Contact us
CMSPI Case Study

Global Fashion Retailer: Approvals Optimization Project

Our payments experts carried out a full benchmarking review, comparing the retailer's ecommerce approval rates against a CMSPI control group.

This multi-billion dollar, global fashion retailer engaged CMSPI in late 2019 to begin a project to optimize their approval rates for ecommerce payments.

Like many merchants, this retailer has seen stores temporarily close amidst the COVID-19 crisis. As a result, ensuring their ecommerce transaction processes are efficient has never been more important. Approval rates – calculated as successful authorizations divided by the total authorization attempts – are lower in the online space by default, due to increased supply chain complexities. False declines – when a genuine customer’s transaction is declined despite having sufficient means to pay – are much more common online, particularly with no real alternative to fall back on, like cash.

A common misconception is low approval rates are caused by the merchant’s own internal setup: more often, issues occur throughout the payments supply chain, resulting in false declines. As the accelerated trend of increasing online sales continues, improving approval rates has become a bigger and more crucial challenge for many merchants.

CMSPI Solution

CMSPI’s payments experts carried out a full benchmarking review, comparing the retailer’s ecommerce approval rates against a CMSPI control group. This review highlighted a number of areas of underperformance, including:

  • Payment methods
  • Issuing bank performance
  • Excessive instances of certain decline codes

CMSPI worked with the merchant’s suppliers – including processors, Payment Service Providers (PSPs) and issuers – to assess potential solutions to these problems, providing comprehensive, independent data insights and expertise.

In February and March 2020, solutions to many of these issues were implemented and resulted in significant improvements. CMSPI continues to monitor the merchant’s approval and fraud rates to ensure they stay at this level, and to look for further optimization opportunities.

Benefits Delivered

By engaging with CMSPI, the merchant has improved their approval rates by 8% from January to April 2020. The graph below also shows how, by working with CMSPI and actively pursuing greater approval rates, the retailer has significantly outperformed a market index of similar merchants by around 5%.

By optimizing their approvals, the fashion retailer has achieved an eight-figure revenue increase and during a particularly testing time, with an annualized, additional successful transaction value of $80m and additional revenue of $30m-$40m. In addition, during the period of store closures for COVID-19, the merchant has also seen incremental ecommerce sales of $6m-$7m during April alone. The merchant also benefits from improvements to customer experience, which will lead to further incremental sales in the future.

Approval Rate Performance Vs Index