Payment Management System Evolution: Say Goodbye to Payment Recovery, Embrace First-Pass Approvals
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With rapidly advancing technology and increasing customer demands, it's more important than ever for companies to have a streamlined and cost-effective approach to their business operations.
An often overlooked area where businesses can significantly improve both is in their payment management system. Most systems wait for the payment to fail, then employ methods to recover the failed payment. This is the least effective and most costly way to handle your payments.
The best strategy is to shift focus towards using an advanced payment management system that utilizes all the payment data to route payments in a manner that will get them approved on the first-pass. These systems still offer retries as a last resort and incorporate the decline data to determine the optimal chances of getting your invoices paid. Leveraging the retry system's access to past transaction data enhances the efficiency of recycle/decline recovery compared to standalone retry systems. This approach not only enhances customer satisfaction but also reduces unnecessary costs associated with expensive platform fees and multiple transaction attempts.
The Downside of Traditional Payment Management Systems
Traditional payment providers often use outdated systems, lacking the sophistication for high first-pass approval rates. Instead of optimizing first-attempt transaction approval, they treat each transaction the same. Failures lead to multiple retries, causing extra fees, frequent failures, and profit margin erosion, reducing effective collection rates. We expand on these inefficiencies and the consequences below.
Traditional payment providers exhibit inefficiencies that can be summarized as follows:
- Treating all payments the same
- Mapping all payment data to their internal platform to more easily standardize integrations and transaction routing.
- Failure to pass all data to all acquirers/networks leading to a higher probability of false declines.
These are the results of those inefficiencies:
- High Decline Rates: Without advanced algorithms and rules to maximize approval chances, initial transaction declines are common. some text
- According to Visa and Mastercard, “An average of 15% of recurring credit card transactions are declined. However, in some industries, decline rates can reach above 30%.”
- Multiple Retries: To compensate for high decline rates, traditional providers may retry transactions several times.
- Increased Costs: Each retry risks the invoice never getting collected and often comes with an additional fee, leading to higher overall business costs.
- Lowered Effective Collection Rate: A high effective collection rate indicates a successful payment strategy, reflecting the ability to convert declined payments into approved ones.
- Customer Frustration: Frequent declines and retries can frustrate customers, leading to a poor experience and potential loss of business.
- Lack of Transparency: Merchants might struggle to obtain valuable customer card or decline data from their provider due to reliance solely on 'internal codes'. Access to raw processor, network, token, AVS, and risk data is crucial for effectively managing a high-performance billing company.
The Benefits of Modern Payment Management Systems
Modern payment providers utilize sophisticated systems designed to maximize first-pass approvals. These systems meticulously analyze all the payment data points of each transaction and apply various factors in real-time to determine the optimal route for an individual transaction to be approved. By minimizing retries, they save sales, cut costs, enhance customer satisfaction, and significantly boost the merchant's collection rate.
Key Aspects to Consider in a Modern Payment Management System:
1. Ensure the provider offers Account Validation and integrates completely with the best-in-class processors such as Nuvei, Worldpay, and Paymentech with the full support of traditional models like TSYS. This is beyond the brand as each acquirer typically has multiple platforms or integrations. It’s important to ensure your provider integrations to the platform with each provider best suited to your business (e.g. Worldpay VAP vs. Worldpay WPG or CORE).
2. Seek a provider who offers transparent data and reporting so you can gain clear insights for every transaction.
3. Seek a partner, not just a provider, in payments. Payments can be messy. It’s best to have a partner in payments instead of a “set it and forget it” system.
Key benefits of these advanced payment systems include:
1. Higher First-Pass Approval Rates: These systems leverage data and advanced algorithms to significantly increase the likelihood that a transaction will be approved on the first attempt.
2. Cost Efficiency: Reducing the number of retries results in lower additional fees, which translates to significant cost savings and enhances the efficiency of the collection rate.
3. Improved Cash Flow: With more transactions being approved on the first attempt, businesses experience smoother cash flow and reduced payment delays.
4. Enhanced Customer Experience: Customers enjoy a seamless payment experience with fewer declines and retries, increasing satisfaction and loyalty.
Why Businesses Should Transition to an Advanced Payment Management System
Transitioning to a modern payment provider that prioritizes first-pass approvals and offers intelligent retry mechanisms can be a game-changer for businesses. Here’s why:
1. Maximizes Revenue: Reducing the number of retries directly translates to lower transaction costs, positively impacting the bottom line.
2. Operational Efficiency: Advanced payment systems require less manual intervention and oversight, freeing up resources to focus on core business activities.
3. Competitive Advantage: Offering a smooth, hassle-free payment experience can set a business apart from competitors and attract and retain more customers.
4. Scalability: As businesses grow, modern payment systems can scale seamlessly, handling increased transaction volumes without compromising on approval rates or customer experience.
Why Revolv3 Is the Ultimate Payment Processing Partner
The era of relying on traditional payment recovery methods is obsolete. Businesses need to adapt to the evolving landscape by adopting payment providers that offer high first-pass approval rates with fewer declines. Revolv3 offers a modern payment management system that goes beyond processing transactions; we're your strategic partner, helping you maximize your revenue potential and build your brand in the long run.
Our data-driven approach will help you make informed decisions to optimize conversions and boost revenue. Our adaptable solutions can accommodate your evolving needs as your customer base and revenue grow. The best part is that we don't charge for failed payments.
Schedule a demo with one of our payment experts to learn how Revolv3 can help you reduce fees and increase your effective collection rate.
