Every payment decision involves a critical consideration of trade-offs. Merchants must weigh the investment required to achieve higher approval rates against the potential revenue loss from declines. For merchants, effectively managing this balance is essential for success.
The Impact of Payment Declines
A payment decline extends far beyond the immediate loss of a single sale. It can profoundly impact customer relationships, potentially diminishing trust and directly limiting overall business growth. Consider a common, frustrating scenario: A customer proceeds to checkout with a full shopping cart, or a recurring monthly subscription nears its renewal date, only for the transaction to decline. Frequently, the reason cited is “insufficient funds,” a leading cause of preventable payment failures that costs merchants billions annually.
Such instances result in immediate and direct revenue loss for merchants. They can also lead to significant customer dissatisfaction, which often contributes to churn and prevents future transactions. These preventable declines add up significantly, hurting a merchant’s finances and customer relationships.
How to balance payment costs and approval rates
Merchants have often faced a difficult choice: either aggressively pursue high approval rates, which can incur significant costs, or prioritize lower transaction fees, thereby accepting a higher incidence of declines. This traditional dilemma often leads to a forced compromise, limiting the maximization of every potential transaction.
Kipp introduces a fundamentally different approach.
With Kipp, merchants can convert a “soft decline” due to insufficient funds into an immediate approval. Kipp offers merchants the unique capability to provide a small, targeted incentive to the card issuer when a transaction would otherwise fail due to insufficient funds.
This ensures merchants pay a premium only for transactions that were successfully avoided from a decline. There are no fees to transactions that would have been approved without intervention. This model directly aligns payment costs with positive business outcomes, transforming potential losses into revenue. Kipp requires no technical integration. It operates seamlessly in the background, without disrupting existing payment processing workflows or necessitating modifications to current systems.
Merchants that work with Kipp achieve higher approval rates without necessarily increasing their overall payment costs. This represents a true evolution in payment optimization, moving beyond traditional trade-offs to unlock new revenue streams.
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