Are Gremlins Really to Blame For Your Card Payment Woes?

Author: Steve Glover, Payment Projects Lead

I listened to a podcast recently with Patrick McKenzie. Patrick is a serial software entrepreneur and business all-rounder who worked at Stripe and still advises them on product and company strategy. It’s fair to say he’s picked up a thing or two about payments along the way.

He was asked to discuss the most likely reason for bank declines. His answer… “Gremlins”.

The credit card ecosystem is built on a stitched-together patchwork of legacy systems that have existed for decades. Sometimes, somewhere, something goes a little wrong in that patchwork. Nobody knows why. And nobody goes looking for fear that the whole thing will fall apart! Hence his answer, gremlins.

However, spurious bank declines are just one problem that merchants are trying to solve when it comes to increasing conversion. The other, even bigger, problems are (i) preventing actual fraud and (ii) minimising false positives whereby the merchant, not the bank, blocks the customer because it looks like fraud but then it turns out it wasn’t. This forces the customer to go elsewhere, sometimes for good.

As much as I like the idea of furry little creatures sitting in a server room somewhere wreaking havoc on banking systems, I prefer to believe that these problems can be codified and solved, at least partly.

Patrick’s insight is interesting because it speaks to the difficulty many have, even insiders, in addressing these issues.

Fraud and false declines cost merchants hundreds of billions of dollars in lost revenue each year. On top of this, losses are growing quicker than inflation as fraudsters become more sophisticated. If you’re a merchant, you can’t afford not to be on top of this.

At Bankhawk, we understand more and more merchants are landing on card schemes’ fraud programmes in the last year or two. Conversely, we’ve also helped some merchants increase their online turnover by up to 10%, while also reducing costs, through better internal and external fraud strategies. This could be the equivalent of opening a handful of new stores but at a fraction of the cost and effort.

In my next post, I’ll break down how top merchants are implementing best practices to address these issues, including which KPIs you should be measuring and specific tactics to keep good customers coming back to your site.

Bankhawk helps enterprise merchants achieve more from payments. If you want to learn or have any questions, please send me a message.

P.S.: the podcast was Conversations with Tyler, which I would also recommend.