With rapidly advancing technology and increasing customer demands, it's more important than ever for companies to have a streamlined and cost-effective approach to their business operations.
An often overlooked area where businesses can significantly improve both is in their payment management system. Most systems wait for the payment to fail, then employ methods to recover the failed payment. This is the least effective and most costly way to handle your payments.
The best strategy is to shift focus towards using an advanced payment management system that utilizes all the payment data to route payments in a manner that will get them approved on the first-pass. These systems still offer retries as a last resort and incorporate the decline data to determine the optimal chances of getting your invoices paid. Leveraging the retry system's access to past transaction data enhances the efficiency of recycle/decline recovery compared to standalone retry systems. This approach not only enhances customer satisfaction but also reduces unnecessary costs associated with expensive platform fees and multiple transaction attempts.
The Downside of Traditional Payment Management Systems
Traditional payment providers often use outdated systems, lacking the sophistication for high first-pass approval rates. Instead of optimizing first-attempt transaction approval, they treat each transaction the same. Failures lead to multiple retries, causing extra fees, frequent failures, and profit margin erosion, reducing effective collection rates. We expand on these inefficiencies and the consequences below.
Traditional payment providers exhibit inefficiencies that can be summarized as follows:
- Treating all payments the same
- Mapping all payment data to their internal platform to more easily standardize integrations and transaction routing.
- Failure to pass all data to all acquirers/networks leading to a higher probability of false declines.
These are the results of those inefficiencies:
- High Decline Rates: Without advanced algorithms and rules to maximize approval chances, initial transaction declines are common. some text
- According to Visa and Mastercard, “An average of 15% of recurring credit card transactions are declined. However, in some industries, decline rates can reach above 30%.”
- Multiple Retries: To compensate for high decline rates, traditional providers may retry transactions several times.
- Increased Costs: Each retry risks the invoice never getting collected and often comes with an additional fee, leading to higher overall business costs.
- Lowered Effective Collection Rate: A high effective collection rate indicates a successful payment strategy, reflecting the ability to convert declined payments into approved ones.
- Customer Frustration: Frequent declines and retries can frustrate customers, leading to a poor experience and potential loss of business.
- Lack of Transparency: Merchants might struggle to obtain valuable customer card or decline data from their provider due to reliance solely on 'internal codes'. Access to raw processor, network, token, AVS, and risk data is crucial for effectively managing a high-performance billing company.
The Benefits of Modern Payment Management Systems
Modern payment providers utilize sophisticated systems designed to maximize first-pass approvals. These systems meticulously analyze all the payment data points of each transaction and apply various factors in real-time to determine the optimal route for an individual transaction to be approved. By minimizing retries, they save sales, cut costs, enhance customer satisfaction, and significantly boost the merchant's collection rate.
Key Aspects to Consider in a Modern Payment Management System:
1. Ensure the provider offers Account Validation and integrates completely with the best-in-class processors such as Nuvei, Worldpay, and Paymentech with the full support of traditional models like TSYS. This is beyond the brand as each acquirer typically has multiple platforms or integrations. It’s important to ensure your provider integrations to the platform with each provider best suited to your business (e.g. Worldpay VAP vs. Worldpay WPG or CORE).
2. Seek a provider who offers transparent data and reporting so you can gain clear insights for every transaction.
3. Seek a partner, not just a provider, in payments. Payments can be messy. It’s best to have a partner in payments instead of a “set it and forget it” system.
Key benefits of these advanced payment systems include:
1. Higher First-Pass Approval Rates: These systems leverage data and advanced algorithms to significantly increase the likelihood that a transaction will be approved on the first attempt.
2. Cost Efficiency: Reducing the number of retries results in lower additional fees, which translates to significant cost savings and enhances the efficiency of the collection rate.
3. Improved Cash Flow: With more transactions being approved on the first attempt, businesses experience smoother cash flow and reduced payment delays.
4. Enhanced Customer Experience: Customers enjoy a seamless payment experience with fewer declines and retries, increasing satisfaction and loyalty.
Why Businesses Should Transition to an Advanced Payment Management System
Transitioning to a modern payment provider that prioritizes first-pass approvals and offers intelligent retry mechanisms can be a game-changer for businesses. Here’s why:
1. Maximizes Revenue: Reducing the number of retries directly translates to lower transaction costs, positively impacting the bottom line.
2. Operational Efficiency: Advanced payment systems require less manual intervention and oversight, freeing up resources to focus on core business activities.
3. Competitive Advantage: Offering a smooth, hassle-free payment experience can set a business apart from competitors and attract and retain more customers.
4. Scalability: As businesses grow, modern payment systems can scale seamlessly, handling increased transaction volumes without compromising on approval rates or customer experience.
Why Revolv3 Is the Ultimate Payment Processing Partner
The era of relying on traditional payment recovery methods is obsolete. Businesses need to adapt to the evolving landscape by adopting payment providers that offer high first-pass approval rates with fewer declines. Revolv3 offers a modern payment management system that goes beyond processing transactions; we're your strategic partner, helping you maximize your revenue potential and build your brand in the long run.
Our data-driven approach will help you make informed decisions to optimize conversions and boost revenue. Our adaptable solutions can accommodate your evolving needs as your customer base and revenue grow. The best part is that we don't charge for failed payments.
Schedule a demo with one of our payment experts to learn how Revolv3 can help you reduce fees and increase your effective collection rate.
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