Merchant Services Optimization

I've helped dozens of acquirers, including Adyen, Checkout.com, and others optimize their authorization rates. 99% of them fall into 3 big traps... Mistakes that keep them bleeding revenue through unnecessary declines. Here's how to quickly fix them (so you can start maximizing approval rates today): Before data scientists got involved in payments, optimization wasn't really a thing. Engineers just found the fastest way to get their work done, often creating these systemic issues that persist today. So here are a few traps to avoid and how to fix them: TRAP 1: Generic Response Code Abuse Most teams send 80%+ of declines as "05: Do Not Honor" or "51: Not Sufficient Funds." This renders your data useless. You can't identify trends, optimize strategies, or help merchants understand why transactions fail. Strategic Fix: Treat response codes as your optimization roadmap. The more granular your codes, the more likely you are to find patterns that can drive intelligent retry logic and merchant coaching. TRAP 2: Blanket Decline Strategies Teams block entire countries, merchant categories, or transaction types "just to be safe." This kills legitimate transactions and frustrates customers who then switch to competitors. Strategic Fix: Risk is contextual, not categorical. Build dynamic risk models that consider transaction velocity, device fingerprinting, and behavioral patterns rather than static rules. TRAP 3: Static Authorization Hold Periods Most acquirers hold authorizations for 7+ days, blocking customer spending power unnecessarily. Strategic Fix: Authorization holds are working capital management. Analyze settlement timing by merchant segment to optimize cash flow without increasing risk. Other ways to increase authorization rates and revenue include: Account Updater: Automatically updates expired card details with merchants, preventing recurring payment failures Stand-In Processing: When issuers are offline, optimized STIP parameters can approve low-risk transactions instead of blanket declines Real-time alerts: Building alerts to notify when BINs are underperforming, so you can take appropriate actions such as Dynamic 3DS or Payment Flagging. The result? Acquirers who focus on implementing these fixes see 15-25% fewer unnecessary declines within as little as 60 days. Authorization optimization isn't just about approving more transactions; it's about intelligently managing risk while maximizing revenue per transaction attempt. P.S. During this summer, I have turned my newsletter into a Payments 4.0 Summer School, every week I will go deep, explaining the current trends and opportunities, providing the best frameworks and strategies. Subscribe here https://lnkd.in/etQJ2Tb5 to get it.

