Square chooses Arcot to minimise false decline rates

Arcot offers a global payment authentication network powered by 3-D Secure (3DS) and believes that merchants should benefit from both a strong fraud protection system and optimised customer experiences. This stance is driving developments in CNP payments and, in a recent pilot with Square, Arcot aimed to prove that authentication can be more convenient.

Improving approval rates through the power of data

US merchants lose more revenue to false declines, which are valid transactions rejected by the issuer, than to actual fraud, according to industry research provided by Broadcom. Square also faced more false declines across CNP transactions in the US, impacting customer satisfaction and conversion rates. It chose Arcot to reduce false declines for legitimate customers and to improve online payment approval rates, while maintaining security and fraud protection.

By leveraging 3DS Data Only, Arcot supports Square to deliver transaction intelligence to issuers and drive more precise risk decisions. 3DS Data Only is a form of 3DS authentication that allows merchants to share transaction data with the card issuer for authorisation without requiring the cardholder to complete authentication steps. This aims to ease issuers into approving more legitimate transactions without interrupting the checkout flow.

By offering a simple sharing of consistent data signals with issuers, Arcot has seen improvements in authentication and authorisation success rates.

This approach lowers fraud attempts and supports approval rates.The pilot delivered measurable benefits for Square, including a 6% fall in chargebacks thanks to optimised risk management and fraud mitigation, a 19% increase in authentication rates, and improved authorisation rates, which rose by 646 basis points across major issuers.

These numbers reflect Arcot’s commitment to offering better data that leads to growth for merchants, issuers, and customers. Additionally, the company’s mission is to modernise digital commerce through the Arcot Merchant Initiative, supporting merchants to securely share rich transaction data, risk insights, and transfer intelligence with issuers.