What is yps on my credit card?

While an increased spend on credit cards has led to a surge in the number of e-payments being processed every day, it has also given rise to some challenges for the users and businesses alike.

The biggest of their woes is credit card declines. In this post, we will tell you everything you need to know about dealing with credit card declines and most importantly, how you can recover ‘lost revenue’ due to these declines.

Feel free to deep dive into the segment you’d like to know more about,

What is a credit card decline?

Breaking down payment failure

Strategies to reduce credit card declines

A proactive approach to failed payments

A credit card decline occurs if, for a particular reason, a credit card payment cannot be processed and the transaction is declined by the payment gateway, the processor, or the bank issuing the money. It’s a common problem faced by businesses that process recurring payments.

There could be a variety of reasons for this. According to Visa and Mastercard, an average of 15% of recurring payments are declined, but for some industries, the rate can be double that.

For a better purview of how credit card payments are processed online, check out this piece on payment gateways — the credit card machines of the web.

There are two common reasons for declines,

As David Goodale, CEO of Merchant Accounts writes, “If you think of the payment process as a chain of events, there are several “handshakes” that must occur in order for a transaction to complete. If one of these parties in the chain is down, interrupted, or unavailable during the transaction resolution, a problem will occur.”

In that same sense, soft declines occur when the bank issuing the funds has approved the payment, but the transaction fails somewhere else.

Hard declines, by contrast, occur when the issuing bank does not approve payment for processing. Hard declines usually require the payment card information to be updated before the transaction will be successful, regardless of how many retries are attempted.

Irrespective of what’s causing the payment failure, every time a card is declined, your gateway (or processor) issues two accompanying, but different pieces of information,

An error code: It is typically a number, a code that identifies the error to the system.

An error message: It is typically in words, a message that identifies the problem to you and your customer.

Both codes and messages are recorded for you. Your gateway puts them down so you can take a look at the failed payment later.

Say your customer is in the process of checking out and has just hit the ‘pay’ button after giving their information. If their card is declined, they will see an error code and an error message. Something along the lines of,

Unfortunately, there are no standardized error codes that might help them make sense of what went wrong. Error codes differ from gateway to gateway. Authorize.Net, for example, throws up error codes as you see in the screenshot above: E00005 and E00027. In the same way, Braintree throws up error codes like 2046 and 2048.

Here’s the thing though,

Error messages are vague

But, why are they vague?

Ethoca, a charge and fraud protection company contacted several card issuers and asked. Here’s what they discovered:

“First, card issuers are protecting their cardholders’ privacy. They are reluctant to share with merchants that the cardholder is behind on paying their bill, maxed out on their credit card, or have lost their card.

The second reason is that if the purchases were made by fraudsters, providing this level of decline information could potentially allow fraudsters to reverse engineer the fraud system and learn how to bypass the fraud checks.”

That being said in most cases, the customer is left to wonder, “Why was my credit card declined?” It’s time to understand the few common error messages that you might come across to make yours and your customer life better.

Most of these credit card declines can be avoided and those that turn into failed payments can be recovered by understanding the mechanics of failed payments.

Integrating these strategies with your accounts receivable and billing software can help prevent these declines and reduce the chance for loss of revenue.

The varied reasons notwithstanding, 52% of the orders merchants thought were suspicious transactions turned out to be good orders that were caught in the fraud nets.

These declines were accompanied by messages like ‘do not honor’ and ‘processor declined’.

They were good orders that could have been fulfilled.

When this is done to safeguard against possible fraudulent transactions, it is often a result of a simpler problem such as outdated card information, insufficient funds, system failure, or simply because the business is located in a country different than that of the card issuer.

In essence, part of battling card declines is fine-tuning the fraud filters in your control so they don’t (for the most part) get in the way of good orders.

Here’s how you do it,

This fraud is declared by your gateway and is entirely in your control. Most gateways allow merchants to customize the rules they have in place to catch a suspicious transaction.

Your gateway allows you to either ignore, block, or flag payments that,

Blacklists and whitelists are among the top methods used by companies in fraud management. Rather than blacklist and block transactions like these (that your gateway perceives are fraudulent), it might make sense to allow the transactions and flag it for a review later (whitelisting and calling these transactions safe can be just as bad).

