Card Declines Can Crush Revenue; Visa’s Real-Time Fix Could Be a Game-Changer for Issuers

Payments orchestration platform Spreedly has announced a new partnership with Visa to reduce instances of failed payments with just-in-time card updates for Visa cards through Visa Account Updater.

The enhancement can provide revenue protection for card issuers and merchants by enabling more transactions to be completed at the point of purchase.

Failed transactions can cause card issuers to lose revenue. When a cardholder is unable to complete a transaction with a certain card, they may switch to another payment method, such as cash or another issuer’s card, to complete their purchase.

Merchants also can lose revenue when a card is declined due to outdated credentials. A merchant may not have a preference as to which credit card a customer uses to make a payment. But if a customer only has one credit card and no other form of payment on hand, then they may abandon the purchase altogether if their card is declined.

Credit card payments fail for various reasons. Some card payments are disallowed due to suspected fraud, but payments can also fail when a card has information discrepancies such as mismatched billing and shipping addresses.

Outdated information can cause a credit card payment to fail.

False declines occur when payment systems stop legitimate transactions due to technical errors that may occur during processing or the detection of incorrect customer information.

Losing a handful of transactions to false declines isn’t likely to sink a credit card issuer’s or merchant’s overall financial performance in a quarter. But consistent false declines can add up to large losses over time.

False payment declines led to a projected $81 billion in lost business in the U.S. in 2023, according to a PYMNTS Intelligence study. And “47% of retailers said false declines have a very or extremely negative impact on customer satisfaction,” the study’s authors wrote.

Consumers who have a card payment declined due to outdated information may grow frustrated with their card issuer. But behind-the-scenes updates, such as those that Spreedly and Visa offer, allow transactions to process smoothly, leading to fewer service interruptions and increased customer loyalty.

According to a press release on the Spreedly enhancement, that outdated card information is a key reason why payments for recurring bills or subscriptions fail.

But just-in-time updates to card information allow for “real-time access to refreshed card credentials at the point of transaction to give merchants greater control and responsiveness.”

Legitimate participants in a credit card transaction, including a cardholder, credit card issuer, merchant, and payment network, want payments to process seamlessly. And the partnership between Visa and Spreedly increases the probability that payments will process without complications.

Peter Dougherty, President at Spreedly, said in the release that the company’s “mission is to provide merchants with the flexibility and intelligence they need to optimize every transaction.”

“We wanted to create an innovation that drives results for our customers — a card update in-line with the transaction itself does exactly that,” he continued.