without a clear reason. A multi-processor solution helps by routing transactions to a different processor if the first one fails, making the checkout process smoother.
- Reduce False Declines:
By utilizing multiple PSPs, you can choose providers with risk modules that are more likely to approve legitimate transactions, including those without a CVV or CVC. This is essential for managing recurring subscriptions.
- Unlock Unrealized Revenue:
With higher authorization rates, your business can capture revenue and profitability that would otherwise be lost. This additional revenue can be reinvested in business growth, new products, and market expansion.
Achieve Faster Speed-to-market For Quicker Business Launch
The time spent to process payments when there are higher volume of transactions or when there are payment delays, can be significantly reduced with a multi-processor payment approach. While a single PSP model might take two to three months to assess whether payments can be processed in a new country, a multi-processor strategy can reduce this to just one to two weeks. This speed allows you to hit business goals and drive sales much faster.
At iServeU, we help businesses enhance their growth by implementing a multi-payment provider strategy. By adopting this approach, businesses gain greater control over their payment processes, ensuring smoother operations, increased reliability, and better long-term profitability.
Author
Ramji Tripathy
FinTech professional and XIMB alum, driving sales strategy, pre-sales, and partner growth across APAC, Middle East & Africa
