New research reveals a false-positive decline may be a bigger threat than transaction fraud and can seriously erode customer loyalty and pushes many consumers to abandon the issuer or merchant connected with the erroneous decline.
JAVELIN new Future-Proofing Card Authorization report, which analyzes the prevalence of false-positive in the U.S and explore technological solutions ” particularly EMV and mobile ” that can help improve the relationship between consumers and the issuer or merchant.
Today’s card authorization rules and strategies cast a wide net to stop fraudsters, but false-positive declines are detrimental and costly in their own right. Javelin estimates that 15% of all cardholders have had at least one transaction incorrectly declined in the past year, representing an annual decline amount of almost $118 billion. Nearly 4 in 10 (39%) declined cardholders report that they abandoned their card after being falsely declined.
Card issuers face a sticky situation: Employ lax card authorization strategies and risk losing revenue to fraud, or use strict authorization rules and risk losing legitimate revenue. Both options have the potential to alienate their customer base, as no consumer wants to deal with either fraud or falsely denied transactions. Fortunately, new technology such as EMV and mobile can help improve card authorization practices and reduce false-positive rates.
The report, Future-Proofing Card Authorization, includes a survey of 3,200 U.S. adults. In addition, it includes a market sizing of false-positive transactions derived by our Javelin analysts.
JAVELIN provides strategic insights into customer transactions, increasing sustainable profits for financial institutions, government, payments companies, merchants and other technology providers. Javelin’s independent insights result from a uniquely rigorous three-dimensional research process that assesses customers, providers, and the transactions ecosystem.
For data, background and forecasts on Transactions: Search CardWeb.com’s CardFlash® Library of more than 58,000 archived articles; Access CardWeb.com’s CardData® for current and historical Performance, Portfolios, Profiles, etc. Visit RAM Research® (ramresearch.com) for quarterly and annual forecasts covering more than 150 metrics. [complimentary or deeply discounted access to CardWeb.com subscribers].
Additional database resources include CardWeb.com’s CardExecs® – comings & goings of payments movers & shakers; CardWeb.com’s CardWatch® – ears & eyes on marketing globally (57K items); and CardWeb.com’s CardPixes® – form & function of card design (7K items).