𝗧𝗵𝗲 𝗥𝗲𝗮𝗹 𝗖𝗼𝘀𝘁 𝗼𝗳 𝗖𝗵𝗲𝗰𝗸𝗼𝘂𝘁 𝗙𝗿𝗶𝗰𝘁𝗶𝗼𝗻 Every merchant knows checkout is where conversions live or die. But few realize just how much revenue slips away. A recent survey from PYMNTS found 1 in 4 companies lose over $1M annually to checkout friction and failed payments Not because customers don’t want to buy, but because the payment flow makes it too hard to say yes Let’s unpack it 👇 𝗪𝗵𝗮𝘁 𝗖𝗮𝘂𝘀𝗲𝘀 𝗖𝗵𝗲𝗰𝗸𝗼𝘂𝘁 𝗙𝗿𝗶𝗰𝘁𝗶𝗼𝗻? Dozens of small failures add up fast: → Re-entering card details every time → Missing preferred local methods → False declines or 3DS loops → Slow redirects and loading delays → Vague “payment failed” errors Each one raises abandonment risk, and once a customer leaves, 70% never return 𝗪𝗵𝘆 𝗜𝘁’𝘀 𝗛𝗮𝗽𝗽𝗲𝗻𝗶𝗻𝗴 𝗡𝗼𝘄 🔹Modern checkout stacks are fragmented, multiple PSPs, gateways, and regional rules 🔹Merchants layer on fraud controls and 3DS for compliance, often increasing friction unintentionally 🔹The result? A conversion tax built into every transaction 𝗪𝗵𝗼’𝘀 𝗚𝗲𝘁𝘁𝗶𝗻𝗴 𝗜𝘁 𝗥𝗶𝗴𝗵𝘁 Leaders treat checkout as a growth engine 🔹𝟭-𝗖𝗹𝗶𝗰𝗸 𝗪𝗮𝗹𝗹𝗲𝘁𝘀 𝗹𝗶𝗸𝗲 Shopify ShopPay & ApplePay → Replace manual entry with saved credentials and biometric auth → Satisfy SCA without 3DS prompts → Boost conversion by up to 2× 🔹𝗦𝗺𝗮𝗿𝘁 𝗥𝗲𝘁𝗿𝘆 & 𝗥𝗲𝗰𝗼𝘃𝗲𝗿𝘆 𝗹𝗶𝗸𝗲 Butter Payments, Adyen RevenueProtect → Reattempt failed payments intelligently after network or issuer problems → Recover 5–10% of “lost” revenue 🔹𝗥𝗲𝗮𝗹-𝗧𝗶𝗺𝗲 𝗔𝗰𝗰𝗼𝘂𝗻𝘁 𝗨𝗽𝗱𝗮𝘁𝗲𝗿 → Keep stored cards current post-expiry or reissuance → Cut involuntary churn for recurring merchants These small optimizations compound into massive lifetime value 𝗪𝗵𝗮𝘁 𝗠𝗲𝗿𝗰𝗵𝗮𝗻𝘁𝘀 𝗦𝗵𝗼𝘂𝗹𝗱 𝗗𝗼 1️⃣ Quantify friction → isolate payment-stage drop-off, not just abandonment 2️⃣ Tokenize early → enable saved cards, wallets, and seamless retries 3️⃣ Adopt smart routing → adapt to issuer/geography behavior 4️⃣ Automate updates → use RTAU and vault-level orchestration 𝗙𝗶𝗻𝗮𝗹 𝗧𝗵𝗼𝘂𝗴𝗵𝘁 Checkout friction is a big revenue leak. The brands winning today design for payment flow, not around it. A seamless checkout feels invisible, but it's what turns “maybe later” into getting paid Source: PYMNTS, TechCrunch 🔔 Follow Jason Heister for daily #Fintech and #Payments guides, technical breakdowns, and industry insights

Checkout optimization used to mean adding more payment methods. Today it’s about shaping the payment journey before friction ever shows up. Fintech Adyen just launched Personalize inside its Uplift suite. The headline feature is real-time Dynamic Identification, trained on trillions of transactions across its network. Why it matters: 37% of shoppers abandon when checkout takes too long. 72% of businesses say transaction fees are pressuring margins. Static checkout flows treat every buyer the same. Modern payment stacks can’t afford that. Personalize adjusts the experience in real time. It can: • Prioritize cost-efficient payment rails • Suppress unnecessary authentication • Surface risk signals before authorization • Route transactions based on identity and context Early data: • 9.4% lower payment costs on eligible traffic in year one of Uplift • 42% reduction in false positives • +1.19% average conversion lift, up to 6% for some merchants • Pilots showing up to 3% lower transaction costs • Tebi: 4.26% cost savings and 0.8% conversion lift This is not incremental CRO. The real shift is architectural. Checkout is becoming a data and feedback loop problem, not a front-end design problem. The platforms that unify acquiring, issuing, risk, and identity inside one system will compound advantages over time. If you’re running payments at scale: Are you optimizing a page… or optimizing a network?

