Use merchant data to reduce false positive declines
To combat the inherent risk involved when the customer’s card is not present, card issuers generally use automated fraud filters to approve or decline credit card transactions. However, sometimes, these tools can be overzealous, resulting in legitimate credit card purchases being declined by the card issuer. These “false declines”—when a legitimate card transaction is rejected by mistake—represent a significant challenge in the industry.
With Kipp, you can enhance your existing fraud model and approve some transactions you would otherwise decline through collaboration with Kipp’s registered merchants. These merchants are prepared to share data points that they collect, such as device ID, fraud score from their anti-fraud provider, and other data points that you do not receive from the standard network authorization request.
For example, you may lack a comprehensive understanding of individual consumers who hold multiple credit cards across different financial institutions. You might raise a concern when a card is used for the first time on a merchant’s website, unaware that the customer has been making purchases on that site for years using a card from another issuer. By enriching the model with merchant data, you can reduce false declines.
Benefits
Improved data-driven decision-making
With access to real-time merchant-provided data on the cardholder, you can approve more transactions that you would have otherwise considered fraudulent.
Maintain top-of-wallet position
More authorizations mean greater customer satisfaction and increased loyalty. Cards that are declined get replaced with others.
Increased revenue
Earn more by authorizing transactions that would otherwise be declined, increasing interchange revenue, and generating incremental revenue from merchant premiums collected by Kipp.
Ask kipp
Answers to the most common questions about Kipp
What type of cards does Kipp support?
All credit cards. Kipp also supports debit cards.
From a cardholder and issuer perspective, can a transaction be approved over one’s credit limit?
Card issuers may choose to authorize transactions that exceed a cardholder’s credit limit based on their assessment. This practice, known as a “shadow limit,” is applied on a case-by-case basis and not universally across all merchants or transactions. It typically depends on the issuer’s policies and the cardholder’s overall creditworthiness (amongst a range of other factors).
Who assumes financial liability of the overdraft?
The issuer. Network guidance remains the same – there is no change in liabilities. The default/credit liability remains with the issuer. For fraud chargebacks, the liability remains with the merchant, unless it is a 3DS transaction in which case the issuer carries the liability.
Does the cardholder experience a decline?
No, from a cardholder perspective the transaction will simply be an authorized transaction.
What happens if a transaction is authorized but not settled?
Kipp receives an indication from the issuer on the settlement of all transactions it was involved in through its API. A billing event will only be created upon settlement of a transaction.
i.e. the merchant will only be charged on transactions that were authorized (with Kipp’s involvement) and settled.
How does Kipp generate revenue, and what is its business model?
Kipp charges a fee to the merchant on top of the price that the issuer requests. For example, if an issuer sets an Ask price of 2%, Kipp will charge the merchant 2.5%.
How does Kipp's platform ensure there is no latency in approving legitimate transactions?
Kipp’s approval flow works outside of the network-based authorization flow and requires no additional action from cardholders. Legitimate transactions are seamlessly approved within less than 200 milliseconds without any latency or customer impact.
How many merchants does Kipp have as part of its network?
Kipp has established extensive merchant coverage and can quickly add specific merchants upon request, without requiring any additional integrations.
How does an issuer set pricing on Kipp’s platform?
An issuer determines pricing based on a range of parameters eg. dollar amount, percentage beyond the credit limit, cardholder’s credit score, and many other factors deemed relevant by the issuer.
To enable easy setup and monitoring, Kipp provides issuers with a Control Center (portal), where issuers can segment their cardholder base and build pricing/scenario rules for situations when they might be prepared to accept an over-the-limit transaction.
