Riskified Launches “Auth Rate Enhance” as Part of Chargeback Guarantee to Improve Conversion Rates and Maximize Ecommerce Revenues for Merchants
- Riskified (NYSE: RSKD) introduces Auth Rate Enhance to maximize authorization rates and boost ecommerce growth.
- False declines were projected to cost US merchants $157B in 2023, emphasizing the importance of optimizing authorization processes.
- Auth Rate Enhance pre-screens orders and enriches analysis to give confidence to issuers like Capital One, resulting in higher authorization rates.
- Partnerships with companies like Capital One and Lorna Jane have led to significant improvements in authorization rates and fraud prevention.
- Lorna Jane saw a 13% increase in authorization rates and a 98% reduction in chargebacks after working with Riskified.
- Riskified's Auth Rate Enhance helps merchants improve their risk profile, increase authorization rates, build trust with issuers, and enhance the customer journey.
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Insights
The introduction of Riskified's Auth Rate Enhance represents a strategic innovation in the ecommerce space, particularly addressing the challenge of false declines which, according to Nuvei, are expected to result in substantial financial losses for US merchants. By focusing on optimizing authorization rates while maintaining robust fraud prevention, Riskified could potentially unlock significant revenue for its merchant clients. The reported 13% lift in issuer authorization rates for Lorna Jane and the 98% reduction in chargebacks serve as strong indicators of the solution's efficacy. These improvements in operational metrics can lead to enhanced profitability for merchants, potentially increasing Riskified's value proposition and customer loyalty.
For investors and stakeholders, the key points of interest revolve around the scalability of this solution and its impact on Riskified's financial performance. Increased adoption rates could lead to higher revenues from service fees and expanded market share. However, the competitive landscape in fraud prevention and risk intelligence must be considered, as competitors may also innovate to offer similar improvements in authorization rates.
False declines present a substantial hurdle for ecommerce growth and Riskified's Auth Rate Enhance targets this issue directly. By pre-screening orders and enriching issuer data, the service aims to improve the customer experience and reduce friction in the purchase process. The collaboration with Capital One and the reported 25% decrease in false declines with certain merchants illustrates the potential industry-wide impact. This innovation could set new industry benchmarks for authorization rates and fraud prevention.
From a broader industry perspective, the adoption of such solutions could lead to a shift in how merchants approach risk management, balancing the need for high authorization rates with the imperative of fraud prevention. The ability to offload chargeback risk while improving the customer journey may become a competitive advantage for merchants, reshaping customer expectations and loyalty strategies.
Understanding consumer behavior in the context of false declines is critical. The frustration associated with a declined transaction can lead to immediate loss of sales and potentially long-term customer attrition. Riskified's solution could enhance the customer experience by reducing these friction points, which is particularly important given the competitive nature of the ecommerce market. The data-driven approach to pre-auth risk assessment and post-auth feedback loops may also provide valuable insights for merchants to refine their marketing and operational strategies.
Long-term implications for the ecommerce sector include the potential for more nuanced risk profiles and personalized authorization processes. The market could see an evolution in how transaction data is leveraged for risk assessment, leading to more sophisticated and efficient ecommerce ecosystems. Merchants that effectively integrate these solutions could see improved customer retention and an increase in lifetime customer value.
New offering aims to optimize approval and card issuer authorization rates to capture more online sales
In today’s competitive ecommerce landscape merchants fight to attract and retain customers. But for many shoppers, the journey ends before it truly starts. According to Riskified data, approximately
Overly low authorization rates can choke conversion rates, in turn stunting ecommerce growth. This situation highlights a critical opportunity to optimize the various safeguards within the purchase process to enable merchants to capture more customers and revenue.
Auth Rate Enhance pre-screens orders and enriches the analysis with data points that give issuers such as Capital One the confidence to authorize more digital orders. Furthermore, Riskified’s Chargeback Guarantee offers the flexibility to be configured pre-authorization or a combined approach integrating pre-auth risk assessment with a post-auth feedback loop. This empowers merchants to optimize conversions, reduce insult rate, and offload chargeback risk to Riskified based on the needs of their specific business segments.
"We’re providing an intelligent risk signal to issuers, so they can authorize more ecommerce transactions for our merchants,” said Eido Gal, CEO & Cofounder of Riskified.
"Our integration with Riskified allows us to meaningfully increase our authorization rates by leveraging data from their merchant network, resulting in superior experiences for consumers shopping with Riskified merchants," said Jonathan Borman, Head of Fraud Partnerships, Capital One. The partnership has enabled Capital One to decrease false declines by up to
Working with Riskified, athletic apparel retailer Lorna Jane saw an immediate
"We were looking for a partner that would not only help us raise our approval and authorization rates, but also minimize fraud to keep us out of the most stringent chargeback programs," said Peter Clarke, Chief Technology Officer at Lorna Jane. "Riskified does exactly that, enabling us to significantly increase our overall authorization rates while also ensuring accurate fraud prevention."
Riskified’s Auth Rate Enhance can help merchants improve their risk profile through accurate fraud prevention, see a significant increase in authorization rates, establish critical trust with card issuers, and take better control of their customer journey.
About Riskified
Riskified (NYSE:RSKD) empowers businesses to unleash ecommerce growth by taking risk off the table. Many of the world’s biggest brands and publicly traded companies selling online rely on Riskified for guaranteed protection against chargebacks, to fight fraud and policy abuse at scale, and to improve customer retention. Developed and managed by the largest team of ecommerce risk analysts, data scientists and researchers, Riskified’s AI-powered fraud and risk intelligence platform analyzes the individual behind each interaction to provide real-time decisions and robust identity-based insights. Learn more at Riskified.com.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240312888271/en/
Aileen McNelis
PR for Riskified
amcnelis@nexttechcomms.com
Cristina Dinozo
Sr. Director of Communications
press@riskified.com
Chett Mandel
Head of Investor Relations
ir@riskified.com
Source: Riskified
FAQ
How can Riskified's Auth Rate Enhance help merchants?
What was the projected loss for US merchants due to false declines in 2023?
Which company saw a 13% increase in authorization rates after working with Riskified?
How much did false declines exceed globally compared to actual ecommerce credit card fraud?
What does Auth Rate Enhance offer in terms of configuration?
