There’s Gold in Authorization Response Codes

Every time a customer swipes their credit card, that card is either approved or declined before funds are transferred. Authorization response codes are a numerical message that’s sent from the cardholder’s Issuer to your Processor. These codes tell your Processor ‘yes, this transaction can be processed’ or ‘no, this transaction should not be processed.’ 

Each code also corresponds to a specific reason for the approval or decline. Codes can change from Issuer-to-Issuer, but they tend to show approvals, soft and hard declines, referral codes (lost, stolen, special conditions, etc.), service codes (card-not-present, expired, system error, etc.), and fraud. When diligently tracked, Merchants can start seeing trends and triangulate reasons for disputes. 

Since submitting representments is expensive, and problems with your processing systems can lead to customer churn, identifying and fixing the root causes can save your business serious money. 

Tracking authorization response codes can feel overwhelming, but trust us, it’s worth the effort. These codes can unlock patterns and troubling shifts that lead to influxes of chargebacks and fraud.    

Analyzing authorization response codes can show you: 

  • Fraud Trends:
    • Increases in stolen card numbers – might indicate a data breech or skimming attempt
    • Card not present declines – can be due to unauthorized use of cards in your ecommerce sites
    • Declines in specific regions or countries – can identify specific pain points
  • Customer Behavior Trends:
    • Insufficient funds – may indicate affordability issues with your product
    • Expired cards – on file will lead to an influx of declines, which is especially painful when working with subscriptions
    • Patterns in Specific Networks or Issuers – technical issues in your payment processing systems can be spotted and fixed
  • Operational Trends:
    • Invalid CVV – could indicate issues with checkout process
    • Address mismatch – trends in mismatch declines can indicate checkout issues
    • Trending error codes – again, trending error codes can indicate technical issues that are
  • Overall Business Trends:
    • Rate of declines – can show if your dispute and fraud measures are working
    • Frequency of specific reason codes – can tell you a world of information. You can dig into how products, marketing, and customer service are performing
    • Comparison with Industry benchmarks – can give you a holistic understanding of how you stack up to the industry standard

February 19, 2024

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