Case Study: Leading OTA Avoids Insufficient Funds Declines
The Challenge
A leading global online travel agency (OTA) watched millions slip away due to non-sufficient funds (NSF) declines. The average transaction value (ATV) of an at-risk declined transaction exceeded $1,000, making each loss particularly costly. With a high ATV, every declined booking whether it’s a hotel, flight, or car rental, translated into a significant financial hit.
High-spend, loyal travelers faced frustration when their payments failed, often abandoning their bookings altogether. Instead of attempting the transaction again, many turned to competitors. Once a traveler switched to another platform, they were likely to continue booking their entire trip there, leading to long-term customer loss and a revenue gap.
Pain Points
1. Revenue Loss
Declined payments meant lost revenue and abandoned bookings. Travelers who switched platforms often never returned, and more critically, they were likely to book their entire trip – flights, hotels, and car rentals – with the competitor. This not only led to immediate losses but also impacted customer lifetime value (LTV) and a frustrated marketing team.
2. Erosion of Customer Trust
High-value travelers expect seamless transactions. Payment failures led to frustration, weakened brand loyalty, and increased customer churn as travelers sought more reliable platforms.
3. High Cost & Inefficiency of Third-Party Retries
Relying on third-party retry services came at a high cost – fees piled up, often without a successful recovery. While designed to help recover failed payments, these solutions introduced additional complexities and inconsistent results, making cost management a continuous challenge for merchants.
Results
With Kipp, this travel merchant avoided 12.9% NSF declined transactions, ensuring customers could complete their bookings without interruption. Every successful decline avoided meant more trips booked and fewer lost sales.
Kipp’s real-time NSF solution enabled direct collaboration between the merchant and card issuers to optimize the handling of at-risk transactions. When a transaction is about to be declined due to NSF, the issuer sends an API call to Kipp to check if the merchant is willing to participate in the cost of risk by paying a percentage of the transaction. This solution requires no integration from the merchant.
Number of declined transactions saved by Kipp (%)
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Benefits:
- Increased booking completion: Customers could finalize purchases seamlessly, reducing drop-offs and improving revenue retention.
- Stronger customer relationships: A smoother payment experience led to higher satisfaction and long-term loyalty.
- Revenue protection: Preventing declines meant keeping high-value travelers engaged and reducing customer churn.
Bottom Line
By partnering with Kipp, the OTA increased their approval rate with minimum cost and enhanced customer satisfaction. This proactive approach ensured smoother transactions, higher booking completion rates, and a stronger competitive edge in the travel industry.
