Report: Retailers Lose $40 Billion per Year to Unnecessary Credit-Card Declines

Feb. 20, 2014

Report: Retailers Lose $40 Billion per Year to Unnecessary Credit-Card Declines Of the 17 percent of consumers who report having had their credit card declined during a card-not-present transaction, up to one-third of those declines were unnecessary, according to a new report from the TrustInsight division of antifraud technology provider 41st Parameter. More importantly, the company found, the revenue lost by retailers because of the blocked sales totals $40 billion each year.

And lost sales for retailers is only the start. When their card is unexpectedly declined, almost half call their issuer, 34 percent try another card, 24 percent use a different payment method and 24 percent either skip the purchase entirely or shop at a different online retailer. These consumer actions have very real and quantifiable financial ramifications for retailers, issuers and card networks, according to Ori Eisen, chief innovation officer for 41st Parameter & TrustInsight, a part of Experian.

“We’ve created a solution that allows merchants and issuers to exchange information in real time that can ascertain that a specific credit card and a specific device on which it’s being used are known to have transacted together without any fraudulent past,” said Eisen. “If so, that should denote to issuers that this, indeed, is your customer, and they should not be declined, unless it’s a credit issue.”