Spreedly, a robust online payments platform that provides cloud-based infrastructure designed to allow businesses to connect to multiple payment service providers, endpoints, and a secure credit card vault – all through a single API; has entered into a new agreement with Worldpay, a global leader in payments, to enable mutual ecommerce customers to transact more easily around the world.

As part of the collaboration, Spreedly agrees to integrate Worldpay’s international payment processing API into its Spreedly service, which will provide merchants with access to over 300 different payment methods in 146 countries and via 126 currencies. The new integration extends upon the existing connection Spreedly has with Worldpay’s U.S. domestic ecommerce platform. The Spreedly-Worldpay cooperative integration supports operations such as Purchase, Authorize, Capture, Refund, Void, Verify and General Credit over Asia Pacific, Europe, the Middle East and North America.

Content subscriptions worldwide are becoming increasingly popular as consumers enjoy and demand greater flexibility in how they consume digital services. According to Worldpay’s latest Global Payment Report, 92% of millennials in the U.S. have active subscriptions. The rise in popularity of subscriptions is leading more merchants to transition to subscription-based billing models. This partnership between Worldpay and Spreedly makes setting up a subscription-based model simple and allows customers greater choice and flexibility when choosing which billing platform they want to use. Merchants simply need to take their Worldpay account, plug the information into the Spreedly API, and start to sell online.

“Key to the Spreedly platform and the value we provide to our customers and merchants is our ability to provide open access to payments,” said Justin Benson, Spreedly CEO. “By working more closely with Worldpay, we expand our network and flexibility for our customers to transact wherever and however they want. That directly aligns with our mission to democratize access to payments worldwide, and we’re excited to fulfill that expectation for our customers with Worldpay.”

“Increasing speed to market while bringing down payment barriers are key focus areas at Worldpay,” said Spiros Theodossiou, SVP Product Management, Global Enterprise eCommerce at Worldpay, “With Spreedly we can deliver more choice, value and peace of mind to companies needing a PCI compliant payment platform, and access to the broadest range of currencies, payment methods, and global reach in the world.”

ABOUT SPREEDLY

Spreedly provides cloud-based PCI Level-1 infrastructure for payments software. Businesses use Spreedly to connect to multiple payment service providers, endpoints, and a secure credit card vault — all through a single API. That enables our customers to transact in more markets and with more partners — all while minimizing PCI compliance scope.

Spreedly is headquartered in Durham, North Carolina. Visit Spreedly.com to learn more.

ABOUT WORLDPAY, INC.

Worldpay, Inc. (NYSE: WP; LSE: WPY) is a leading payments technology company with unique capability to power global integrated omni-commerce. With industry-leading scale and an unmatched integrated technology platform, Worldpay offers clients a comprehensive suite of products and services globally, delivered through a single provider.

Worldpay processes over 40 billion transactions annually through more than 300 payment types across 146 countries and 126 currencies. The company’s growth strategy includes expanding into high-growth markets, verticals and customer segments, including global eCommerce, Integrated Payments and B2B.

Worldpay, Inc. was formed in 2018 through the combination of the No. 1 merchant acquirers in the U.S. and the U.K. Worldpay, Inc. trades on the New York Stock Exchange as “WP” and the London Stock Exchange as “WPY.” Visit us at http://www.worldpay.com/global

The post Spreedly and Worldpay Partner to Deepen Support for Online Merchants Globally appeared first on Spreedly.

What’s New in the New Dashboard?

Monitor your Transactions 

Troubleshoot and support debugging 

Quick links to Other Tools 

Get Started!

The post New Spreedly Dashboard Boosts Successful Transactions appeared first on Spreedly.

“There is not much merchants can do about credit card declines” is probably not the best start for an article about lowering decline rates. Nevertheless, it is not far from the truth. Almost half of the declines occur due to the cardholder’s lack of funds. Add to this the variety of preventative measures by banks and financial institutions to fight fraud, many of which lead to declining otherwise legitimate transactions.

On the other hand, the very little we can do can still have a significant impact on optimizing our payment processing and eventually saving losses, in particular for the organizations that have not paid much attention to the data they collect and pass it on to the payment gateways.

In this article, we aim to help merchants avoid the common pitfalls in handling payments by raising awareness about and identifying factors with profound impacts on the declines. We also provide simple suggestions to raise the approval rate of credit card transactions.

1. Introduction

As a frequent credit card user, you may experience a declined transaction if you exceed the card limit, use an expired card, make an international transaction or a big purchase, or use your card for the first time at a new merchant away from your local geography. When this happens, you may retry with the same or another card, use cash, call your credit card company or change your mind about the purchase. For merchants and banks, however, the story is more complicated.

For the merchant, a declined transaction could mean a lost sale if the customer changes her mind about the purchase. To estimate the merchant’s true cost of declined transactions, factors such as the customer acquisition cost, customer lifetime value and impact of declined or blocked orders should be taken into account. For example, Riskified estimates that lowering false positives (legitimate but declined transactions) can lead to a revenue increase from 3% to 30%. According to PayPros, lowering or eliminating declines leads to an increase in cash flow and better customer relations, all while lowering card processing fees.

For the card-issuing bank, on the other hand, the biggest risk is when declined transactions encourage customers to switch to a different card. In fact, accounting for the lifetime value of a cardholder being estimated between USD $3,600 – $48,000, the impact of losing a customer goes well beyond a lost sale.

