Insights

Last month, I wrote about the recent and coming changes announced by the Payment Brands. April is six short months away and is when the remainder of the changes will go into effect. New interchange structures and fees aside, some of the Visa updates will force many merchants to deal with process changes, or even engage valuable IT resources to accommodate the new rules. Visa’s focus for the past several years has been on ensuring transaction security and integrity of the authorization system. I want to highlight one new rule that takes that a bit further by levying fees against merchants whose decline recovery practices push the envelope in order to obtain approvals. In my years as a Relationship Manager for a large global acquirer, I’ve seen recurring clients employ impressive strategies to determine which declines to retry, and how often, based on several factors, including card type (debit vs. credit), decline reason code and optimal timing based on a tracked rate of success. On the other end of the spectrum are merchants that retry every decline as often as they can, usually due to a lack of resources or understanding. If you’re in the latter group, you may want to consider improving your process to avoid unnecessary fees. If you struggle with the lack of resources, or if you simply lack the expertise, we can help you to better understand and advise you on your decline strategies. Here’s what you need to know. Beginning in April 2021, declined Visa transactions will fall into one of four decline reason code “buckets”. The first contains “hard” declines that Visa advises should never be retried. Any attempt to reauthorize a transaction with one of these decline reason codes will incur a $0.10 fee ($0.15 for cross-border transactions). The other three buckets indicate opportunities to get an approval. Bucket 2 is more about timing, while Bucket 3 will require merchant intervention to correct data. Bucket 4 is everything else. These will incur this same fee, but only for excessive attempts, defined as 15 attempts within a 30-day period. See the chart below for the breakdown. A second component to the new Data Consistency rule, which will penalize merchants for making changes to transactional data to coerce an approval after receiving a decline was put on hold for now, so avoid this tactic in your new strategy!