Approval rate optimisation
Approval rate optimisation enhances the success rate of payment transactions across all processing stages. Cardflo employs smart routing, decline recovery, and 3DS optimisation to maximise transaction approvals.
This comprehensive approach minimises lost revenue due to preventable declines and ensures a higher percentage of customer payments are successfully captured, directly impacting the merchant's bottom line.
- Category
- Recovery
- Capabilities
- 10
- Available on
- All plans
The overview
Approval rate optimisation refers to the technical processes used to increase the probability that a payment authorisation request is accepted by the issuing bank. This activity occurs within the middle layer of the payments stack, sitting between the merchant checkout and the final acquirer.
Success in this area requires managing the complex interplay of transaction data, authentication protocols, and banking preferences. By analysing BIN-level performance and historical decline reasons, merchants can adapt their submission strategies to align with issuer risk appetites.
The process involves technical adjustments to data fields, the application of SCA exemptions, and the strategic selection of processing paths. Proper execution ensures that legitimate transactions are not blocked by overly aggressive fraud filters or technical mismatches at the network level.
This focus on the authorisation stage is critical for maintaining revenue stability and reducing the cost of customer acquisition, which is wasted if the final payment fails.
How it works
Smart Routing and MID Selection
Transactions are directed to specific acquirers or Merchant Identification Numbers based on real-time performance data. By evaluating which processing paths yield the highest success for specific card types, regions, or currencies, the system avoids bottlenecks.
This geographic and technical alignment reduces the likelihood of an issuer flagging a transaction as suspicious.
Protocol and SCA Management
The system determines the most efficient authentication path for each request. This includes applying for Strong Customer Authentication exemptions under PSD2, such as Transaction Risk Analysis or low-value exemptions.
By minimising 3DS friction while maintaining compliance, the merchant reduces abandonment without increasing the risk of a hard decline.
Intelligent Retry Logic
When a soft decline occurs, such as an insufficient funds indicator or a temporary technical error, the system initiates a calculated retry. These attempts are timed based on issuer behaviour patterns and specific response codes.
This prevents immediate transaction failure and captures funds that might be available shortly after the initial attempt.
Data Enhancement and Validation
Before submission to the card schemes, transaction data is validated to ensure all required fields are present and correctly formatted. This include AVS and CVV checks, as well as the inclusion of network tokens where applicable.
Clean data reduces the probability of an issuer rejecting a request due to formatting irregularities.
Why it matters
Revenue Integrity and Recovery
Preventing false declines directly preserves the top line. A significant portion of rejected transactions involves legitimate customers with sufficient funds who are blocked due to technical misalignment or overly sensitive fraud scoring.
By refining the authorisation process, merchants recover this otherwise lost revenue, ensuring that marketing spend results in completed sales rather than abandoned carts at the final hurdle of the checkout process.
Operational Efficiency and Cost
High decline rates often lead to increased customer support volume and potential scheme fines for excessive retry attempts. Optimisation reduces these operational burdens by ensuring transactions succeed on the first or second attempt.
Furthermore, by routing transactions to the most effective acquirers, merchants can potentially lower their overall interchange and scheme fees, as successful local processing is generally more cost-effective than cross-border attempts.
Use cases
Subscription-Based Services
For recurring billing, the system manages Merchant-Initiated Transactions by using account updaters and scheduled retries. This ensures that expired cards or temporary balance issues do not lead to unnecessary churn or service interruption for the cardholder.
High-Volume E-commerce
During peak traffic periods, smart routing prevents any single acquirer from becoming a point of failure. The system distributes volume across multiple MIDs to maintain high availability and consistent authorisation speeds when transaction density is at its highest.
International Merchant Operations
Merchants selling across borders use this to route payments to local acquirers within the cardholder's region. This local-to-local processing typically sees higher approval rates compared to cross-border transactions, which issuers more frequently flag for potential fraud.
