Reasons why wrongful rejections occur
Posted: Wed Jan 22, 2025 6:30 am
Fraud detection systems rely on complex algorithms that analyze many factors in each transaction, such as the buyer's location, purchase history, or even the payment method used. If one of these factors seems suspicious, even if the purchase is legitimate, the system ends up rejecting it.
Let's look at an example to understand it better: A customer makes a purchase from abroad or uses a credit card from a different place than usual. This could be seen as a potential risk for security filters.
Similarly, when there are high-value purchases or shipments to croatia phone number list addresses, which can generate alerts in fraud detection systems.
What is the cost of incorrect rejections for your e-commerce?
Payment declines in your online store affect both immediate sales, your relationship with your customers, and your business reputation. Some of the main impacts include:
Lost revenue: When legitimate customers are unable to complete their purchase, they may abandon their cart and head to a competitor. It is estimated that for every dollar lost to fraud, businesses also lose a significant amount of money on declined valid transactions.
Dissatisfied customers: Wrongful rejection can lead to frustration among customers, who may choose not to buy from you again. Additionally, dissatisfied customers are more likely to share their anger on social media, affecting the perception of your brand.
Reputation damage: Trust is a key aspect in e-commerce, and wrongful rejections can quickly erode it. Bad experiences can go viral and generate distrust in future customers, especially in such a competitive environment.
Fraud detection issues: When fraud prevention systems are too restrictive, they end up blocking legitimate transactions and make it difficult to collect accurate data to improve detection in the future.
Let's look at an example to understand it better: A customer makes a purchase from abroad or uses a credit card from a different place than usual. This could be seen as a potential risk for security filters.
Similarly, when there are high-value purchases or shipments to croatia phone number list addresses, which can generate alerts in fraud detection systems.
What is the cost of incorrect rejections for your e-commerce?
Payment declines in your online store affect both immediate sales, your relationship with your customers, and your business reputation. Some of the main impacts include:
Lost revenue: When legitimate customers are unable to complete their purchase, they may abandon their cart and head to a competitor. It is estimated that for every dollar lost to fraud, businesses also lose a significant amount of money on declined valid transactions.
Dissatisfied customers: Wrongful rejection can lead to frustration among customers, who may choose not to buy from you again. Additionally, dissatisfied customers are more likely to share their anger on social media, affecting the perception of your brand.
Reputation damage: Trust is a key aspect in e-commerce, and wrongful rejections can quickly erode it. Bad experiences can go viral and generate distrust in future customers, especially in such a competitive environment.
Fraud detection issues: When fraud prevention systems are too restrictive, they end up blocking legitimate transactions and make it difficult to collect accurate data to improve detection in the future.