Credit declines is a complex problem: the customer’s history, what product is purchased, whether the purchase is domestic or international, the time and location of purchase and merchant category are just a few of the factors involved in whether a transaction is approved or denied. These lead to, for example, a large volume of “false positive” declines. For instance, in 2014, the ratio of suspicious to actual fraud declines was 13 to 1 which means for every 13 transactions declined due to the suspicion of fraud, only 1 was actually a fraud. And that only accounts for 9.4% of declines.

Merchant’s ability to fully understand, measure, and lower the declines are limited by several factors. First is the lack of control over the payment processing. As argued by David Goodale of Merchant-Accounts.ca in an excellent series of articles on credit card decline rates (part I, part II, part III, part IV), an online transaction can be declined by the payment gateway or the issuing bank. The gateway is mostly protecting the merchant while the bank declines the transaction to protect the customer’s best interests. There are measures merchants can take in order to increase the approval rate by the payment gateway while there is not much that can be done about card-issuers.

The second factor is our limited ability to learn from declines. This is due to the fact that for fraud-prevention purposes, the issuing banks leave the transaction messages vague. While some declines are followed by messages like insufficient funds, many others are generic messages such as do not honor. Therefore, merchants can only speculate about why those transactions got declined.

The third problem is data. As pointed out by Justin Benson, CEO of Spreedly:
The problem is data. Merchants don’t have absolute data and they don’t have relative data. You know (hopefully) what your decline rate is, but how does that compare to other merchants at your gateway? And how does that compare to a similar merchant at another gateway?

In the previous work: Credit Card vs Debit Card Decline Rates: Are Credit Cards Worth the Processing Fees? I compared the decline rates of credit vs. debit cards based on the card brands, issuing banks, and the currency of transactions and found that in each category, credit cards have a lower rate of declines. The analysis of millions of transactions showed that credit cards have many advantages over debit cards for both customers and merchants and despite their higher processing fees, it is to the benefit of merchants to encourage and accept them. In this work, we take a further step towards a frictionless payment experience.

In this work, I dig into the decline causes which we can act against. On the one hand, we do understand that the complex issue of declines does not have a simple solution. On the other hand, we believe that due to the scale of this problem, that costs banks and merchants multi-billion dollars annually, any incremental improvement in approval rates can lead to significant results in the revenue generation, customer satisfaction and churn reduction. In other words,
It simply hurts to have an otherwise hard-won customer and lose them over something as simple as a declined payment. The good news—even if your business does happen to be prone to declined payments— is that by understanding the reasons why declines happen you can build processes to catch it when it occurs.

2. Decline Codes

We can categorize the decline causes to those where merchants have little or no control over and the causes where merchants can act upon. For example, insufficient fund, which according to Ethoca comprise 44% of the $145 billion in transactions that are declined annually, are in the first category.

On the other hand, an invalid address or an expired card, that also account for a big chunk of the declines, are in the second category. For instance, Recurly reports that 5.58% of their customer’s declines are due to invalid addresses, a cause that can potentially be avoided by using Account Verification service (will be discussed later).

According to Stripe, providing a valid CVV (a.k.a CVC) and zip code can also lower fraud-related declines. CVVs are mandatory in Europe and are recommended for US merchants as well. The impact of other factors varies by the card brand and the country.

In this work, we focus on some of the decline reasons in the second category. I compared the response codes of US Bank, Chase Paymentech, Visa Developer Center, Stripe, and PaySimple to generate the following list:
— Expired card
— Address verification failed
— Previously declined
— Declined for CVV failure

In the following sections, I will focus on the first two items on the list above, expiration dates and valid addresses, namely, and investigate their effects on declining/approving a transaction. What percentage of transactions merchants can save by investing time and resources to make sure that, for example, the cards are not expired or the credit card information is up-to-date and which factors do not impact the approval rate significantly will be discussed in further details. To start, let’s review the assumptions used in this study.

3. Assumptions

Transaction types

In our analysis, I consider two transaction types only: Card-Not-Present (CNP) Purchases and Authorizations. In Purchase, the order is fulfilled immediately while there is a delay in order placement and fulfillment in Authorization (+ Capture).

Country & currency

Out of hundreds of millions of transactions in Spreedly’s database that have been processed since January 2016, I filter almost 10 million transactions in USD currency from 5+ million credit cards issued in the United States.

Banks & gateways

Banks and gateways use different models and policies and provide merchants with different settings and options when it comes to processing transactions. Therefore, any analysis requires breaking down the numbers to bank-gateway level. Here, I consider top issuing banks and gateways in Spreedly’s database with at least 500k transactions in USD by US cardholders. The list of banks and gateways are given in figures 1 and 2, respectively. American Express is included in the list as one of the top card issuers. Discover did not make it to the list.

                                                                                    Fig. 2: gateways

No subsequent declines

I do not take into account the subsequent declines from the same credit card during a one-day period. These transactions are denied for reasons different than what we are interested in here.

Times are in US Eastern (ET) Time

The times are all converted to Eastern Time. So transactions at 6 am Pacific Time, and transactions at 7 am Central time, are all grouped with transactions that took place at 9 am ET.

BIN database

The first 6 digits of a credit card comprise information about the card brand (Visa, MasterCard, …), the issuing bank (Bank of America, Chase, …), the card type (cash reward, classic, …), etc. This information can be looked up in a Bank Identification Number (BIN) database. I joined two BIN datasets in the market for this analysis, binbase, and bindb. The code for fixing the issues in these datasets and merging them for analytics purposes is available in this Github repository. In a future blog post, I will write more about using BIN database for financial analytics purposes.

4. General Trends

We break down the Authorization and Purchase transactions into a bank-gateway level and look for the possible differences in how they handle transactions. We also check the effects of the amount and time of transactions on their decline rates.

