Developing a successful payments strategy is becoming complex every day, and for merchants, staying ahead of potential challenges is critical. To help navigate this shift, Optimized Payments, Gr4vy, and Checkout.com recently hosted a webinar featuring three industry leaders:
- Anand Goel (CEO & Founder, Optimized Payments)
- Zubin Vandrevola (VP of Business Development & Partnerships, Gr4vy)
- Adam Manisero (Head of Account Management, North America, Checkout.com).
In the discussion, they shared their perspectives on how merchants can transition from a reactive approach—putting out fires—to a proactive payment strategy that drives efficiency, revenue, and customer satisfaction. Here are the key takeaways from their conversation.
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Complexity Is the Biggest Challenge, But Also an Opportunity
Payments have evolved significantly in recent years, with more players, payment methods, and regulatory considerations than ever before. Merchants must manage multiple payment service providers (PSPs), acquirers, gateways, fraud prevention tools, and local regulatory frameworks. This creates layers of complexity that can make it difficult to ensure smooth and cost-effective transactions.
However, complexity also brings opportunities for businesses that can effectively analyze and streamline their payment operations. By consolidating payment data across providers and markets, businesses can unlock hidden efficiencies and improve decision-making.
Zubin Vandrevola noted that the challenge is making sense of this complexity: “The biggest challenge in the ecosystem is the complexity. The opportunity comes in how we disambiguate that complexity—whether through cooperation, collaboration, or better technology.”
Anand Goel: “There are so many moving parts in payments. The key is to harmonize the data from multiple providers and use it to drive actionable insights.”
A merchant that takes a strategic approach to payments—rather than simply reacting to issues as they arise—can optimize processing costs, improve authorization rates, and ultimately enhance customer experience.
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A Proactive Payment Strategy Is About Anticipation
Being proactive in payments isn’t just about reacting quickly to issues—it’s about anticipating problems before they happen and putting measures in place to address them.
Many merchants today operate in a reactive mode, responding to payment failures, chargebacks, or rising costs only after they become problems. A proactive strategy, however, involves using data and best practices to foresee and prevent these issues before they impact revenue.
This approach requires merchants to actively monitor payment performance, track key metrics, and continuously test and refine their processes. For instance, payment failures due to incorrect customer data or insufficient funds can often be mitigated by intelligent retry strategies and optimizing routing through multiple acquirers.
Anand Goel emphasized the importance of leveraging analytics: “A proactive approach means anticipating future problems, whether they are front-end (customer-facing, such as failed transactions) or back-end (reconciliation, reporting, benchmarking). Data and analytics play a huge role in staying ahead.”
Zubin Vandrevola: “Think of it as a continuum—on one end, you’re constantly firefighting. On the other, you have all the tools and data to act before issues arise. The goal is to keep moving toward that ideal state.”
Adam Manisero: “Payments should not be an afterthought. It’s a lever for additional revenue. Even a small improvement in authorization rates can mean millions of dollars in added revenue.”
Building a proactive strategy also means ensuring that internal teams—from finance to operations—have the right tools and processes to manage payment data effectively. By doing so, companies can reduce unnecessary fees, minimize fraud, and improve overall transaction success rates.
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Balance the Three-Legged Stool: Authorization, Fraud, and Cost
A successful payments strategy requires balancing three critical factors:
- Authorization Rates: Maximizing the percentage of successful transactions is key to reducing lost revenue.
- Fraud Prevention: Preventing chargebacks and unauthorized transactions without creating unnecessary friction for legitimate customers.
- Cost Efficiency: Keeping transaction fees, fraud management costs, and operational expenses under control.
Merchants often make the mistake of focusing too much on one aspect while neglecting the others. For example, aggressively optimizing for higher authorization rates may lead to increased fraud risk, while prioritizing cost reduction might result in lower approval rates due to poor routing strategies.
Zubin Vandrevola explained this balancing act: “The biggest pitfall is optimizing only one of these without considering the trade-offs. You might push for higher authorization rates but end up increasing fraud or costs. It’s all about balance.”
Anand Goel: “Merchants should track key metrics like approval rates, chargeback ratios, fraud ratios, and effective payment costs to ensure they’re making data-driven decisions.”
By leveraging advanced analytics and working with payments partners, merchants can find the right equilibrium that maximizes revenue while maintaining security and cost efficiency.
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Start With Data and Leverage Your Partners
For merchants looking to transition to a proactive payments strategy, the first step is gathering and analyzing data. Without clear visibility into key metrics—such as approval rates, chargeback ratios, and processing costs—it’s impossible to identify and address inefficiencies.
Merchants should also benchmark their performance against industry standards and leverage external partners to gain insights and best practices. Industry forums like the Merchant Risk Council (MRC) and the Merchant Advisory Group (MAG) provide valuable networking opportunities and data-sharing insights.
Zubin Vandrevola emphasized the importance of collaboration: “There’s a great community in payments. Don’t go at it alone—tap into industry knowledge and best practices.”
Adam Manisero highlighted the importance of strong partnerships: “Any PSP or payments provider that stands still is probably not up to date on the latest industry trends. Merchants should choose partners that iterate with them, bring forward insights, and help them stay ahead of the curve.”
Additionally, working with PSPs, consulting firms, and analytics platforms can help businesses uncover optimization opportunities they might otherwise miss.
Bonus Insight: AI and Machine Learning Are Game Changers
Artificial intelligence (AI) and machine learning are revolutionizing payments by enabling smarter decision-making and automation. Merchants can now use AI-driven solutions to optimize payment routing, retry failed transactions more effectively, and detect fraud patterns in real time.
For example, AI can analyze past transaction data to determine the best retry strategy for declined payments, helping merchants recover revenue that would otherwise be lost. Similarly, machine learning algorithms can detect fraud attempts by recognizing subtle behavioral patterns that traditional rule-based systems might miss.
Adam Manisero: “Checkout.com uses AI-powered authorization optimization tools to fine-tune transactions for better success rates. But AI alone isn’t enough—it must be combined with human expertise.”
Anand Goel: “At Optimized Payments, we’re using AI to build Opie, a bot that provides real-time payments insights, and machine learning to predict chargeback outcomes with over 80% accuracy.”
While AI is still evolving, it holds tremendous potential for improving authorization rates, reducing fraud, and automating complex payment workflows.
The transition from reactive to proactive payments isn’t an overnight change—it’s a journey. By implementing data-driven decision-making, balancing key payment levers, leveraging AI where appropriate, and collaborating with industry partners, merchants can future-proof their payments strategy and unlock significant revenue opportunities.