By the numbers
This represents a typical industry range for merchants moving from a static, single-acquirer setup to a multi-acquirer environment with active decline management.
Industry benchmarks suggest that a significant portion of temporary declines can be recovered through intelligent retry logic and proper timing of re-submissions.
By refining fraud rules and using secondary authentication selectively, businesses often see this level of reduction in legitimate transactions being incorrectly blocked.
Related terms
Talk to our team about a live rollout on your acquiring stack.
What you get with Approval rate optimisation
- Application of BIN-level intelligence to select the most compatible acquirer for every individual transaction.
- Automated identification and categorisation of decline reasons to distinguish between soft and hard failures.
- Dynamic 3DS versioning to ensure compatibility with the issuer's preferred authentication protocol and infrastructure.
- Utilisation of network tokens to provide more secure and persistent credentials than standard Primary Account Numbers.
- Implementation of PSD2 exemptions to bypass unnecessary friction for low-risk, compliant transaction profiles.
- Strategic retry scheduling that follows issuer-specific windows to maximise the likelihood of successful authorisation.
- Real-time monitoring of acquirer health to switch traffic away from declining or unstable processing nodes.
- Validation of AVS and CVV data to meet strict issuer requirements and reduce fraud risk.
- Optimisation of Merchant Category Codes to ensure transactions are processed under the most appropriate classification.
- Granular reporting on authorisation success rates split by card type, issuer, and geographic region.
A short scoping call, then a written plan for your MIDs.
Questions about Approval rate optimisation
What is the difference between a soft decline and a hard decline in this context?
A soft decline, such as a temporary technical failure or insufficient funds, suggests that a subsequent attempt might succeed. A hard decline, often caused by a stolen card or a closed account, indicates a permanent failure where retries should be avoided to prevent scheme penalties.
Optimisation systems distinguish between these codes to ensure that retry logic is only applied when there is a statistical probability of success, thereby protecting the merchant's reputation with issuers and card schemes.
How does smart routing affect the total cost of card processing?
Smart routing can lower costs by prioritising acquirers with lower fee structures for specific transaction types. By routing a domestic card to a domestic acquirer, the merchant avoids cross-border fees and often benefits from lower interchange rates.
Furthermore, increasing the approval rate reduces the effective cost per acquisition, as the merchant is not paying for marketing and infrastructure only to have the sale fail at the final stage of the payment funnel.
Can approval rate optimisation help with PSD2 and SCA compliance?
Yes, it is a core component. The system evaluates each transaction to see if it qualifies for an exemption under SCA, such as a low-value payment or a transaction going to a trusted beneficiary.
By correctly flagging these exemptions in the authorisation request, the merchant can avoid the 3DS challenge, reducing friction for the user while remaining fully compliant with the regulatory requirements of PSD2 or the upcoming PSD3 framework.
What role does BIN lookup play in transaction success?
Bank Identification Number (BIN) lookup provides data on the issuing bank, card type, and country of origin. Optimisation tools use this data to predict how an issuer will react to certain variables.
If a specific issuer is known to decline transactions lacking certain data fields, the system ensures those fields are populated or routes the transaction to an acquirer with a better historical relationship with that specific bank.
Why is retry logic timed rather than immediate?
Immediate retries for an insufficient funds decline are rarely successful and can be flagged as fraudulent or abusive by the card schemes. Strategic retries are timed to coincide with typical cycles, such as paydays or specific hours when issuer systems are most stable.
This disciplined approach minimises the risk of being blocked by the network while maximising the chance that the cardholder has replenished their balance.
How does the use of network tokens impact approval rates?
Network tokens are issued by the card schemes and are specific to the merchant. Unlike standard card numbers, they are kept up to date by the schemes even if the physical card is replaced.
Issuers generally view network tokens as more secure, which often leads to a measurable increase in approval rates and a reduction in false positives compared to transactions using plain Primary Account Numbers.
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