Case Study: Customer-Initiated Transactions (CIT)
The Challenge
For the Senior Director of Global Payments at a leading digital goods merchant where most transactions are CIT (customer-initiated transactions), payment declines – particularly those due to insufficient funds (NSF) – posed a major challenge.
Customers expect instant delivery, and any payment failure can lead to abandoned transactions. Unlike subscription-based merchants that can retry failed payments, most CIT merchants have just one shot to complete the sale.
Each decline wasn’t just a lost sale – it risked losing a customer for good. High decline rates led to revenue loss, increased support inquiries, and damaged trust. Customers didn’t understand failed payments and blamed the merchant, leading to frustration and brand damage. With no visibility into decline reasons, the CIT merchant needed a way to improve authorization rates without third-party recovery interventions.
Pain Points
1. Revenue Loss
A declined transaction wasn’t just one missed sale – it often meant losing a customer entirely. CIT based merchants can’t retry payments, making each failed transaction a direct hit to revenue and retention.
2. Customer Frustration
Customers expect a seamless checkout experience. When a payment is declined, they often perceive it as a merchant issue rather than a banking problem, leading to frustration, abandoned purchases, and lower return rates.
Results
With Kipp, this merchant achieved a 39% save rate, significantly improving their bottom line. Every recovered payment meant a completed sale, fewer abandoned carts, and stronger customer retention.
Kipp integrates with card issuers in real time to prevent NSF-related declines. When a transaction is about to be declined, the issuer sends an API call to Kipp to check whether the merchant is prepared to pay the issuer’s predefined % premium, for the issuer to accept the overdrawn/overlimit transaction.
Number of declined transactions saved by Kipp (%)
Digital Goods
0
%
Benefits:
- Higher approval rates: More transactions successfully processed, reducing lost sales and customer churn.
- Better customer experience: Fewer disruptions in the checkout process mean increased customer satisfaction.
- No integration needed: The merchant implemented Kipp’s solution without requiring additional technical resources.
Bottom Line
With Kipp, CIT based merchants can significantly reduce NSF-related payment declines, ensuring a smoother purchasing experience for customers and maximizing revenue recovery.
