Electronic Retailer - March 2012 - 37

A successful payments management program including advanced logic to analyze declines can yield as much as 4 percent to 25 percent recovery of previously uncollectable transactions; even those that have already been re-attempted many times and failed.

strategies to get the payment authorized. Evaluating the issuer’s possible billing lifecycle is an example whereby a merchant, armed with the right information about a particular cardtype, can submit a transaction at the optimal time to receive a successful authorization. • Process Advanced logic solutions give merchants a second chance at recovering lost revenue. Although the service is customized based on each client’s needs, a general outline of the process is described here. • The merchant runs their current recycle process on declined authorizations. • The merchant creates a “dead customer” file. The file is then submitted into Verifi’s advanced Decline Salvage platform. If using a third-party vendor for this functionality, system integration should include secure FTP protocols and PGP encryption in order to protect the merchant’s sensitive data. • The file is analyzed and a declined transaction profile is developed. This profile includes specific information regarding the merchant, their industry, client account information, and banking specifics. • Based on the parameters outlined in the profile, a process is created including advanced logic to resubmit previously declined cards to maximize the likelihood of a successful authorization. Merchants have the option of developing this sophisticated logic in-house or hiring a third-party firm to manage the process for them. If resources are available, an internal deployment could be the more cost-effective option. However, there are benefits to using a third party to manage the recovery process. Firms that are experts in payments and risk management have the experience and knowledge of issuer processes that help create more advanced logic to overcome declined authorizations. Companies that have achieved critical mass in covering the United States’ total issued card base also have the ability to increase authorizations at a network level. • Benefits To appropriately measure the success of any recycle program the merchant should perform its own return on investment (ROI) analysis. During this process, it must take into consideration the fee for each transaction retry, along with the cost of goods provided to the customer and the potential revenue recovery, in addition to the cost of implementing the service. This analysis will help determine which transactions should be evaluated and retried and which are not worth the effort. A successful payments management program including advanced logic to analyze declines can yield as much as 4 percent to 25 percent recovery of previously uncollectable transactions; even those that have already been re-attempted many times and failed. A diligent and consistent ROI evaluation can help a merchant decide which approach is right for their business. Jeff Sawitke is chief product officer at Verifi. Visit the company’s website at www.verifi.com. 37

expenses. Furthermore, customers benefit from uninterrupted service, reduced negative experiences and an account update process where they don’t have to be involved. • Recurring Billing Transaction Recycling Most merchants have developed logic based on such parameters as payment types and/or frequency, product lines, customer segment, revenue goals and banking agreements to retry a declined payment. These internal rules are set up to automatically follow a predefined process for retrying a transaction for a defined period of time in an attempt to gain approval without involvement from the merchant or the customer. If the transaction continues to fail after the specified time period, merchants often notify the customer of the failed attempts in an effort to get the customer to respond. If this also fails, the declined payment is written off or is sent to collections. • Collections Ultimately, if the merchant ships products that the customer has not paid for through the traditional recurring billing channel, the account is sent to collections. For obvious reasons this can cause an incredibly negative experience for the customer and can be expensive and time consuming for the merchant.

Using Advanced Logic in the Revenue Recovery Process
Unfortunately, many merchants’ decline recycling strategies start and end with the final two processes described above. Combined, the approaches listed above reverse a percentage of declines, but a considerable amount of revenue is still left on the table resulting in a loss of potential profit to the merchant leaving them vulnerable to future revenue shortfalls. Deploying a solution with more robust logic, such as Verifi’s Decline Salvage solution, takes traditional recycling logic to the next level. For each declined transaction, advanced logic is combined with an examination of credit card characteristics, extensive knowledge of the payment and risk management industry practices, and the merchant’s profile to determine the best

March 2012 | electronicRETAILER



Electronic Retailer - March 2012

Table of Contents for the Digital Edition of Electronic Retailer - March 2012

Chasing Shadows in Mobile Retail
Calendar of Events
Industry Reports
eMarketer Research
IMS Retail Rankings
Jordan Whitney’s Top Categories
Lockard & Wechsler’s Clearance & Price Index
Cover Story CarMD Makes a DR Diagnosis
Selling in a Fragmented World
Case Study DR Marketing North of the Border
Advertiser Index
Bulletin Board
Classifieds
Electronic Retailer - March 2012 - Calendar of Events
Electronic Retailer - March 2012 - cover2
Electronic Retailer - March 2012 - 3
Electronic Retailer - March 2012 - 4
Electronic Retailer - March 2012 - 5
Electronic Retailer - March 2012 - 6
Electronic Retailer - March 2012 - 7
Electronic Retailer - March 2012 - 8
Electronic Retailer - March 2012 - Industry Reports
Electronic Retailer - March 2012 - 10
Electronic Retailer - March 2012 - 11
Electronic Retailer - March 2012 - 12
Electronic Retailer - March 2012 - 13
Electronic Retailer - March 2012 - eMarketer Research
Electronic Retailer - March 2012 - 15
Electronic Retailer - March 2012 - IMS Retail Rankings
Electronic Retailer - March 2012 - 17
Electronic Retailer - March 2012 - Jordan Whitney’s Top Categories
Electronic Retailer - March 2012 - 19
Electronic Retailer - March 2012 - Lockard & Wechsler’s Clearance & Price Index
Electronic Retailer - March 2012 - 21
Electronic Retailer - March 2012 - 22
Electronic Retailer - March 2012 - 23
Electronic Retailer - March 2012 - Cover Story CarMD Makes a DR Diagnosis
Electronic Retailer - March 2012 - 25
Electronic Retailer - March 2012 - 26
Electronic Retailer - March 2012 - 27
Electronic Retailer - March 2012 - Selling in a Fragmented World
Electronic Retailer - March 2012 - 29
Electronic Retailer - March 2012 - 30
Electronic Retailer - March 2012 - 31
Electronic Retailer - March 2012 - 32
Electronic Retailer - March 2012 - 33
Electronic Retailer - March 2012 - Case Study DR Marketing North of the Border
Electronic Retailer - March 2012 - 35
Electronic Retailer - March 2012 - 36
Electronic Retailer - March 2012 - 37
Electronic Retailer - March 2012 - 38
Electronic Retailer - March 2012 - 39
Electronic Retailer - March 2012 - 40
Electronic Retailer - March 2012 - 41
Electronic Retailer - March 2012 - 42
Electronic Retailer - March 2012 - Bulletin Board
Electronic Retailer - March 2012 - Classifieds
Electronic Retailer - March 2012 - 45
Electronic Retailer - March 2012 - 46
Electronic Retailer - March 2012 - cover3
Electronic Retailer - March 2012 - cover4
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