In today’s digital world, data holds the key to success. Merchants who rely on instinct,
will see any competitive edge begin to wane and decline in favour of their data-savvy
Despite data being coined as the ‘new oil’ as far back as 2006, many online merchants
have yet to tap its full potential when it comes to payments. Our latest whitepaper, The
Great Payments Transformation, found that less than a third (32%) of merchants say
they are optimising payments data to a good standard, with a third (33%) saying there
is some room for improvement. Almost one in five (17%) said that there is much room
The true cost of unoptimised payments
Failure to optimise payments data is costing merchants heavily. 87% of payments
leaders in online retail say that their organisation is losing revenue as a result of
shortcomings in their payments gateway, and all participants identified that changes
need to be made to their payments strategy to avoid losing revenue and customers.
Many are waking up to the urgency of the changes required, with more than half (57%)
saying these changes need to be made before the end of 2022.
Significant barriers remain in the way, however. More than a third (36%) are struggling
to get enough quality data to justify investing in new solutions, with a further third
(34%) citing a lack of metrics and KPIs to measure impact and ROI. Perhaps
unsurprisingly, 30% of respondents said being able to get quality insights from
payments data would be a top concern for 2022.
Why change is needed
With 35% of payments leaders saying that an astonishing 11-25% of their revenue is
being lost due to shortcomings in their payment gateway, there is real impetus for
change. Further, of all the industries we surveyed, online retailers showed the most
dissatisfaction with their payment service providers; one in four are unhappy, and 6%
are actively seeking a change.
This reticence to look for an alternative despite feeling dissatisfied, could be linked to
barriers to investment. In particular, the lack of prioritisation at board level and lack of
in-house resource could mean that these businesses are unable to dedicate the time or
manpower needed to enter into an RFP process. Furthermore, changing payment
providers can be a lengthy and, often, complex process, impeding businesses from
switching payment partners and leaving them to bear the brunt (and cost) of
Without the data to support the change, online retailers are effectively trying to feel their
way in the dark. However, without being able to demonstrate where inefficiencies lie,
they will struggle to implement change leading to further unnecessary losses.
How to optimise payments strategy
For the businesses which have adequate levels of data but are struggling to convince the
board that a change of payments service provider is needed, there are steps that can be
taken now to improve payments strategy.
To reduce loss from sales, payments leaders must analyse decline data to fine-tune their
fraud and risk management tools. Having a strong risk management strategy in place
from the start means that you won’t be forced into taking a predominantly reactive
response. Fraud is not only costly, but can irreparably damage a merchant’s reputation if
it happens too frequently. By setting appropriate fraud rules, merchants can detect and
prevent the majority of fraudulent incidents before they happen.
Secondly, merchants must move to harness location data. Local acquiring is key to
optimising acceptance rates. Generally, domestic transactions tend to yield the most
favourable level of acceptance. Merchants should look to partner with a payment service
provider with strong presence and local acquiring capabilities in the markets where their
Finally, merchants must ensure that their payments set-up is optimised to accept more
legitimate transactions while ensuring that their fraud defences are watertight. With
high-volume trading periods approaching in the UK and Europe, it’s integral for online
retailers to ensure that their payment processing complies to the latest payment
regulation and safeguards them from chargebacks and lost revenue.
Further, as merchants drill down into decline data, they can identify fixes that could
prompt smarter fraud rule setting. Often transactions are declined for legitimate reasons,
such as the customer has inadequate funds, or their card has been reported as stolen.
For fraud instances, it’s highly beneficial to leverage robust risk solutions and strike the
perfect balance between conversion optimisation and fraud aversion, without turning
away legitimate transactions.
These simple steps can help optimise the payments process for online retailers. As we
continue accelerating far beyond the tipping point for eCommerce adoption, it becomes
increasingly essential that merchants champion data and analytics above instinct and
gut. Payments data can be a powerful tool to inform the business strategy in an
eCommerce world that never ceases to change.