4.1 Declines: issuing banks & gateways

The ratios of declined to all transactions in bank-gateway level are listed in Table 1. The last column, Mean(Gateway), is the average decline ratio for each gateway. Likewise, the last row at the end of each transaction type, Mean(Bank), is the average decline ratio for each bank for that transaction type.

From Table 1 we see that purchases experience a higher ratio of declines. For authorizations, banks and gateways have done a great job keeping the declines as low as 3% of the overall transactions with the exception of Vanitv with 7% of decline rate. The combination of Vantiv-Bank of America and Vantiv-Capital One decline ratio is as high as 9%.

In purchases, on average Capital One declined more transactions. While the other banks average around 3-4%, the declined transactions by Capital One peak at 6%. The largest decline for bank-gateway combination belongs to Authorize.net-Capital one with 11%. The next noticeable large decline ratio, 9%, belongs to Capital One-Stripe.

The excellent performance of American Express in handling both transaction types may be due to the fact that, in this case, the card brand and the issuing bank is the same.

Among gateways processing USD purchases made by US-issued cards, the highest decline rate belongs to Stripe. While Stripe maintains a higher decline rate for all the issuing banks, it reaches its lowest decline when processing American Express cards.

PayFlow has zero declines for several banks for up to 2 significant digits. One reason is the low volume of Capital One, Chase and Citi cards processed by PayFlow.

4.2 Declines: amount of transaction

To check the relationship between declines and transaction amounts, I studied the decline rate of transacted amounts, grouped into four categories of less than $99, between $99 to $999, between $999 and $9999 and greater than $9999, as shown in Figure 3.

The analysis of decline vs. amount clearly shows different trends for authorizations vs. purchases. The largest decline ratio for purchases takes place in the first category, i.e. for amounts less than $99. It then drops down to 5% and remains the same for the next three categories. The decline ratio for authorizations, on the other hand, has the lowest rate in the first category, slowly rises by 2% and 4% in the second and third categories and spikes at the noticeable 23% in the last category. The dashed lines show this trend for Purchase and Authorization transactions.

Evidently, in processing payments, banks and gateways treat Authorization and Purchase differently. Moving from small to large amounts, the decline ratio of purchases slows down while for authorizations, it rises significantly. The comparison of this figure with the Distribution of Transaction Amount in different countries (see page 5) by Stripe shows that this spike cannot be entirely attributed to fraud and other causes play a role as well.

4.3 Declines: transaction time

When do most declines happen? Are the declined transactions uniformly distributed or it fluctuates over time? Fig. 4 is the plot of the ratio of declines vs. the hour of the day for three classes of transaction amounts. The larger the orange circles, the higher the decline ratio for that particular hour (Eastern Time).

From Figure 4, one can identify danger and safe zones for transactions. The transactions, independent of their amount, experience a higher decline before noon. From afternoon to midnight, the decline rate decreases significantly. Though Authorization and Purchase declines do not peak at the same hour (the plot is not shown here), they share the same safe and danger zones.

A comparison of Figure. 4 with Stripe’s report (page 3, Fraud Rate as Share of Transactions by Time and Day 2016) shows that the decline rates in Fig. 4 are not all fraud-relevant (though one should note that these two plots are not exactly the same). Therefore, a portion of the declines can be related to other factors, some of which are of our interest in this article.

Figure 4 suggests that for merchants that batch-process their payments, moving the scheduled time to the afternoon can potentially affect the decline rate. Merchants can also consider pushing out big sales/promotions at lunchtime so customers are buying in the afternoon, vs. first thing in the morning.

It is worth noting that I did not observe a significant difference in the declines between the different months and days of the week. However, Recurly reports that B2C merchants tend to experience higher declines in November through January, due to higher holiday spending.

After looking at the some of the general trends for declined transactions, in the next section, I look into the decline causes that can be avoided or fixed.

5. Actionable Decline Reasons

A few parameters that merchants can control are the expiration dates of the credit cards they’re running as well as making sure the cardholder’s address is valid. Merchants can use different means to make sure the cardholder’s records and the card’s information are up-to-date.

How important is the role of expiration dates and valid addresses? Is it worth the time and resources to keep these records current?

5.1 Expiration Dates

To find transactions made by expired cards, I compare the credit card’s expiration and the transaction dates. As you will see, the data shows that payment companies (brands, banks, gateways, …) take the expired card transactions very seriously. In fact, they decline them, but not as often as you might think!

For instance, let’s look at the decline ratio of Authorization and Purchase transactions by expired Visa, MasterCard, and American Express cards (Fig. 5). For both transaction types, the decline ratio is quite high. On average the authorizations transactions are rejected more than purchases, though.

Visa and MasterCard are rejected more than 50% of transactions for both transaction types. The lowest decline rate belongs to purchases made by expired American Express cards.

I should point out that, in Spreedly’s database, purchases with expired cards are about 20 times more than the counterpart authorizations. One reason is that, for recurring charges, the card is authorized only once and it is the first time that the card is used. If authorized successfully, the card will later be used to capture the amount without re-authorization.

Table 2 shows the decline rates of expired cards for brand-bank pairs. Authorization and Purchase transaction numbers are presented separately. The last column, ratio, already discussed in Fig. 5, is the average decline rate for the card brands.

