How to Prevent False Declines in Ecommerce

A false decline is a legitimate card transaction which is falsely detected as fraudulent and therefore declined. These online payment fraud detection systems are in place to prevent fraudulent transactions — a task they often do extremely well. However, they can occasionally be over-precautionary and block legitimate transactions.

False declines can spell issues for businesses as it means they miss out on sales. However, an unanticipated consequence is the effect it can have on a business’s reputation. Indeed, a customer may not take kindly to spending time browsing and filling their basket only to find they are unable to make their purchase and are suspected of being a fraudster. This can have a knock-on effect on customer retention too.

For all these reasons, ecommerce false declines can be detrimental to business. With that in mind, let’s discover some ways to eliminate false declines altogether.

Reducing false declines

As false declines can have an adverse effect on finances and customer relations, keeping them to an absolute minimum is imperative. Below are some key ways you can help eliminate false declines.

Investigate declines

The first step to tackling false declines is finding out how much of a problem it really is. You can do this by analysing your blocked transactions and noting how many among them are actually fraudulent. Using this information, you’ll be able to deduce how many blocked transactions were falsely declined.

You will also have access to other information about the decline and may be able to determine why it occurred. You can use this to adjust your fraud parameters so that they are better tailored to your customer base.

Upgrade your fraud protection tools

Legitimate transactions being erroneously blocked may be down to primitive fraud protection. Some fraud protection systems don’t take into account adequate context for a transaction, such as certain data fields, and so cannot correctly distinguish between genuine customer transactions and fraudulent ones. More sophisticated fraud prevention systems can use machine learning based on customer feedback to help identify legitimacy in customer transactions.

It’s therefore recommended that you keep your fraud prevention software and tools up to date. This way you can ensure the most sophisticated fraud detection and limit false decline rates.

Improve communication between merchants and banks

When it comes to the transaction process, merchants themselves have little to no visibility into it. This can limit the influence merchants have on the transaction process. To improve this, merchants can pursue a more open line of communication with banks to allow them to have more insight into fraud data. This can help boost authorisation rates across the board.

Take payments via other methods

Ecommerce false decline rates can be drastically reduced by taking payments via methods alternative to credit or debit cards. For businesses which operate using a subscription or recurring payment model, it may be suitable to collect payments by Direct Debit.

With GoCardless, businesses can set up Direct Debit pull payments with customers, allowing them to collect recurring payments directly from customer bank accounts. With customer permission, businesses are in control of payment frequency and amount, allowing them to manage cash flow and avoid issues related to failed and late payments.

GoCardless takes on the set-up and relationship with the banks, as well as making sure things like payment pages are compliant and store information securely. As there are no cards involved, the risk of false declines is entirely eliminated, meaning no damage can be done in terms of sales, reputation and customer retention rates.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.