Behind the scenes: what happens during optimised transactions?

Happy customers, repeat buyers, enjoyable shopping journey, high conversion, and increased revenue – these are goals every retailer or merchant works hard towards achieving. It’s become quite the norm though to overlook how much a payment strategy weighs in on the challenge of turning shoppers into customers, keeping them happy, and giving them a pleasant and seamless experience they’ll want to return to.

For consumers, a transaction needs to happen in the blink of an eye and shouldn’t be complicated by extremely rigorous fraud checks, slow checkout pages, or the lack of preferred payment methods. Any of these obstacles are valid reasons to prevent someone from completing a purchase. If we take a look at what happens behind the scenes of a successful transaction, things can get more complex than we might imagine.

What’s the process behind a transaction?

A transaction includes the entire route of a customer’s funds from the moment they’re sent in exchange for a product. It all starts with the authorisation. Once a customer completes their purchase, the merchant’s payment partner checks with the customer’s bank and card association on the status of the card. This check includes whether it has been reported stolen or lost, as well as the state of the funds: does the customer have enough credit for the initiated transaction?

Next, both the card association and the bank report back to the payment provider informing them whether the transaction has been authorised or declined, based on the review conditions.

Finally, the merchant is informed by their payment partner about the transaction status. Although it may sound like a very complicated process that takes a good amount of time, the entire authorisation lasts only for a few seconds due to advances in technology and the algorithms behind it.

The authorisation and capture of the transaction, known as the more complex phase of the process, is shortly followed by the settlement phase. In this step, the customer’s bank sends the required funds to the payment partner. The payment provider then deposits the funds in the merchant’s account. This is the general progression occurring behind any transaction. Once this process is finalised, the customer can be happy with completing their purchase and the merchant can enjoy a successful transaction for their online trade.

The enhanced payment lifecycle

Although the process explained earlier is part of every transaction, the focus nowadays is more on an enhanced payment lifecycle powered by machine learning. With the help of this technology, transactions are optimised, resulting in less friction for customers and increased conversion for merchants.

Acapture’s fraud management solution uses machine learning to improve the transaction process. It all starts with a customer browsing a merchant’s web shop in search of their desired product or service. The fraud management solution can track the customer’s behavioural patterns and instantly detect and report any signs of fraud.

When shoppers are ready to finalise their purchase, they arrive at a checkout space that’s customised according to the merchant’s needs, has a responsive design, and is compliant with PCI DSS standards. Customers can enjoy a smooth journey with checkout features, such as validation, and an account updater for return purchases. With the help of tokenization, customer data, such as profiles and payment preferences, are stored safely, making one-click payments instantly available to support returning customers.

Once the customers go on to finalise the purchase, the transaction is routed to the acquirer with an optimal authorisation rate and cost, ensuring the best conditions for the payment to be processed. In the meantime, chargebacks are reduced via data-enriched machine learning models. These models check the transaction’s validity with the help of features such as dynamic 3-D Secure, device fingerprinting, and predictive issuer intelligence that anticipate the issuer’s response. This safeguards against fraudsters and ensures that honest customers can seamlessly make their purchases.

In addition, there are solid models in place to help the system make sure that genuine transactions are authorised and not declined for the wrong reasons. With the help of machine learning, each stage of every transaction is continuously optimised, securing the merchant’s business, while also increasing their revenue.

Why optimised transactions?

With support from advanced fraud prevention powered by machine learning, transactions are more secure and honest customers can more easily be differentiated from fraudsters. By making this detection happen faster and more accurately, the level of authorisation rates increases, resulting in higher conversion and fewer disgruntled bona fide customers. At the same time, genuine customers can also enjoy a smoother journey, which encourages them to return and buy more, ultimately leading to higher revenue for merchants. All in all, machine learning not only protects from fraud; it highly supports merchants to grow their businesses.

Payments play a crucial role throughout the entire customer journey – it’s a step that can heavily influence whether or not customers decide to make a purchase. This is why merchants need to ensure that they not only improve their shopping experience from different points of view, such as user experience, delivery and variety of products offered, but also optimise their payment processes to take advantage of advanced fraud managment and increased conversion.

This editorial was first published in our Payments and Commerce Market Guide 2018-2019. The Guide presents the key trends and developments in global and regional payment methods by highlighting the innovation, challenges, and developments in the use of the most important payment methods across geographies and verticals.

About John Snoek

John is Acapture and Payvision’s CPO, collaborating with the key business and content stakeholders to design a truly agile roadmap for success by unifying the different teams involved in the successful launch of a new product. John has accrued over 20 years’ of go-to-market experience in product development, management and launch. Prior to joining the two companies, John was responsible for global marketing and product management, being one of the pioneers in the field of alternative payments.

About Acapture

Launched in 2015, Acapture is an international payment service provider focused on maximizing the revenues of merchants around the globe. Acapture is affiliated to Payvision, one of the world’s fastest-growing global card acquiring networks. The two companies help merchants grow their business through a complete data-driven omnichannel payment solution, capable of managing a payment at every stage, from checkout to fund collection to settlement.