The first noticeable observation in Table 2 is the high ratio of declines almost across all bank-gateway pairs. The lowest decline rate, which belongs to purchases by American Express, exceeds 40% of transactions (except for US Bank). For the rest of brand-bank pairs this ratio exceeds 60% and in some cases such as Visa-US Bank, Visa-Wells Fargo, and MasterCard-Capital One, the ratio tops 90%. In other words, 9 out 10 transactions have been declined; something that clearly emphasizes the significant role of expiration dates on approving/declining a transaction.

The good news is that merchants can use Account Updater to keep the credit card data up-to-date. Account Updater, a service that is supported by the major credit card brands, connects to the issuing banks of the cards and refreshes the card information, helping save merchants from revenue loss and declined transaction-related costs. Account updater is an excellent solution because it is typically seamless to integrate/add and requires nothing be done by the consumer. The impact of Account Updater on lowering declines, saving revenue and decreasing churn is the topic of future blog posts.

5.2 Cardholder’s Address

We looked into the cardholder’s address data, including street, city, state, zip, and country and how they affect the decline rates. The country records are verified by comparing the customer country input with BIN database. However, the measure to verify city, state and zip is solely the lack or existence of these records in Spreedly’s database.

We should point out that for Address records, the only input we can verify, using the BIN database, is the country record. For street, city, zip, and state, we only compare the decline rates between the transactions with, and without this records. A significant difference in the decline rates between these two groups was not observed.

For the country records, I only consider the Country records with the frequency (appearing in the data) of greater than 50 times. Our data show a high ratio of declines for transactions – mostly processed by the Authorize.Net gateway – with the wrong country code. DE (Germany) and ES (Spain) experienced 96% and 90% declines, respectively.

Another observation is that payment processors are not sensitive to the different variations of the United State (United States, US, USA, …) names in their records as they all received high approval rates.

Putting all the address records together, our number of decline rates (3% for Authorization and 4% for Purchase) are comparable with Recurly’s report, according to which address-not-verified accounts for ~ 6% of their declines.

6. Conclusion

Among the variety of reasons that lead to a declined transaction, some can be changed or controlled by merchants. This study targets some of these factors and weighs their impact on decline rates.

I used around 10 million transactions by 5 million credit cards issued in the United States and investigated the relationship between several controllable parameters by merchants and the decline rates as well as general trends among declined transactions. All the transactions are in USD currency and were processed via US-based gateways (Figs. 1 and 2).

Our analysis identified three factors with detrimental effects on approving a transaction. These three factors are,

• the time of transaction,
• the expiration date of the card and
• the country (address) record.

From Fig. 4, the safe and danger zones for transactions can be identified. Safe hours are from the midday to midnight (Eastern Time) when the decline rates are significantly lower compared to the danger zone.

This study also reveals the huge impact of the expiration dates on declines. To deal with expired cards, we suggested merchants use Account Updater.

We also observe the high decline rates for transactions with the wrong country codes, however, due to the small number of these records, we cannot make a conclusive remark. Our overall declines due to the addresses match Recurly’s.

To solve the problem of invalid addresses some merchants perform pre-authorization. This is discouraged by K. Hendrick of CardNotPresent:

Because it looks a lot like card-testing (when fraudsters test the validity of a card with an unsuspecting merchant before selling the card for misuse) banks are suspicious of $1.00 authorizations and many decline transactions with merchants that perform them. So, a tactic merchants were using to fight fraud has evolved into an indicator of fraud.

Instead, it is recommended to check address verification using services like Account Verification offered by Visa and MasterCard.

As a final note, the author is aware of the uncertainties in this study: for example, I have not taken into account the role of merchant categories. However, we hope that this analysis provided actionable insights for lowering the decline rates and encouraged merchants to keep the credit card information up-to-date and, in particular, make sure they run transactions using the cards that are not expired. At the end, I agree with Verifi that the ultimate solution for better payment processing requires further collaborations between merchants and the issuing banks.

The post Cash me if you can: simple steps to lower your credit cards decline rate appeared first on Spreedly.

Omnivore, itself focused on a developer-centric API offering for restaurants and the supplier network that surrounds it, saw some of its leading edge customers utilizing Spreedly as a PCI compliant vault that built a bridge between point of sales systems and value added third party applications. In particular, our universal payment method token helps solve one of the bigger challenges in this space – repeat ordering.

We’re happy to partner up to work more closely with Omnivore and provide better support to joint customers. We tip our hat to those developers that, via their own research and testing, realize the two services will work together to solve their business requirements. We hope by working more closely with Omnivore we can widen the path for others to follow.

You can read the more formal press release here to get more details: http://omnivore.io/news/press-releases/omnivore-partners-with-spreedly-to-transform-restaurant-industry-2017-12-4/

And the documentation on how PMD works in general here: https://docs.spreedly.com/guides/payment-method-distribution/

The post Spreedly and Omnivore appeared first on Spreedly.

One of the most common, and understandable, questions we receive is, “how many cards can I expect to be updated if I utilize the Account Updater service?” We’ve written this blog post with data captured during the beta and public period of offering the service to help you with some broad parameters.

Firstly, a refresher. Spreedly’s Account Updater is a service whereby we submit the credit cards in your vault to their respective card brands. If the card has changed, then we receive back new credit card details and update the card in your vault. Changes typically result from cards expiring, accounts closing, or lost and stolen cards getting replaced.

Today, the service is North America focused, with some issuing banks participating out of the UK; there is talk that eventually Visa in particular will expand to cover much of Europe.

We submit all the cards in your vault twice per month, but you only pay a fee for those cards that are actually changed. That’s important to remember. You don’t really worry about the size of your vault when it comes to economics; you just want to make certain that the retention benefit of an updated credit card compensates for your expense.

