Traditionally, when we talk about the approval of online transactions, merchants are the ones who have the majority of “rich” data.
By that, I’m referring to merchants having access to elements such as customer demographic info, name, email address, and IP address of the customer submitting the transaction. Also included is the shipping address, along with what type of products are being purchased.
The hitch in this process is that when merchants request authorization from the issuing bank, those issuing banks don’t have access to the same data. The data they can see has historically been very limited. The basic things that issuing banks can see are:
- What is the line of credit for that card?
- Is that transaction over limit?
- Has that card been used before in that industry?
- Sometimes even at that merchant?
The transaction amount, and in certain cases the name and billing address associated with the payment method, which can help in authorization process, may also be present.
Here’s the problem
The lack of visibility for issuing banks into this important customer information can generate significant impacts on the authorization process. These effects are especially magnified in the Central and South American markets, where a very large percentage of online transactions are declined, even reaching 20% or more in certain industries.
In the US, the numbers are much lower, but the impact is still there, nonetheless. There is an exception, though, when the Issuing Bank is also the Acquirer, meaning they have a relationship with the card holder as well as the merchant.
These types of relationships allow more data to flow than simple credit card and name/address information, such as the email and IP addresses, and other details about the order, which have proven to be indispensable in allowing more precise decisions that benefit all parties involved.
For customers, orders are approved more quickly with less disruption. For merchants, this translates into more revenue, as a larger portion of orders are approved.
Big changes to come
The biggest change we are seeing in authorization flow is that in the near future, banks will be able to more readily receive those precious details.
Instead of only focusing on credit card number and basic demographics, issuing banks will be able to get email and IP address, and even some details on the purchase type.
Those elements will be key for a much more streamlined and robust transactional risk assessment. To empower more rapid risk assessment, Emailage has new offerings in the mix to allow issuing banks—at the time of transaction—to send email, IP, customer name, phone and billing/shipping address via API.
Within milliseconds, critical, actionable feedback is returned, allowing merchants to both stop transactions where there’s a high likelihood of fraud, as well as quickly approve legitimate orders with confidence.
These changes on the horizon will be key for issuing banks, allowing them validate digital identity by using Emailage for all online orders.
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