Maximise Payment Acceptance Rates and Deliver a Frictionless Customer Experience

The world of financial services payments can seem daunting at times. Those new to it not only need to find their way through the complex payments ecosystem, but also face complicated jargon that can sometimes sound more like a foreign language.

That being said, getting the payments experience right can be incredibly rewarding, from both a corporate and customer standpoint.

So, how can you unlock the value from payments in financial services and improve customer experience? It may all come down to one primary objective: optimising acceptance rates.

The Importance of Payment Acceptance Rates

What is a Payment Acceptance Rate?

A payment acceptance rate is the percentage of accepted transactions out of all attempted payments. If 100% of the payments are accepted, you’ve built a truly frictionless payment experience for your customers.

What Can Impact Payment Acceptance Rates?

However, the reality is that acceptance rates are limited – sometimes for reasons out of any party’s control, and at other times as part of the system itself. For example, acceptance rates may be lowered in the effort to mitigate against fraud or chargebacks, to protect those who cannot afford to pay or a myriad of other reasons. This is largely dependent on jurisdiction and regulation.

Declining a payment has its consequences, of course. Our Power Your Payments research revealed that 60% of financial services customers who face a failed transaction do not reattempt the transaction or are at least less likely to do so.

The same report revealed that in the UK, 63% of respondents were less likely to complete a purchase after a failed payment attempt for an unknown reason. UK shoppers are particularly sensitive to failed transactions. 73% would not complete a purchase at all if they then had to start the shopping process again from scratch, in contrast to just 26% of Germans.

In short, a failed transaction could easily translate to lost business, or worse, leading someone into the arms of a competitor.

As a financial services firm, bringing customers on board can be difficult, but now that customer acquisition costs are growing, it could be time to rethink your payments strategy.¹

Poorly optimised acceptance rates could be an impediment to all your hard work and spending on payment optimisation over the last few years. Re-evaluating and optimising your acceptance rates could mean improving your firm’s chances of maximising revenue and boosting the return from your customer acquisition investment.

3 Tips for Managing the Payment Experience

Here are three simple tips for managing the payment experience for your new and existing customers:

1. Understand your Desired Customer’s Payment Habits

Having a wide range of payment methods is vital. When surveying for our Power Your Payments research, 37% of financial services consumers told us that they would not complete a purchase if their preferred payment type was unavailable. ²

Transactions in this space can range from a few dollars to many thousands, and every consumer will have their own habits and preferences. While certain transactions can easily be made on a credit card, accepting payments of larger sums may be best suited to bank transfers. If the right security measures are in place, an Open Banking solution could make large payments a lot simpler for all parties.

Before promoting a certain payment type, however, you’ll want to consider: why would my customers select this method? What about my payment experience is encouraging or discouraging a certain choice?

2. Review and Benchmark Your Payments Data

A good payment provider will offer solutions that provide additional visibility into your acceptance rates.

A solution like Pazien could help you determine if acceptance rates are currently in line with industry benchmarks. If underperforming, it may be because you need to adjust certain risk tolerances. Naturally, you must evaluate acceptance rate benchmarks with payment preferences and geography in mind. A relationship manager working with your payment provider could help with this.

Additionally, an AI-enabled fraud detection tool, like Fraudsight or 3DS Flex, could be considered if you are aiming to minimise ‘false positive’ rejections.

3. Responsibly Promote Your Preferred Payment Methods

Once you’ve understood your payments data, as well as your own firm’s strategic goals and risk tolerances, it should become much easier to decide which payment methods to promote.

Let’s say, for example, a trading firm is aiming to minimise the risk of fraud and chargebacks while also reducing onboarding friction. For this firm, promoting Open Banking-enabled transfers could be ideal as it may better enable higher value transactions and potentially cut steps out of the payment process.

Once you know your preferred payment method, you could consider promoting this prominently in communications. You’ll also want to educate customers on the benefits of this method.

Thoughtfully considering your payment method mix can make for a better experience for your target customer and help you meet your performance goals.

Accept More Payments

It may seem obvious, but understanding your customers’ payment preferences and habits is key. There are always new trends, from the rise of digital wallets and cryptocurrency integration over the last few years to BNPL’s booming popularity in the UK. Reviewing your data regularly and promoting the payment methods based on that information are both critical steps in optimising payment acceptance.

Be sure to review your position frequently, and to discuss trends with your payment services provider to make sure you aren’t missing any opportunities.

¹Moeser, M (2020) How COVID-19 cratered customer acquisition, profitability” (2020) American Banker. Available at: https://www.americanbanker.com/news/how-covid-19-cratered-customer-acquisition-profitability

²Worldpay (2020) Power Your Payments Financial Services” (2022) Worldpay Available at: https://offers.worldpayglobal.com/payments-finance.html