Turning Declined Transactions into Loyal Customers: A Case Study on Merchant-Initiated Transactions (MIT)
The Challenge
A top-tier streaming content provider, offering a wide array of TV shows and movies, faced a growing problem: the negative impact of card declines. This merchant depended on Merchant Initiated Transactions (MIT), recurring payments to maintain uninterrupted service for subscribers.
The merchant’s VP of Payments identified a critical issue: declined payments not only blocked subscribers from enjoying key moments like a show’s finale or a pivotal soccer match but also fueled frustration and misplaced blame on the service. This strained the brand’s reputation and inundated customer support with complaints. Attempts to update payment details frequently led to canceled plans or downgraded subscriptions, driving revenue loss and escalating churn rates.
Fallout from Declined Transactions
1. Loss of Revenue
Declined transactions undermine investments in branding, marketing, and customer acquisition,
and lead to lost sales opportunities.
2. Frustrated Customers
Payment declines cause a range of negative emotions – from mild annoyance to significant frustration
over service disruptions, significantly affecting the overall customer experience.
3. Negative Impact on Customer Loyalty
Poor transaction experiences can erode customer trust and loyalty, reducing the likelihood of repeat business and harming long-term relationships.
The streaming merchant needed a cost-effective, innovative way to boost authorization rates and minimize declines without having to build expensive integrations with third parties.
Kipp’s Solution
Kipp offers a unique solution that helps subscription-based services recover legitimate transactions without integration. By helping merchants collaborate directly with card issuers, more transactions
that are at risk of being declined due to insufficient funds “NSF” can be authorized.
Merchants simply set a premium price they’re willing to pay to offset the issuer’s risk. When a transaction
is at risk of being declined due to insufficient funds, Kipp intervenes to save the sale enabling real-time solutions that align the merchant’s bid with the issuer’s risk acceptance criteria.
The Results
The merchant joined Kipp’s merchant program and determined the price they were willing to pay the card issuer to avoid a non-sufficient fund decline. They ultimately benefited from a save rate of 35% for transactions that would have otherwise been declined.
Kipp’s solution ensured subscribers could continue accessing their content without interruption, even during temporary over-the-limit or overdraft issues. As a recurring subscription service, every saved payment means the customer remains active for another month, and increases the likelihood of their continued engagement in the future.
Number of declined transactions saved by Kipp (%)
Entertainment
0
%
Benefits:
- Significant conversion uplift: Experience higher transaction success rates by ensuring more payments are approved.
- Only pay for successful transactions: Merchants only incur fees on transactions that would have been declined, ensuring cost-efficiency while maximizing approvals.
- Increase transaction volume via issuer collaboration: By paying issuers a premium, merchants can avoid NSF declines.
- Avoid the decline: Ensure more purchases are approved the first time, without the need for a post decline recovery flow.
- No integration required: Implement Kipp effortlessly without the need for additional technical integrations.
Bottom Line
By partnering with Kipp, MIT merchants – like this streaming content provider – can effectively mitigate the challenges of declined payments. Kipp enables merchants to deliver uninterrupted service, allowing them to benefit from higher retention rates and greater customer satisfaction and loyalty. In an era where customer loyalty is crucial , partnering with Kipp ensures your transactions are seamless, your customers are satisfied, and creates new revenue opportunities.
Ensure your customers enjoy uninterrupted experiences—reach out to learn more.
