SAN JOSE, CA--(Marketwired - Feb 19, 2014) - 41st Parameter, the leader in device recognition and a part of Experian, has released data about online credit card declines from its TrustInsight division. The independent study found that 17 percent of consumers report having had their credit cards declined during card not present (CNP) transactions. According to TrustInsight, as many as one-third of these declines were unnecessary. The result is consumer aggravation, increased operational costs for banks and credit card companies and as much as $40 billion in lost revenue for online retailers. TrustInsight has issued a report and infographic detailing the findings of the study.
To help understand the scope and impact of these declines, TrustInsight -- which helps establish trusted relationships between online consumers, merchants and financial institutions -- conducted a study of 1,000 U.S. consumers. The findings found that avoidable online credit card declines lead to loss of trust for consumers, sales for merchants and increased operational costs for credit card companies and issuing banks.
"The impact of consumer action in the face of a decline can have real and measurable effects on all parties, including credit card companies, banks and merchants manifesting itself in lost revenues, lost fees and lost customer loyalty," said Ori Eisen, founder and Chief Innovation Officer at 41st Parameter. "TrustInsight is committed to creating a standard for online trust that enables merchants, credit card companies and issuing banks to better recognize trusted digital consumers and reduce the number of wrongly declined consumers avoiding unnecessary losses."
The study also revealed that consumers handle credit card declines in a variety of ways -- all of which carried negative economic impact to at least one party in the transaction, resulting in unnecessary operating costs for banks, decreased loyalty for the credit card company and lost revenue for all. For nearly half (48 percent), the first step is to immediately call the phone number on the card. This is a natural response but one that drives up call center costs. According to the study, 34 percent of consumers simply try again with a different credit card. Most alarming is that one of every six people will skip the purchase altogether.
"No one wants to turn away business," said Eisen, "and no one wants their business declined. The frustration and impact of wrongful declines is a real problem -- especially as more and more transactions occur in non-face-to-face situations."
For more information, download the report and view the accompanying infographic.
About TrustInsight, a Division of 41st Parameter
In a world where people are increasingly reliant on a variety of Internet-connected devices for everything from banking to shopping to entertainment and media, creating friction-free customer experiences and preventing online fraud are constant business challenges. 41st Parameter, the global leader in device recognition and intelligence, combines patented technologies and years of expertise to identify devices without cookies, without compromising privacy and without impacting performance. The TrustInsight™ enables online merchants to increase sales by approving more trusted transactions.