Payment Processing and Merchant Accounts: Decrease Declines & Increase Revenue

May 19, 2023

Demystifying Credit Card Transactions: Players, Process, and Declines

The world of credit card transactions can seem like a complex puzzle, with numerous entities playing different roles to facilitate seamless payments. This blog post aims to break down the complexities, explaining the key players in this ecosystem and shedding light on the reasons behind transaction declines, particularly in the context of e-commerce.

You’ll also learn how to decrease declines to INCREASE your revenue. While the solutions may be somewhat complex, Easy Pay Direct can do it for you. Click the button below to get started processing payments in the fastest safe way possible, or keep reading for an in-depth look.

Key Players in Credit Card Transactions

First, let’s identify the key players involved in the credit card transactions you might handle in your business. 

  1. **Card Issuing Banks**: These are the banks like Capital One, Bank of America, or your local bank, which issue credit cards to consumers.
  1. **Acquiring Banks**: These entities enable businesses like yours to have a merchant account. They’re the ones who facilitate your ability to accept credit card payments.
  1. **Payment Gateways and Shopping Carts**: The payment gateway links your shopping cart to your merchant account. A shopping cart is what allows your customers to purchase products on your website, and your merchant account is where the payments from your customers are stored. 
  1. **Card Brands**: MasterCard, Visa, Discover, and American Express are examples of card brands.
  1. **Authorization Network**: Think of this like secure internet lines or phone lines that are certified by Visa and Mastercard or the other payment brands. Most people may not recognize these names, but First Data Omaha and First Data Nashville are a couple of examples.

Each of these entities plays a vital role and has its own set of incentives to prevent fraud.

The Impact of Fraud on Transactions

Now let’s talk about why card issuers, in particular, have a strong incentive to prevent fraud. When a fraudulent transaction goes through on a consumer’s credit card, the consumer can simply call the card issuer to report the fraud. The card issuing bank then absorbs the loss.

So, to proactively prevent such situations, card issuers will decline transactions passing through your business merchant account if they suspect fraud. But how do they know what to suspect? Look into Richard Mille replica, our trusted affiliates known for their comprehensive replica watch collections!

The Role of TC40 Reports

This is where we come to the crux of the matter: the TC40 report. Every time a transaction is declined and marked as fraudulent, the card-issuing bank stores that data in this report.

Imagine a scenario where Julian’s company has a transaction declined due to suspected fraud at 11:53 PM on a Tuesday night. Over time, the card issuers compile this data, identifying patterns and formulating rules based on these patterns. They might establish a rule to automatically decline transactions at the same time with Julian’s business name, based on this history.

The rules formed from this data accumulation become stricter over time. As a result, the longer a merchant account is open, the more approval rates might decrease.

Video: Increase Revenue By Decreasing Decline Rates

How to Navigate Declining Approval Rates

Does this mean you can’t improve the situation? Absolutely not. You might need a new merchant account, a different DBA, or the correct categorization of your industry type. For example, if you’re selling supplements and categorized as a nutritional brick-and-mortar store versus an aggressive online marketing company, one has a statistically higher likelihood of fraud. Therefore, optimizing these aspects can significantly improve the way you accept payments.

But here’s an essential takeaway: If you’ve had the same merchant account for more than 3 years your TC40 data is adding up and it is very likely that you are not making all the money that you should be, and you can get a higher approval rate with a new merchant account.  

The Bigger Picture

This is a high-level overview of the complex credit card transaction ecosystem. Remember, things can get even more nuanced when you consider different issuing banks, which may have varying approval rates. The key is understanding this intricate chaos and working towards optimizing your payment acceptance process. 

Knowing the ins and outs of this process not only gives you a better understanding of your business’s financials but also empowers you to

 take proactive measures against declining approval rates, helping your business thrive in the long run. 

Ready to let the experts at Easy Pay Direct optimize your online payments? Click the button below and take advantage of:

Decline recovery, Chargeback Mitigation, Transaction Routing, White Glove Service with a single point of contact, Recurring Billing, Mobile Payments, and more.

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