To be cautious about stolen cards and credit card fraud, some merchants like Paypal already provide basic security measures, however any scaling business should check out for these fraud detection methods.

Another thing to keep in mind is those payment gateways are prone to outages. Check out how you can tackle your sign-ups and subscription renewal when your payment gateway is down here.

This fraud is the one that is declared by the payment processor, hence, less in your control. Transactions that have passed through your gateway (without being blocked) might still be declined if it fails one of the processor’s fraud checks. One of the reasons processors decline transactions is the risk they perceive on behalf of the merchant.

The unintended consequence of two sets of fraud filters (one from your gateway and one from your payment processor) working together (and independently of each other) is that sometimes they can cast a net that’s too wide. It could end up preventing genuine customers from placing orders. The best filters are the ones that wouldn’t just flag a customer because they entered the wrong CVV. Instead, it would consider all the information provided in the customer’s account and then decide whether there could be a potential threat.

Riskified, a revenue protection software, holds that preventing false declines and false blocks can have a significant impact on your bottom line. Shalhevet Zohar for Riskified  writes, “In our experience, removing filters and reducing false-positive declines leads to a sales revenue increase of anywhere from 3% to 30%…taking the time to calculate the impact of declines on your business and working to reduce false positives is well worth the effort.”

In research conducted by Globalization Partners and CFO research, it was found that 41% of the companies worldwide were expanding globally. This highlights the opportunity for scaling and accommodating a global audience. Reach a broader audience with their choice of payment options- credit cards, digital wallets, direct debit, and offline payments.

Chargebee offers multiple online and offline payment options to reach your customers in any corner of the world and with the help of this option, Makespace, an on-demand storage company scaled from 4 to 31 markets in a year!

Instaply, a text messaging app that helps improve customer service, had the same problem every scaling company had. They had hit their first 100 customers and the opportunity to reach a new audience and new customers kept them up at night. What also contributed to their sleepless nights was involuntary churn through failed payments and the sheer pressure of solving for currency, tax, and payment complexities if they were to expand.

Adopting plan specific checkouts helped them collect payments instantly. Many subscription billing platforms focus on simplifying the checkout process making it scalable. Additionally having features such as an account updater to inform customers about changes to the account information or smart retries to retry failed payments for a customized period to help get the money back would help to prevent revenue leakage.

With your fraud filters tuned to better sort legitimate payments from fraudulent ones, your credit card decline rates will fall.

The harsh truth is that you will not be able to fully eliminate credit card declines, though.

The question, at this point, becomes what you can do to recover any revenue that might be lost? The answer lies within the umbrella term ‘revenue recovery’.

Revenue recovery tactics shorten the gap between the money that is owed and the money you are getting.

For example for an expired card, there are two kinds of revenue recovery tactics you could have implemented immediately,

Here’s a list of 20+ tactics that you can implement to get your revenue recovery up and running. This is important because it would reduce churn and provide your customers with hassle-free billing experience. Go ahead and check out how Chargebee Receivables brings all-action revenue recovery under one roof.

To weed out the problem at the beginning, at Chargebee we use the Luhn algorithm to help you understand the validity and authenticity of the card details you have. Read more about it here.

Apart from taking all precautions, a good portion of your churn could be attributed to voluntary churn which is indeed painful. But imagine a customer who is actually interested in your service/product but you lose them due to operational glitches. How can you stop this from happening?

Even a 1% churn can affect your overall revenue and dunning is a process that helps to monitor customer accounts and debit/credit cards that are expiring soon. It then notifies the customer of the upcoming expiration and encourages them to update their payment information.

A firm that used dunning management to their advantage is, Whiteboard Mortgage CRM. They used Chargebee’s Revenue story to get an accurate picture of their data and improved MRR by 35%. They coupled this with Chargebee’s dunning management and managed to reduce churn by almost 100%!

If a credit card on file resulted in a failed payment due to a hard-decline such as card expiry, there’s no point trying that same card again a few weeks later.

