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False declines are the unintended consequence of a poor eCommerce fraud prevention strategy.
"How did our eCommerce store lose money during the holidays?"
It seems like it'd be almost impossible to lose money during what's supposed to be the busiest time of year for eCommerce businesses. But unfortunately, for some, this is a very real situation that they might find themselves in if they don't have the proper fraud prevention tools in place.
While fraud prevention tools are an important component to any successful eCommerce business, they also come with their downsides. It's not uncommon for these tools to decline orders from legitimate customers, resulting in what's called a "false decline". It’s estimated that businesses lose 3% of their revenue due to false declines every year.
Clearly, this is a significant problem that needs to be addressed.
In this article, learn about the true impact that false declines can have on your business, and what you can do to effectively prevent them from ever occurring.
False Declines and Legitimate Purchases
The balance between fighting fraud and retaining revenue is vital to your eCommerce store. False declines for digital fraud on legitimate purchases is a major source of lost revenue for eCommerce store owners.
As it turns out, false declines are bigger profit leaks for online merchants than fraud itself. Here’s a simple calculation to back this up:
It’s estimated that businesses lose 3% of their revenue due to false declines. In 2018, the eCommerce industry generated $2.86 trillion. If this revenue level stays the same until 2023, this would sum up to $14.3 trillion. At 3% leakage rate, false declines will cost the businesses $429 billion, while fraud will cost the industry $130 billion.
In short, false declines will cost merchants 3x more than fraud itself.
The Key to Eliminating False Declines
So, how do eCommerce businesses keep from rejecting legitimate customers who want to make purchases in their online store?
Digital fraud management platforms like Vesta are designed with this eCommerce balancing act in mind.
This is why Vesta uses artificial intelligence and machine learning to monitor your transaction trends. Our platform can spot a legitimate transaction and makes sure that transaction gets approved. You'll be able to capture revenue in your store that you'd normally lose to false-positive fraud tags.
All the while, you'll still have high-quality fraud protection software at your disposal to handle illegitimate purchases and chargebacks.
We're so confident we can help minimize your false positives that we can guarantee every transaction that is approved by our platofmr. If we're wrong about the legitimacy of an order, we'll completely cover the cost. Our decisioning models are so accurate that we often reach approval rates as high as 97% for eCommerce businesses.
The Benefits of an End-to-End Fraud Solution
In addition to optimizing your transaction approval rate and protecting your eCommerce business from fraud attacks, Vesta can also provide in-depth analytics into the purchasing behaviors of your customers.
eCommerce business owners will gain access to comprehensive tracking, and reporting on all of their transaction so they be better informed on the shopping habits of their target audience. These insights can help you to optimize your inventory, checkout process, and abandoned cart follow-up procedures.
The true value of an end-to-end fraud solution is undeniable.
WIt's Time to Stop False Declines... For Good
If your eCommerce business is struggle with a fraud problem, it may be time to consider investing in a proper fraud prevention tool. If left unattended, false declines can become a serious problem and result in lasting damage to your business' ability to scale.
Vesta's fraud solution allows you to address the causes of false declines easily, cutting down complaints from customers and ensuring security for payments. If you'd like to learn more about Vesta's platform, request a demo today and we'll walk you through exactly how it works.
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