How does Account Updater fit into your business?

The number of impacted cards in your vault depends on what type of business you have, and whether it’s a first time run or ongoing maintenance of your vault. There are 3 main factors:

1. Are you a recurring/subscription based business?
2. Are you an ecommerce repeat/additional sale based business?
3. What is the mix of North American/UK users amongst your overall customer base?

1. Recurring/Subscription based businesses

These businesses tend to have the “cleanest” vaults. That’s because you’re typically trying to charge a credit card every month, so you know the status of the card quite regularly. In a way, there’s a manual, end user driven account updater process happening. This reduces the number of cards you’re likely to see impacted by using the account updater service. That means this type of customer usually sees the smallest initial cost when running Account Updater for the first time.

2. Ecommerce repeat/additional sales

In this model you store the customer’s credit card to make any future repeat or additional purchase easier, thus removing a friction point and driving up conversion.

This can vary a lot by business and user, but typically these cards are not used each month. This means that when we first run Account Updater on your vault, we’re going to be submitting cards that have been stored for an extended period of time. This increases the success rate of impacted cards as a percentage of your overall vault.

3. Regional mix of users

Given that Spreedly’s Account Updater only covers Visa, Mastercard, and Discover cards in North America and parts of the UK, the number of credit cards updated initially, and on an ongoing basis, will be dependent upon the mix of users you have in those regions.

Now, on to the actual Account Updater data:

Again, repeat ecommerce most likely has slightly higher run rates due to the timing of our vault updates vs. the timing of the subscription renewal runs by our customers.

One can safely assume that for our repeat ecommerce cards, many cards are added during the month and are not transacted against again. In the subscription model, some percentage of the cards added will fail a renewal test and get updated before they get a chance to get passed to AU.

Non-USA/UK based services

We are seeing initial run percentages as low as 3% and 4% and ongoing monthly at 0.5% to 1% for customers. But based on the fees for Account Updater, the economics still work here: You’re only charged for cards that are modified in some way.

How to think about Account Updater’s Return on Investment (ROI)

There are two ways to think about ROI as it relates to Spreedly’s Account Updater:

1. Captured Revenue

Firstly, the number of “saved” transactions. Each business is different, but your rough formula should be:

(Number of updated cards) x (Average ticket size per card per charge/subscription)

From that, you have to apply your internal formula based on what you know about your service and its stickiness today. Ie. when cards fail, what percentage of your customers abandon your shopping cart or let their subscription expire vs. what percentage re-enter their credit card?

If 75% of customers are manually reentering their card data upon failure, then you would take the above amount and multiply it by 0.25 to get the total amount of revenue you can truly retain.

2. Reduced Costs

The second area to think about is reduced support costs. What does it look like for you when a card fails? This is especially pertinent to subscription and recurring businesses, but can also apply to ecommerce apps too.

At one end of the scale, you have one or more full time employees in a customer service role whose job it is to chase down existing, or soon to expire, credit cards on file. At the other end of the scale, you can track tickets in your support application to see how many your team handles each month around a failing payment method and updating it.

For example, if your average support ticket cost on a failed payment method is determined internally to be $30, and an updated card via Account Updater is 18 cents, then each successfully updated credit card saves you $30 in a support ticket chasing down that customer/subscriber.

Conclusion

For Spreedly customers, that first run of the Account Updater vault can feel costly, especially if you’re an ecommerce application with a large, long-term vault in place. Yet once you get past the initial run, you can expect to settle into an ongoing rate of 3 – 6% of your monthly vault. Even if your rate is much lower than that, it still makes sense to join because there is no fixed cost and you only pay for updated payment methods.

Whether it’s cost effective to you as a business will depend on what you believe the overall stickiness of your service is, and how much you value the cost of supporting customers when their payment methods fail.

Click below to learn more about Spreedly’s Account Updater, or visit the Account Updater help page for more details.

The post How effective is Spreedly’s credit card Account Updater? appeared first on Spreedly.

What is Account Updater?

Spreedly’s Account Updater allows you to always keep your customers’ card details up to date. When your customers’ credit card numbers expire or are updated, Account Updater protects you from the lost revenue and decreased customer satisfaction associated with outdated payment information.

Who is eligible for Account Updater?

Account Updater is an opt-in service available for Spreedly customers on current pricing plans. Sign up now for a free trial account to get started, or reach out to success@spreedly.com for any questions on your existing trial or pricing.

What are the costs?

There is no up-front cost to turn on the Account Updater feature. Once you opt in, Spreedly will submit all of the cards in your Spreedly vault for updating twice monthly, on the 1st and 15th of every month. For every card that is updated, you will be charged 15¢.

Visit the Account Updater help page for more details.

How does it work?

If you opt into Account Updater, all of your cards stored with Spreedly will be automatically sent to their card networks for updating. However, only Visa and MasterCard cards in the USA, Canada, and parts of the UK are currently eligible for updating. You will only be charged for those cards that are actually updated.

Cards are automatically updated by Spreedly in the background and your customers can continue using your service without interruption.

For more frequently asked questions, visit the Account Updater help page, or the Account Update general page.

Account Updater is one of the most requested features we’ve received since Spreedly began. We’re excited to offer you this competitive feature and we hope it adds value to your business.

The post Account Updater: Keep your customers’ credit cards up to date appeared first on Spreedly.

The report delves into the detail of payment security and PCI DSS compliance and analyzes compliance patterns and control failures from global, regional, and industry perspectives. Spreedly’s customers are international and span multiple industries, including the industries covered in the report.

Report Overview

The Verizon report focuses on the challenges in sustaining payment card security.

