4 ways to improve your authorization rates

Card declines can cost merchants both sales and customers. Here are proven ways to reduce how often it happens


8 minute read

Key takeaways

  • New, powerful software solutions, involving real-time updates, data mining and artificial intelligence have the potential to significantly reduce unnecessary declines
  • Using cutting-edge practices such as tokenization allows the card number to be maintained despite physical card number changes and adds a level of protection that will lower card decline rates over time
  • Increasing card authorization rates has the potential to boost the bottom line and improve the shopping experience

Not all card declines are a result of fraud or insufficient funds. A card may be declined because the customer entered the card information incorrectly, because the card has expired or because it’s been replaced. It can also be declined when a transaction triggers a false positive for fraud. However, declines are far more common in transactions where the card is not present, such as e-commerce sales, says Sara Walsh, senior vice president, enterprise payments at Bank of America. According to Bank of America proprietary data, card-not-present transactions has steadily increased year over year, especially in 2020 as a result of the pandemic, which means declines are hitting merchants harder, notes Walsh.


Fortunately, there are technologies, processes and systems that decrease the odds that a legitimate payment will be declined. Here are four strategies to try.


“A cutting-edge retry strategy can identify the times when the account is most likely to be able to afford the transaction, and retry the transaction at that time.”


1. Employ automatic, real-time account updates


A couple of major culprits to transaction declines are invalid card numbers and expiration dates, says Robin Reodica, senior vice president, global product management with Merchant Services at Bank of America. This could mean that a customer has entered in their personal and card data inconsistently, but more often the issue is that a card has been replaced or has expired since last used with that merchant.


“When a consumer card is replaced, customers may not always remember to update their information with every single retailer or subscription service where they have an account,” Reodica says.


Traditional “updater” services can be used to periodically update the customer cards on file as they expire or change for other reasons, but depending on how often you request an update, any number of cards are likely to be inaccurate at any given time. Luckily, according to Reodica, newer services (such as ‘real-time account updater’ as part of the authorization optimization service) can automatically check for any account updates as the sale is being transacted with the cardholder, which can more than double approval rates.


2. Apply accurate industry indicators


A transaction that’s been flagged as potential fraud might be declined because the purchase doesn’t match the pattern of the consumer’s previous purchases with that merchant. One common reason for this is that many businesses, especially those with multiple types of operations, could have confusing or contradictory merchant category codes (MCCs). While most businesses stick to the MCCs for their primary business activities, that may not be enough if they have multiple lines of business and brands, says Gregg Kambour, senior vice president in technical solutions consulting with Merchant Services at Bank of America. “Think about a hotel, for example, that has several businesses just in the lobby — a restaurant, a coffee shop, a retail store, car rentals — and there might be many more.”


To combat this type of card decline, payment officers should take care to fill out all the soft descriptors about the various lines of business, as well as alternate business and brand names. For companies that offer subscription services and charge customers a fee on a regular basis, it’s also important to use the available indicators to alert credit- and debit-card networks that these are recurring subscription fees, says Walsh, adding, “If critical indicators within your transactions change, such as merchant ID, price point, or velocity, let your major issuers know so they can prepare their strategies and avoid false / positive declines.”


3. Leverage advanced retry technology


Fortunately for customers and merchants, declines aren’t one and done: authorization optimization software will allow you to retry the sale later. But the timing of those retries can be critical. “The second largest reason for declines, behind invalid account number as discussed above, is due to customer exceeded their credit limit or available balance,” says Kambour. “For those declines, a cutting-edge retry strategy can identify the times when the account is most likely to be able to afford the transaction, and retry the transaction at that time.”


To even further increase the odds that the billing will go through on the second try, consider using authorization optimization software that employs data science and artificial intelligence, says Kambour. Software like this can analyze a customer’s previous transactions to see if the transaction fits their spending pattern, then look for and correct information that may have been omitted or supplied incorrectly.


4. Embrace tokenization technology


Tokenization, which turns sensitive data into electronic “tokens,” is generally considered one of the highest forms of data encryption. Since the account tokens are generated by the card issuers, card tokenization increases the likelihood that the card will be recognized and that the transaction will therefore be approved. At the same time, the token has the added advantage of remaining consistent even if a card expires or if a cardholder replaces the physical card.


Card declines can do serious damage to a business. And no single solution can address all of the reasons for declines. But by bringing together real-time account updates, informed retry strategies, proper transaction indicators and tokenization you can improve both your authorization rates and your customers’ experience.



Contact Bank of America today to learn more about solutions that are designed to improve authorization rates such as the authorization optimization service incorporating the innovative card processing strategies.




Sara Walsh, Senior Vice Pesident, Enterprise Payments at Bank of America

Robin Reodica, Senior Vice President, Global Product Management with Merchant Services at Bank of America

Gregg Kambour, Senior Vice President in Technical Solutions Consulting with Merchant Services at Bank of America