FEATURE ARTICLE
Insights Magazine from CMSPI
Page 6 | November 2021
Assessing transaction productivity means looking at the gross profitability of every transaction. That’s more than just minimizing cost. If one payment type is low-cost but is more likely to be declined because of a “false positive” of possible fraud, then it is less productive than a counterpart that has higher fees but attracts a broader customer base and has higher transaction approval rates (shown in Figure 1). Higher approvals don’t have to mean accepting greater fraud risk: CMSPI estimates that one in five online declines are false, and it is those good customers wrongfully turned down who must be approved to increase productivity. What is Transaction Productivity?
“ The impact of fraud can weigh heavily on a business. Businesses are also contending with increased customer demand, changing customer attitudes, and an accelerated digital transformation… The solution: a modernized checkout experience for the customer and a tech-forward, optimized experience for businesses.
Joanna Raitano, Stripe
VISUALIZING TRANSACTION PRODUCTIVITY
Using the abstract visual opposite as an example, we can see that the calculations involved in adopting a payment method can be challenging. While Payment Method 4 is the cheapest, it is still less productive than Methods 1 and 3, which have higher approvals and offer a smoother customer experience that boosts conversion rates. Similarly, Payment Method 2 generates a significant increase in conversion and average basket sizes, but becomes unproductive if customers are more likely to be falsely declined. These assessments differ not just between payment methods but also between suppliers offering the same payment method.
Figure 1. How Productive Are Your Payments?
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