“Organizations are required to not only achieve 100.0% compliance with the PCI DSS, but also to maintain it. This means having all applicable security controls continuously in place. We measured organizations during interim assessment to determine the percentage that achieved full compliance for each Key Requirement.”

The report finds that while sustained PCI DSS compliance is on an upward trend – from 11.1% in 2012 to 55.4% in 2016 – nearly half of companies fell out of compliance within 9 months of validation, putting them at risk. Of those organizations that were breached, Verizon determined that none were fully compliant with regulations at the time of their breach.

So what’s happening? Why are companies falling out of compliance? The report strongly suggests that this is happening because companies do not have the proper controls in place to maintain compliance over time.

Of the four industries analyzed – Financial Services, Hopsitality, Information Technology, and Retail – here’s how they compare with respect to the best and worse compliance:

• Hospitality performed the worst, with only 42.9% achieving full compliance at interim assessment.
• Only 50% of Retail organizations failed to be fully compliant at interim.
• About three-fifths (59.1%) of Financial Services organizations achieved full compliance at interim assessment.
• Information Technology did the best with full PCI DSS compliance at interim, at 61.3 percent.

Uh oh. Retail, and especially Hospitality business, are most at risk. Bad news if you are an e-commerce concern in either of these industries, but good news for Spreedly as this presents opportunities :-)

Looking Further Into Hospitality & Retail

Becoming PCI DSS compliant consists of meeting 12 Key Requirements. The Verizon report evaluates how the four industries perform in each of the requirements. Of particular interest to Spreedly is Key Requirement 3 (Protect stored cardholder data) and Requirement 4 (Protect data in transit). These are two requirements that Spreedly’s solutions directly address, not only at the outset of implementation but on an ongoing basis as well.

Protect stored cardholder data – 80.1% of companies assessed after a data breach were not in compliance with this requirement, with the worst offenders being in Retail and Hospitality.

Hospitality Findings – Typically hotels, restaurants and travel and tourism companies

• Less than half (42.9%) of Hospitality organizations achieved full compliance at interim – the lowest of the four key verticals.
  • Only a quarter (25.0%) of Hospitality organizations in the Americas achieved full compliance at interim assessment. In comparison, half of those in Europe and 80.0% of similar companies in Asia Pacific achieved this level.
• Protecting stored data declined by 3.8%. Hospitality companies performed particularly poorly against control 3.1, Keep data storage to a minimum.

Protect data in transit – 20.8% of companies assessed after a data breach were not in compliance, with the worst offender being Retail.

Retail Findings – Merchant organizations that sell to consumers. This covers both bricks and mortar stores and e-commerce businesses.

• Half of Retail organizations achieved 100% compliance at interim assessment, compared with 57.1% the previous year. This fall occurred across all 12 Key Requirements.
  • Just 46.7% of Retail organizations in the Americas achieved full compliance at interim assessment. Those in Europe did only slightly better (50.0%)
• Protecting data in transit had an abysmal performance in the Retail industry. It was the least compliant key requirement, with just 80.0% of companies assessed found to be fully compliant. This was the lowest score for any of the key industries.
• Protecting stored data declined dramatically, falling from 85.7% to 65.0%.

Organizations are required to not only achieve 100.0% compliance with the PCI DSS, but also to maintain it. When it comes to protecting stored cardholder data and protecting data in transit, Spreedly’s solutions reduce PCI scope not only at the outset but on an ongoing basis, and we work directly with companies in both hospitality and retail. Visit our website for more information on our PCI compliant payment solutions or sign up for a free trial.

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“Latin America is one of the fastest-growing regions for e-commerce, behind Asia-Pacific. We expect online retail sales to grow at a compound annual growth rate (CAGR) of 17% between 2014 and 2019 to reach $85 billion in sales at the end of the forecast period.”

The Latin America E-commerce Report

Latin America presents a unique challenge for online merchants. It’s a rapidly growing region, but much of its online payment infrastructure is relatively new and there are many different providers. Today, roughly 10% of Spreedly’s customer base transacts in Latin America, but the big story is how much growth we’ve seen there in the last 12 months. Here’s a snapshot of our transaction history for the two biggest markets combined, Mexico and Brazil.

For this article, I want to drill down on Mexico and look at some key data points.

Popular Payment Providers in Mexico

Below is an illustration of all transactions on our platform in Mexican Pesos (MXN) (some transactions are local, in-country merchants and some are non-Mexican merchants processing in pesos). Breaking it out by payment providers, OpenPay and Conekta are by far the most popular choices amongst our customers, representing approximately 99% of the transactions. OpenPay is the blue and Conekta the green.

The very tiny sliver makes up the all of the remaining providers who transact via Spreedly in Mexican Pesos. Breaking down this small group, approximately 1% of all MXN transactions, here is what we see:

Stripe is leading the group for Mexico once we get outside the big two. Redsys makes sense, it’s a Spanish gateway shared amongst Spanish banks. It’s a little surprising that Payu Latam isn’t more popular, but anecdotally we are starting to see interest pick up there.

Success and Decline rates in Mexico

Credit card fraud rates are high in Mexico. Here is a chart showing consumers who have experienced credit card fraud, by country.

The higher the degree of fraud, the more likely that legitimate/good transactions will be falsely declined: high fraud rates require more strict fraud defaults, which can accidentally catch perfectly good transactions by mistake. This happens in any country and situation, but the higher the fraud, the more likely it is to occur.

Let’s use Spreedly Insights and look at success and decline rates for requests in the Mexican Peso vs different currencies. The following is for Authorization transactions.