𝐇𝐨𝐰 𝐀𝐈 𝐜𝐚𝐧 𝐞𝐦𝐩𝐨𝐰𝐞𝐫 𝐏𝐒𝐏𝐬 & 𝐀𝐜𝐪𝐮𝐢𝐫𝐞𝐫𝐬 𝐢𝐧𝐟𝐫𝐚𝐬𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞 by ACI Worldwide 👇 PSPs and Merchant Acquirers are entering a new era. The traditional stack — onboarding, routing, settlement, billing, fraud, and reporting — is being rebuilt around AI-native infrastructure. AI removes manual work, increases approvals, reduces fraud, automates compliance, improves margins, and enables real-time decisioning across the entire acquiring chain. Below is a clear view of where AI is reshaping the PSP infrastructure model. — 𝐓𝐡𝐞 𝐀𝐈 𝐋𝐚𝐲𝐞𝐫𝐬 𝐚𝐜𝐫𝐨𝐬𝐬 𝐭𝐡𝐞 𝐀𝐜𝐪𝐮𝐢𝐫𝐢𝐧𝐠 𝐒𝐭𝐚𝐜𝐤: 1️⃣ AI-Driven Fraud, Risk & Trust Infrastructure → Role: Real-time fraud detection, behavioral analysis, adaptive risk scoring, and automated decisioning. ↳ ACI Worldwide’s machine learning engine continuously retrains on billions of transactions to reduce false positives and increase trust. 2️⃣ Smart Authorization & Routing Engines → Role: Predictive issuer logic, L2 routing intelligence, scheme preference modeling, and dynamic retry strategies. ↳ Checkout.com leverages AI-driven issuer insights to optimize approval rates across global markets. 3️⃣ Merchant Onboarding & Underwriting Automation → Role: Automated KYC/KYB, document intelligence, AML screening, and risk-based onboarding workflows. ↳ Alloy uses ML-based identity intelligence to reduce onboarding friction and improve underwriting accuracy. 4️⃣ AI-Powered Disputes, Chargebacks & Compliance → Role: Case classification, evidence generation, dispute automation, fraud pattern clustering, and scheme-rule intelligence. ↳ Forter applies AI to categorize disputes and automate representments across issuers, acquirers, and PSPs. 5️⃣ AI for Merchant Reporting, Analytics & Personalized Insights → Role: Revenue intelligence, anomaly detection, pricing insights, & merchant-level optimization. ↳ Pagos delivers issuer and BIN-level intelligence that PSPs use to optimize routing, revenue, and merchant performance. 6️⃣ AI in Payments Orchestration & Optimization → Role: Traffic shaping, cost optimization, retry logic, scheme selection, FX intelligence, and routing automation. ↳ DEUNA uses AI-driven orchestration to unify acceptance, routing, and optimization into a programmable commerce layer. 7️⃣ AI-Powered Account, Wallet & Embedded Payments Infrastructure → Role: Balance forecasting, settlement optimization, automated treasury ops, and embedded finance logic. ↳ Dfns provides secure, policy-controlled wallet infrastructure that powers automated treasury and embedded payment flows. Some PSPs do perform in all of those buckets: ↳ ACI Worldwide, Checkout.com, DEUNA and few others 😉 AI is not an add-on for PSPs — it is becoming the intelligence layer inside onboarding, routing, pricing, fraud, settlement, and merchant operations. — Source: ACI Worldwide ► 𝐓𝐡𝐞 𝐏𝐚𝐲𝐦𝐞𝐧𝐭𝐬 𝐁𝐫𝐞𝐰𝐬: : https://lnkd.in/g5cDhnjC ► Connecting the dots in Payments... | Marcel van Oost

Last week, the CEO of a major international marketplace asked me, "James, how can I lower my payment costs?" It’s a complex issue, but here’s where I said they should begin: 1. Know your business inside out Before you can optimize costs, you need to understand your payment processing operations thoroughly. What payment methods do you use? What are your transaction volumes? What's your refund rate? Your decline ratio? These details matter. 2. Understand your pricing model Payment pricing can be deceptively complex. Some providers charge per successful transaction, others for every event (including declines and refunds). Know which model you're on and how it aligns with your business patterns. 3. Dive into your merchant discount rate This is typically your biggest cost. Not all acquirers are transparent about their margins. Look for providers offering "Interchange Plus Plus" pricing for more clarity. 4. Consider Alternative Payment Methods In markets like Brazil, solutions like Pix can significantly reduce costs compared to traditional card payments. Don't overlook local payment methods when expanding internationally. 5. Watch Out for Hidden Costs Chargebacks, currency conversion, and various 'event' fees can add up quickly. Make sure you're accounting for all costs, not just the headline rate. 6. Leverage Your Scale If you're a major marketplace, you have negotiating power. Don't be afraid to use it, but remember - the lowest price isn't always the best deal if it comes with poor service or limited features. 7. Think Holistically Sometimes, paying a bit more for a solution that increases approval rates or reduces fraud can lead to higher overall profitability. Don't focus solely on lowering costs at the expense of growth. TLDR: There's no one-size-fits-all solution in payments. The key is to deeply understand your business needs and the intricacies of payment processing. Only then can you make informed decisions that truly optimize your costs.

