In today’s time, who doesn’t prefer online shopping? The E-Commerce industry has grown a lot in the past few years and continues to witness growth at an exponential pace. After the implications of Coronavirus, many merchants have closed their brick-and-mortar stores and shifted to online marketing and business online. Although running business online is convenient for both the merchants and consumers, but it does come with its own set of drawbacks. Reports show that around 2.6% of E-Commerce orders worldwide get rejected.
Most of these rejections are false, and there is no wrongdoing on the part of merchants. However, a lot of money is lost because of these rejected sales. Potential sales revenue is lost, but money spent on advertising and marketing also goes to waste. As a result, online vendors and merchants need to adopt technologies that can help reduce these rejected transactions.
Many payment service providers and getaways have embraced the digital revolution and use effective Cascading and Smart Routing strategies to increase transaction approval rates. However, a study shows that most consumers don’t purchase from a particular merchant after a single declined transaction.
Therefore, E-Commerce merchants should know about cascading transactions and how to implement this technology for their businesses for increased sales revenue.
What is Cascading?
Cascading and smart routing are similar to each other but not entirely the same. For example, cascading a transaction involves distributing failed or rejected transactions among multiple payment getaways and finding an appropriate one. In addition, merchants can send transactions to a specific channel to increase transaction approval.
Cascading helps in identifying transactions that may face issues and getting them over the line. Buyers can pay the total amount through multiple prepaid payment portals. If there are insufficient funds in one account, the amount is split with another payment option.
Difference between Cascading and Smart Routing
Smart routing involves sending a transaction to a payment getaway where its chances of approval are highest. It is controlled through an extensive acquiring network that is safe and secure. It differs from cascading because it focuses on preventing declined payments while cascading involves getting declined payments approved.
Routing works before a transaction is authorized, but cascading is used to solve problems associated with failed transactions. Top payment service providers like eDataPay Payment Platform make use of both technologies to assist high-risk merchants with their transactions.
Both cascading and smart routing have a similar objective, but their processes are a bit different.
Why are transactions declined, and how does Cascading help?
Most failed payments take place because of human errors. For example, when someone enters the wrong details, CVV code, card number, etc., the transaction is declined. Of course, this is a simple mistake, but banks usually consider this potential fraud and completely decline the payment.
Banks and higher authorities want to reduce fraudulent transactions, but merchants have to suffer even if there is no fraud involved. Businesses can hire risk managers to work on flagged payments and get them approved, but it is time-consuming.
Integrating cascading helps find the most appropriate channel to make the payment go through without issues. For example, some payment getaways have a pre-decided, fixed cascading flow, while some follow the rules and logic to change the course of the transaction while it is being processed.
How Cascading helps increase sales volume?
Through cascading of card-not-present payments, merchants can reduce failed transactions. Cascading effects both prioritization and real-time transaction approvals that can help tackle failed payments. In addition, merchants can imply this technology to increase their revenue and profits.
1. Reduction in payment fees
Different vendors have different payment fees, and merchants may need to pay higher amounts at certain channels. Cascading gives merchants the ability to complete a transaction through a payment portal that charges the lowest.
Also, failed transactions or chargeback claims are complex and take a lot of time to solve. Therefore, merchants need to pay for disputing and challenging these claims, which reduces such problematic situations.
2. Switch to multiple payment vendors easily
Customers like to make hassle-free payments and do not buy from a merchant if their card is declined even once. Through cascading, if a transaction cannot be completed on a particular channel, it automatically retries the transaction on another channel to complete it.
This technology allows merchants to save almost 15% of transactions that would have failed in normal circumstances. In addition, top PSPs have integrations with more than 100 payment portals so that they can choose the right one for any particular transaction.
3. Maximum payment conversion rate
E-Commerce businesses have seen a growth of 40% in their transaction conversion rate after using cascading in their payment process. Normally when a transaction fails, there is no way to reverse it instantly. However, in most cases, cascading will distribute the payment to a getaway where the chances of approval are high.
Businesses lose a lot of money annually because of failed payments, and through a higher conversion rate, their revenue goes up. Also, they don’t have to spend too much on maintaining their payment systems when cascading technology is being used.
4. Expand your business to new regions
For businesses that want to expand internationally and enter new regions, cascading is vital. There are many countries where there are no established payment service providers. Cascading will consider all available options and provide both consumers and merchants an easy, convenient way of making payments.
In most emerging nations, where payment getaway outage is common, cascading transactions can be immense. Set up the most established payment systems on top of the cascading order and go down from there.
The menace of failed transactions brings losses worth millions every year to merchants, especially the E-Commerce industry. Of course, some of these transactions are fraudulent, but most of them are harmless, and merchants lose hard-earned money for no reason at all.
The best thing businesses should do is implement cascading and smart routing in their payment flows. It will drive up the rate of transaction approvals and give a better shopping experience to consumers. Merchants need to partner with highly secure payment processors like eDataPay Payment platforms that offer cascading technology and integrate with multiple vendors. It ramps up fraud prevention, payment approval and helps businesses increase their sales revenue.