First, the Brazilian Real:

This chart represents all Authorization transactions over the last 8 weeks by all Spreedly merchants against the Brazilian Real. On average, 68.5% of those transactions succeed.

Now, let’s look at Authorization transactions when it comes to Mexican Pesos:

The results are almost completely introverted!

Lastly, for triangulation’s sake, here’s the Columbian Peso:

Conclusions

The behavior we’re seeing from Spreedly customer’s entering or working in Latin America can be described as follows:

Growth there is very strong so participants are being rewarded. But that’s tempered by high decline rates/fraud. As a result, merchants are frequently changing providers as they try and find the best possible combination of geographic reach, rates, services and fraud controls. Spreedly’s unique position helps solve for this problem: our centralized tokenization solution gives clients control to ramp up and down new providers in real time, based on ever changing conditions.

Spreedly collects a tremendous amount of payment related data – we capture metrics for over 100 payment gateway providers and third party API endpoints worldwide. Our tools allow you to better understand the absolute and relative performance of your payment gateway’s key metrics, such as failed online credit card transactions. Click here for more information.

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“You will be the same person in five years as you are today except for the people you meet and the books you read.” — Charlie Tremendous Jones

While it’s a gross simplification, there’s a lot of truth in that Charlie Tremendous Jones quote: relationships and reading will define and encompass most of our personal growth over our lifetimes, and the same holds true for the formation and growth of an organization. Someday I’d like to tell the people-side of the story of how Spreedly came about, but in this (hopefully) ongoing series of posts I’m going to focus on the other half of the equation: the books – and more generally the writings – that inspired me to found Spreedly originally, and have influenced me as I’ve been a part of it since.

The caveat is that this bibliography is opinionated. While the Spreedly co-founders and the others who have joined us along the way may have read some of these books, they definitely haven’t read all of them. And, if they have read them, they might completely disagree with my analysis. Maybe they’ll post their own opinionated bibliographies someday – I know I’d love to read them!

I’m chunking this bibliography into general areas of influence. The first set of writings are all about how I came to want to start a business in the first place…

Catching the Entrepreneurial Bug

I grew up in a pretty average, American, middle-class household in the 80’s and 90’s. My dad was an architect, and my mother was an RN. In my mom’s case, “RN” stood for “Retired Nurse,” since upon getting pregnant with me she decided to shelve her syringe for a few decades to pour herself into myself and the two sisters that followed three and nine years later. We never went hungry, and we often had a surplus, but there were lean times too. One period in my early teens stands out   when for over a year, Dad kept the lights on by throwing newspapers in the wee hours of the morning and Mom kept the larder stocked by being incredibly frugal.

I remember my parents taking a few stabs at entrepreneurship as I grew up. One in particular stands out: a short-lived attempt to sell water filters that looked too good to be true and was; I got inoculated for life to high-buy-in multi-level marketing schemes as a result. But while personal financial literacy was clearly demonstrated and taught – balance your checkbook, stay out of debt, save for the future, etc. – I never got much exposure to what I would now recognize as “real world entrepreneurship.”

And yet here I am, a couple of decades later, a real world entrepreneur starting and running two successful businesses. The first was a software consultancy, followed by Spreedly. Forget learning entrepreneurial skills, what was it that made me want to actually be an entrepreneur in the first place? From a “things I read” perspective, I highlight two authors in particular: Robert Kiyosaki, and Paul Graham.

The Cashflow Quadrant by Robert Kiyosaki

Look, here’s the deal: I’m going to level with you that I read and was influenced by Robert Kiyosaki of Rich Dad, Poor Dad fame, and you’re going to promise not to laugh. Because from where I sit a few decades later, if the typical business “novel” is over the top, Kiyosaki is plain outrageous with his smarmy self-help and supposedly autobiographical sketches that are surely 99% made-up. But as we retread my path to founding Spreedly, I’d be remiss to pretend Kiyosaki didn’t influence me.

But while many might cite the famous book, Rich Dad, Poor Dad, as their biggest influence, Kiyosaki’s simpler, less well-known follow-on book, The Cashflow Quadrant, had the biggest impact on me personally. I’d already read Rich Dad when I picked up Cashflow Quadrant, but I remember the key idea of the latter much more clearly and still think back to the basic premise of Cashflow Quadrant on a regular basis.

What is that premise you ask? It’s so simple you can draw it on a whiteboard in sixty seconds or less:

The basic idea is that you can earn your money from one or more of four different quadrants: Employment, Self-employment, Business ownership, and/or Investing. What resonated with me, especially as someone who wasn’t raised in an entrepreneurial household, was the difference between being self-employed and being a business owner. The best way to sum up that difference is as follows: if you go on vacation for a month and you’re self-employed, forward progress (and income) stops while you’re gone. If you’re truly a business owner with a well-managed business system, when you go on vacation for a month and come back the business has gotten better while you’ve been away (and continued to generate income).

Should you read The Cashflow Quadrant? Well, it’s a quick read, and it’s still the best breakdown of the four different places you can earn income that I’ve read anywhere. But be be prepared to roll your eyes a good bit as Robert Kiyosaki absolutely loves himself some hyperbole.

How to Make Wealth by Paul Graham

There are hundreds, if not thousands, of financial self-help books that encourage you to “build business systems,” “stop trading time for money,” just like Cashflow Quadrant did for me. But as a person who loved to write software, the next step for me was starting to read Paul Graham’s essays. Graham, or “pg” as he’s often referred to, co-founded and wrote much of the code for one of the first e-commerce platforms – Viaweb – later acquired by Yahoo and renamed Yahoo Stores. He moved on from there to do angel investing, and eventually started Y Combinator, the iconic startup incubator.