Agentic Musings #11 This one is for merchants… Consumers are starting to delegate. Merchants have to pivot from “optimize checkout” to “optimize for agents.” What changes: Agents decide offsite, before your page loads; comparing price, availability, delivery SLAs, return terms, reliability, and approval odds in real time. If those signals aren’t machine-readable, you’re not in the consideration set. How merchants pivot (practical moves): 1. Publish an Agent Catalog- Expose inventory, price, fees, delivery windows, constraints, and return policy via API- not PDFs or pages. 2. Offer & Loyalty as APIs- Serve deterministic, agent-readable incentives at quote time: amount/MCC/basket rules, stackability, and expiry. Auto-redeem; no codes. 3. Agent-Ready Payments- Support tokenized credentials, scoped consent (amount/time/vendor), signed payment intents, and “agent-present” attestation for high-trust flows. 4. Agent-Grade Post-Order- Return line-item receipts, policy reasons, refund/exchange APIs, and rich dispute data. Agents need evidence, not emails. 5. SLOs Become Marketing- Publish uptime/latency targets, approval predictability, delivery reliability. Agents reward what’s fast and consistent. 6. New KPIs- Track agent win rate, time-to-quote, quote→pay conversion, and policy conflicts avoided. Optimize the algorithm’s choice, not the page. 7. Org Shift- Stand up an Agent Acceptance squad + a lightweight developer portal for agents (schemas, examples, sandbox, test cards, status page). Proof points already hinting at this shift: Reserve-with-Google flows, EV “Plug & Charge,” toll tags, ride auto-pay, and Subscribe & Save- policy + APIs beating UI clicks. Bottom line: Merchant acceptance ≠ prettier checkout. It’s an interface contract with the buyer’s agent. Are your offers, policies, and rails API-visible, simulatable, and trustworthy? #AgenticCommerce #MerchantAcceptance #FutureOfPayments #APIs #TopOfWallet #Loyalty #Tokenization #InvisibleUX #ProductLeadership

A global travel platform recently discovered a shocking number: 27% of their legitimate bookings were being declined. Not because of fraud. Not because the cards were bad. But because issuers saw “unusual patterns” — a customer booking from abroad, a card used while traveling, or a transaction routed through the wrong acquirer. Here’s the painful irony: The customer had the money. The merchant had the service. The payment system said no. Industry studies estimate merchants lose $300B+ a year to false declines — more than double fraud losses. And most of it is preventable. The best operators are now treating approval optimization as seriously as fraud prevention. They’re: → Routing intelligently by BIN, issuer, and geography. → Retrying smartly at times issuers are more likely to approve. → Monitoring in real-time where declines are happening and why. The shift in mindset is simple but profound: Fraud prevention saves you from bad customers. Approval optimization saves you from losing good ones.

🚀 𝗔𝘂𝘁𝗵𝗼𝗿𝗶𝘇𝗮𝘁𝗶𝗼𝗻 𝗢𝗽𝘁𝗶𝗺𝗶𝘇𝗮𝘁𝗶𝗼𝗻 𝗶𝗻 𝗣𝗮𝘆𝗺𝗲𝗻𝘁 𝗔𝗰𝗾𝘂𝗶𝗿𝗶𝗻𝗴: 𝗕𝗼𝗼𝘀𝘁𝗶𝗻𝗴 𝗦𝘂𝗰𝗰𝗲𝘀𝘀 𝗥𝗮𝘁𝗲𝘀 & 𝗥𝗲𝗱𝘂𝗰𝗶𝗻𝗴 𝗗𝗲𝗰𝗹𝗶𝗻𝗲𝘀 💳 In the fast-paced world of #payment #acquiring, Authorization Optimization is key to improving transaction success rates and reducing costly declines. With approval rates directly impacting #merchant revenues, focusing on optimization is a game-changer. 