The magic of smart routing In the Ecommerce world, merchants are probably too familiar with the issue of failed transactions and how they can have a strong impact on conversion rates and revenue. When looking at failed payments, what falls under the umbrella are the ones rejected by the acquirer or the issuer in the payment flow, due to reasons like incomplete or incorrect card or contact information, authentication tools and insufficient funds on the account. Some of these problems cannot be tackled by the merchant because they are related to issues on the customer’s end. If we take a look at the impact PSD2 and Strong Customer Authentication have had on Ecommerce in Europe, it is easier to understand how sensitive the issue is. During the first quarter of 2021, 25.5% of authentications performed with the Mastercard scheme did not succeed, the vast majority resulting in failed payments. In the second quarter, according to new data released by Mastercard, only 76% of 3DS authentications were successful, which means that the improvement over the previous period was only about 1.5%. Smart routing In order to minimise the number of failed transactions due to technical problems, choosing a payment infrastructure based on dynamic routing is certainly a great way to start. Payment processing is what happens after the customer clicks on the “pay now” button of the check-out page, for Ecommerce purchases. From that moment the transaction “route” entails different steps: • Authentication • Authorisation • Clearing • Settlement These are taken care of by payment service providers, acquirers, issuers and fraud prevention services. When we look at static routing, a transaction’s route is directed to the acquirer via manual configuration by following a pre-determined route. This means that transactions are sent to a determined PSP for processing and directed to a specific acquirer, following one pathway. In the case of a company working with only one PSP and acquiring bank this process is linear and the reconciliation is simple. The downside is that in case of technical failures on the one payment route there is no back-up to redirect the transaction to. Moreover, there is less flexibility with geographical regions, because the merchant is dependent on the chosen payment gateways, PSPs and acquirers, which may be available in some countries but not in others. However, companies can choose static routing and work with a number of different payment gateways, PSPs and acquirers. We can therefore say that the main disadvantages of static routing are: • Lack of flexibility in geographic regions for transactions • Lack of back-up to redirect failed transactions • Inability to take into consideration changing parameters and adapt to a specific transaction 👉 Subscribe for more insights https://lnkd.in/d94JgWBU Source Fabrick #fintech #payments #wallets
The magic of smart routing In the Ecommerce world, merchants are probably too familiar with the issue of failed transactions and how they can have a strong impact on conversion rates and revenue. When looking at failed payments, what falls under the umbrella are the ones rejected by the acquirer or the issuer in the payment flow, due to reasons like incomplete or incorrect card or contact information, authentication tools and insufficient funds on the account. Some of these problems cannot be tackled by the merchant because they are related to issues on the customer’s end. If we take a look at the impact PSD2 and Strong Customer Authentication have had on Ecommerce in Europe, it is easier to understand how sensitive the issue is. During the first quarter of 2021, 25.5% of authentications performed with the Mastercard scheme did not succeed, the vast majority resulting in failed payments. In the second quarter, according to new data released by Mastercard, only 76% of 3DS authentications were successful, which means that the improvement over the previous period was only about 1.5%. Smart routing In order to minimise the number of failed transactions due to technical problems, choosing a payment infrastructure based on dynamic routing is certainly a great way to start. Payment processing is what happens after the customer clicks on the “pay now” button of the check-out page, for Ecommerce purchases. From that moment the transaction “route” entails different steps: • Authentication • Authorisation • Clearing • Settlement These are taken care of by payment service providers, acquirers, issuers and fraud prevention services. When we look at static routing, a transaction’s route is directed to the acquirer via manual configuration by following a pre-determined route. This means that transactions are sent to a determined PSP for processing and directed to a specific acquirer, following one pathway. In the case of a company working with only one PSP and acquiring bank this process is linear and the reconciliation is simple. The downside is that in case of technical failures on the one payment route there is no back-up to redirect the transaction to. Moreover, there is less flexibility with geographical regions, because the merchant is dependent on the chosen payment gateways, PSPs and acquirers, which may be available in some countries but not in others. However, companies can choose static routing and work with a number of different payment gateways, PSPs and acquirers. We can therefore say that the main disadvantages of static routing are: • Lack of flexibility in geographic regions for transactions • Lack of back-up to redirect failed transactions • Inability to take into consideration changing parameters and adapt to a specific transaction 👉 Subscribe for more insights https://lnkd.in/d94JgWBU Source Fabrick #fintech #payments #wallets Thomas Leda Timothy Alex Ali Carlos