As I prepped for this blog post, I looked back through pg’s archives trying to figure out approximately where I started reading and which essays were most influential. I settled on How to Make Wealth as being fairly representative, but that’s kind of unfair since they really affected me as a body, not individually per se. The basic idea I picked up was thus: my ability to write software, and the rapidly falling costs of building and delivering software systems, could be leveraged to build a business system with much less up-front capital and in a much shorter period of time than was previously possible.

Needless to say this was a very exciting prospect. It set me on the hunt for business ideas worth pursuing and people worth pursuing them with. How to Make Wealth was published in 2004, and Spreedly was started in 2007. There is no doubt that the former influenced the nature and timing of the latter.

Deploy at will pic.twitter.com/R2k84Y9LPg

— mrb (@mrb_bk) June 13, 2017

At this point maybe you’re thinking, “So if I just read the things that Nathaniel did, I’ll have the same outcomes he did!” Or maybe you’re thinking, “This is all fine for you Nathaniel, but how is it going to help me?” If I could circle back around to the idea I began with: it is our reading and our relationships that shape us. I hope that if it does nothing else, this series will convince you to invest time in reading good books that expand your horizons and challenge your pre-conceived notions. I’ve heard people say, “I’m just not a reader,” and it makes me cringe inside since it’s basically the same as saying, “I’m just not into growing as a person.” So go forth, pick up an insightful, hokey business novel or a book that will challenge you to communicate better or a book about the theory behind an interesting topic and never stop learning and growing as a person.

The post An Opinionated Spreedly Bibliography, Part One of ??? appeared first on Spreedly.

1. Limiting the Currency You Accept?

Maybe you only need to accept USD today. Or, maybe you only need to accept MXN or EUR. What you really ought to consider is where your customers are and where the funds will settle. Ask yourself: is this a one-currency situation for the long-haul?

In addition to presenting pricing to your customer in their local currency, consider setting up end-to-end settlement with local payment processors to minimize your conversion fees. Allow me to point you toward this post on Variable Currency Support.

Multi currency Processing is what we’re talking about here. The best ways to achieve this while minimizing the markup you encounter is by 1) finding a gateway that accepts the currencies you want to process, 2) finding a payment gateway that onboards merchants in the countries that interest you (which is a signal that they have local processors) and 3) hooking up with multiple necessary payment processors so you have end-to-end currency settlement.

2. Tokenizing With a Single Payment Gateway?

Sure, for some this might make perfect sense. But even when you’re trying to control costs, it’s age-old knowledge that we don’t want to put all of our eggs in one basket! (Dare I reflect on an AWS mishap from a couple months back . . .) Whether it’s a cloud service, an app tool, or your gateway, having a bit of diversity in your online payments stack is always a safer bet.

Most payment gateways allow you to vault and tokenize with them for free. But as we know, nothing in life is “free”. Make a decision that could save you and your merchants/clients down the line . . . grab another basket! Try implementing an alternate, or failover gateway option for when your primary payment gateway goes down. Use universal tokens so that you aren’t stuck only able to route your payment methods in one direction.

3. Requesting Customer Card Info for Every Purchase on Your Site?

What’s happening here is your organization has decided to put up a razor-toothed barbed-wire barrier around your checkout button. If you’ve got high volume transactions and at least quarterly repeat buyers, the goal is to make the transaction EASY, EFFORTLESS and FAST. (see post on Checkout pages).

The best way to get around this is to vault and tokenize the payment method. However, we’re not talking a single-vault scenario. Think bigger. Get universal! After-all, token restriction does not a successful multi-gateway scenario make—Payments Yoda. (If you understood that sentence, you are worthy).

4. Payment Platforms: Are you forcing Your Merchants to Conform to a Single Payment Gateway of Your Choosing?

Well, you’ve failed to consider what happens when your merchants or clients outgrow the gateway you’ve selected. Or, say they need different functionalities and flexibilities that your chosen payment gateway doesn’t provide—flashback to the second entry to this post and maybe read up on the Business Advantages. Or, if they already have a preferred payment provider, forcing them to use another creates a barrier to closing that sale.

It might sound good to make your clients put “all their eggs in one basket” (so they rely on you), but when you limit their gateway options you are forcing them to put all their eggs in the wrong basket—and it belongs to the payment gateway, not you. Give your clients and online merchants a variety of gateway options and geographies to choose from so that when they grow, they do it with YOU.

5. Single-Channel Transactions?

POS only? Web only? iOS only? Android Only? Are you using a single channel for taking payments? Today, all are effective means of collecting online payments and completing transactions. However, a combination of these methods is most powerful.

I love this infographic from EuroITGroup, particularly the statistic that “85% of online purchases start on one device and finish on another.” Clients, merchants, consumers, everyone is on the move. The most convenient payments are those that don’t restrict movement and accommodate consumer change of physical environment.

How Did You Do?

Did you pass with all “no”s or did you answer any of the above “yes”? If you answered yes to any of these questions you probably aren’t optimizing your online payments capacity. This means you’re at risk for losing all of your eggs when the basket drops. Organizations come to us daily with issues stemming from payments homogeny. Adding a little diversification to your payments stack is more than a safety measure to prevent losses: it’s a sure-fire way to bolster your returns. Do yourself and your customers a favor and grab some insurance with the tips provided here, or reach out to us with your special case to see how Spreedly can help make your online payments flow a success!

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