🔑 𝗞𝗲𝘆 𝗘𝗹𝗲𝗺𝗲𝗻𝘁𝘀 𝗼𝗳 𝗔𝘂𝘁𝗵𝗼𝗿𝗶𝘇𝗮𝘁𝗶𝗼𝗻 𝗢𝗽𝘁𝗶𝗺𝗶𝘇𝗮𝘁𝗶𝗼𝗻: • 𝗦𝗺𝗮𝗿𝘁 𝗥𝗼𝘂𝘁𝗶𝗻𝗴: Transaction routing is optimized by directing payment requests through the most suitable acquirer or processor, reducing the likelihood of declines. • 𝗔𝗜 & 𝗠𝗮𝗰𝗵𝗶𝗻𝗲 𝗟𝗲𝗮𝗿𝗻𝗶𝗻𝗴: Analyzing transaction data to predict the most likely path for approval, improving real-time routing and reducing transaction failures. • 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻 𝗔𝘂𝘁𝗵𝗲𝗻𝘁𝗶𝗰𝗮𝘁𝗶𝗼𝗻: Enhancing fraud prevention measures, such as multi-factor authentication, to ensure legitimate transactions are approved. • 𝗥𝗲𝘁𝗿𝘆 𝗟𝗼𝗴𝗶𝗰: Automatically retrying declined transactions through alternative methods, increasing approval chances. • 𝗗𝗲𝗰𝗹𝗶𝗻𝗲 𝗥𝗲𝗰𝗼𝘃𝗲𝗿𝘆: Working with issuers to improve approval rates for borderline transactions, reducing the risk of lost sales. • 𝗧𝗿𝗮𝗻𝘀𝗮𝗰𝘁𝗶𝗼𝗻 𝗗𝗮𝘁𝗮 𝗘𝗻𝗿𝗶𝗰𝗵𝗺𝗲𝗻𝘁: Adding device information, location, and purchase history to improve decision-making and increase authorization success. 🔑 𝗞𝗲𝘆 𝗦𝘁𝗮𝘁𝘀 & 𝗜𝗻𝘀𝗶𝗴𝗵𝘁𝘀: 🌍 𝗚𝗹𝗼𝗯𝗮𝗹 𝗗𝗲𝗰𝗹𝗶𝗻𝗲 𝗥𝗮𝘁𝗲𝘀: Credit card transaction decline rates can be as high as 15-20% across various industries. 📊 𝗦𝘂𝗰𝗰𝗲𝘀𝘀 𝗥𝗮𝘁𝗲 𝗜𝗺𝗽𝗮𝗰𝘁: Smart routing alone can increase approval rates by up to 10-15%, significantly reducing lost revenue. 🔄 𝗔𝗜-𝗣𝗼𝘄𝗲𝗿𝗲𝗱 𝗥𝗼𝘂𝘁𝗶𝗻𝗴: Machine learning algorithms analyze transaction data in real time to route #payments through the best channels, improving approval chances and ensuring smoother transactions. 🛡️ 𝗙𝗿𝗮𝘂𝗱 𝗣𝗿𝗲𝘃𝗲𝗻𝘁𝗶𝗼𝗻: Implementing robust fraud detection systems alongside authorization strategies can lower chargebacks by 20-30%, further protecting your revenue. 🔒 Optimizing the authorization process ensures smoother transactions, higher approval rates, and better customer experiences. 📈 Ren Payments by Euronet

More merchants than ever are utilising the services of more than one acquirer. Dual acquiring isn't anything new, but the rise of orchestration platforms and redefined dynamic routing products has made it easier than ever for merchants to leverage more than one acquirer relationship. This approach allows merchants to diversify their payment processing channels, increasing failover resilience, taking a stronger stance on good relationship management and potentially optimising costs, if deployed in the right way. _______________________________ ➡️ How Dual Acquiring Works 🔹 Merchants integrate with two (or more) acquiring banks or PSPs, either directly or through a payment gateway or orchestration platform. 🔹 Transactions can be routed dynamically based on various factors such as cost, card type, or transaction volume. 🔹 Some merchants use automated systems to select the most cost-effective or reliable acquirer for each transaction in real time. 🔹 A layer beyond this, On-Us transaction selection is a further highly efficient functionality that should be considered by merchants. In an On-Us transaction, the issuing bank and the acquiring bank are the same institution. This enables them to maximise their profits from the transaction and provide pricing at rates lower than standard interchange fees for the end merchant. With an alternate Off-Us transaction (when the issuing and acquiring banks are separate entities), the interchange fee is divided between both banks, which results in lower profits for each and higher pricing for the end merchant. ➡️ Merchant Considerations 🔹 Your setup requires the ability to support multiple acquirer integrations within the payment processing system you roll out. This can be a slightly more complex initial integration, but it will lead to considerable benefits in the long run. Orchestration platforms are also making lighter work of this for merchants. 🔹 Managing settlements and reconciliations across multiple acquirers can add operational complexity. This is why we are seeing more and more 'payments teams' being created within merchant organisations. 