In this way, one needs to understand that every form of failed payment requires a different dunning method, and doing this manually can be hectic and time consuming for a subscription business.

PURPOSE & ELIGIBILITY: To provide a term loan for purchase of merchandise / service by using credit card for customers having valid credit card, wherein there have been no past dues.

MARGIN: Nil

TICKET SIZE: Rs.2500/- to Rs. 2,00,000/-

PROCESSING CHARGE: Nil

EMI TENURE: 3, 6, 9, 12, 18 & 24 Equated Monthly Installments.

ROI:

PRE-PAYMENT CHARGES: 3% of the remaining amount.

DEFAULT: In case of default of three consecutive EMI’s by a customer will result in reversal of entire outstanding principle plus interest for the period of default @ the Interest rate applicable on credit card purchases. The date of reversal shall be after the expiry of one month from the due date of third un-serviced instalment.

MORATORIUM PERIOD: Nil

GENERAL TERMS AND CONDITIONS:

In these Terms and Conditions, the following terms shall have the following meanings · “Credit Card” shall mean an unexpired credit card issued by Jammu & Kashmir Bank. · “Cardholder” shall mean the holder of a Credit Card. · “Merchant EMI” refers to transactions initiated by the card member at any Point of Sale or an e-commerce website where the cardholder chooses to convert the purchase amount into Equated Monthly Installments at the point of payment/ charge to credit card at the rate of interest as communicated in the charge slip at the time of availing the product. · The present Terms and Conditions are to be read in conjunction with, and not in derogation of, the Cardholder Terms & Conditions and nothing contained herein shall prejudice or affect the terms and conditions of the Cardholder Terms & Conditions. · Unless otherwise specified, the words and expressions used herein shall have the same meaning as in the Cardholder Terms & Conditions.

Terms and Conditions for Merchant EMI on credit cards · A Cardholder may opt to convert a purchase at select Merchant outlets/website into Equated Monthly Installments (EMIs.) The Purchase(s) would be converted into Equated Monthly Installments (EMI) with interest charged on the monthly reducing balance. · In the event the Credit Card is closed prior to all installments being charged, the amount outstanding against Merchant EMI plan shall be debited as a consolidated amount to the Credit Card account of the Cardholder. · Jammu & Kashmir Bank shall be entitled to demand immediate repayment of such consolidated outstanding amounts. · The EMI shall be computed on a monthly reducing balance. · Interest rates as communicated at the time of availing the product(s) shall be applicable. · Partial or full refunds initiated by the merchant towards the original transaction subsequent to the Merchant EMI booking leads to pre-closure of the Merchant EMI facility. Once the Merchant EMI is pre-closed, for any reason, all outstanding including but not limited to the principal outstanding and the interest for the actual number of days till closure i.e., from the last billing date till the date of closure, shall be debited to the Credit Card account. However in this case no pre-closure charges shall be applied. · Cash back (if applicable and communicated to customer at the time of the transaction) for an EMI transaction is offered solely by the merchant/brand and shall be credited to the cardholder only on receipt of the funds from the merchant/brand. This process may take up to 90 business days.

Enjoy exclusive benefits upon signing up and transacting with an HDFC Bank Credit Card. We also offer benefits on annual spends exceeding specific amounts

Convert credit card spends of INR 2,500 or more into SmartEMIs post your purchases. Enjoy competitive interest rates and flexible repayment tenures on offline and online Credit Card purchases converted into SmartEMI.

Make payments quickly, confidently, and securely with our contactless Credit Cards. Just tap your card to pay at retail outlets in seconds.

To activate contactless payments, please use MyCards.

Shop and save more on your overseas spends. We levy a low foreign currency markup on overseas purchases on select HDFC Bank Credit Cards.

Select HDFC Bank Credit Cards come with complimentary insurance benefits. Get air accidental cover and emergency overseas hospitalisation cover worth several lakhs.

Leverage revolving credit facilities at nominal interest rates on HDFC Bank Credit Cards. Check the MITC to know more.

For select credit cards get complimentary access to airport lounges at domestic and international airports.

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