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How to Improve Credit Card Authorisation Rates

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedOct 20222 min read

The authorisation process is in place to authenticate a credit or debit card and verify whether or not an account holder has the funds necessary to complete the transaction. Authorisation rate, therefore, refers to how many successful authorisations vs declines occur within a certain period of time.

Having a perfect or near-perfect authorisation rate is extremely difficult to obtain, especially if your business is carrying out large volumes of transactions daily. However, through adopting certain practices, it is possible to improve your credit card authorisation rate and see a reduced number of failed payments.

Even improving credit card payment authorisation marginally can make a big difference in terms of revenue. In this post, we’ll outline some key ways you can improve your credit card authorisation rate so that you can see a revenue spike.

Ways to improve credit card authorisation rates

There are several things you can do to increase authorisation rates. These include:

Offering digital payment

E-wallets like Apple Pay and Google Pay have two-factor authentication and require customers to use a password or facial recognition. This makes them very secure forms of payment. Due to the ease and accessibility of these digital wallets, customers using them are more likely to be aware of the funds they have available, meaning they won’t accidentally try to pay for a product or service they’re not sure they can afford. This can reduce the number of declines significantly.

Collecting extra billing information

For direct debits and bank transfers, make sure that you have all the billing information necessary on a client to ensure the banks involved are able to authorise transactions. Including a postal code, for example, often helps to legitimise payments.

Optimising your payment schedule

In the case that your business schedules services or products in advance, make an informed decision about when you will charge the customer. For instance, imagine a customer has booked a conference room for a meeting 2 weeks in advance at the cost of $100/hour. In some cases it might be better to charge them in full at time of booking to avoid any risk that the payment won’t go through nearer the time. Of course, if they are a trusted customer then this is not necessary. Analyse trends in your authorisation rates to see what would be the better decision in your particular circumstances.

Reducing fraud rates

Some customers may try to dispute payments with their bank after they’ve been made, effectively meaning you won’t receive the money they owe you. You might consider using a fraud detecting solution to help block any payments flagged as suspicious.

Automating card account updates

When a customer’s card has expired, this may prevent their payments to you going through. To counteract this, speak to your payment provider about card account updaters which can automatically update the card details you have on file for a customer. This means you’ll never miss a payment because a customer has renewed their card.

Authenticating payments

Banks which support 3D Secure may require you to authenticate certain payments. This extra step can help ensure the validity of a payment.

Obtaining a credit card authorisation letter

Travel companies are examples of businesses which usually require a credit card authorisation letter in order to receive payments for their services. It is often mandatory for credit card holders to provide a letter to confirm that a trusted company or an individual is able to use their card in their absence. Depending on your business operations, you may need to obtain a credit card authorisation letter in order to carry out transactions for customers.

Improve your payment success rate with GoCardless

One way to reduce failed payments is to use GoCardless. Built on Direct Debit, GoCardless payments do not require authorised user credit cards or depend on credit card authorisation to work efficiently. This is why GoCardless is able to collect around 97.3% of payments at the first time of asking. Another positive in favour of GoCardless is that bank accounts don’t expire, so information rarely needs to be updated. Overall, payment authorisation rates can spike dramatically by using GoCardless’s online payment solution.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.