🔹 Ensuring compliance with regulations such as PCI-DSS when working with multiple acquirers can be slightly more cumbersome. _______________________________ At Nomupay we understand that as well as being an acquirer in our own right, maintaining a close working relationship with a whole variety of other acquirers globally is the right thing to do for our end merchants. That's why we also lean into a gateway agnostic approach. A merchant will always appreciate the best fit for them being recommended, even if that means relinquishing some share of wallet over the long term. More acquirers need to be thinking this way in 2025. So, if you are a payments provider interested in exploring a partnership with Nomupay, please do drop me a message. 📨

Online checkout has come a long way, but surprisingly I find that some of the biggest frictions remain quite basic. To put it bluntly, a checkout that doesn’t match how shoppers expect to buy is still one of the fastest ways to lose revenue. Small details add up... ... a page layout that feels cluttered ... that breaks on mobile ... forms that ask for too much ... missing payment methods or currencies ... error messages that confuse rather than guide ... accessibility that isn’t truly accessible And the list goes on and on... Shoppers are now conditioned by one-click flows, digital wallets and auto-fill. Asking shoppers to type card numbers or recall passwords is a big no-no. In a world where competition is one tab away, every point of friction widens the gap between intent and conversion. But equally in today's context, the harder part for merchant is probably not not technology, it is noise. The paytech landscape moves quickly and is full of overlapping terms, converging features and categories that blur into each other. It is easy to get caught up in the volume of updates and miss the few that actually matter. Not every new payment trend or product update matters. What usually cuts through the noise is looking at changes through the lens merchants already operate with: 👉Cost: reducing fees or operational overhead 👉Conversion: lifting approval rates or reducing drop-off 👉Compliance: strengthening alignment with requirements and reducing exposure 👉Customer experience: making the buying flow faster, safer, or more intuitive The point is that innovation only becomes valuable when it actually impacts the overall business operation. Today, modern payment stacks give merchants the tools to compete in a very different way: flexible, modular and built for adaptation. For many merchants, the real shift comes from reducing dependency. Legacy setups lock businesses into rigid structures and single points of failure. A more modern architecture increases control, strengthens continuity and makes adaptation faster than the competitive set. And across all of this, security sits at the core. Trust and loyalty only grow when payments feel safe. More alternative methods alone won’t solve that. A good payment strategy simplifies where it matters, modernises where it counts and builds for resilience, trust and long-term customer relationships. I was pleased to share some thoughts on the recently released article by WIRED x Mastercard on payment innovation. The article explores how trends like click-to-pay, passkeys and the rise of agentic commerce are reshaping what seamless checkout really means. https://lnkd.in/dN7_gUy7 Mastercard WIRED Paypr.work [ˈpeɪpəwəːk] -- 𝘐𝘧 𝘺𝘰𝘶’𝘳𝘦 𝘭𝘰𝘰𝘬𝘪𝘯𝘨 𝘵𝘰 𝘣𝘶𝘪𝘭𝘥 𝘢 𝘥𝘦𝘦𝘱𝘦𝘳 𝘶𝘯𝘥𝘦𝘳𝘴𝘵𝘢𝘯𝘥𝘪𝘯𝘨 𝘰𝘧 𝘩𝘰𝘸 𝘱𝘢𝘺𝘮𝘦𝘯𝘵𝘴 𝘳𝘦𝘢𝘭𝘭𝘺 𝘸𝘰𝘳𝘬 𝘢𝘯𝘥 𝘢𝘱𝘱𝘭𝘺 𝘵𝘩𝘢𝘵 𝘬𝘯𝘰𝘸𝘭𝘦𝘥𝘨𝘦 𝘴𝘵𝘳𝘢𝘵𝘦𝘨𝘪𝘤𝘢𝘭𝘭𝘺, 𝘭𝘦𝘵’𝘴 𝘵𝘢𝘭𝘬: 👉 Intro@paypr.work 👉 www.paypr.work