¿What is the payment approval rate and how can it help you increase your sales in Latam?

¿How can you reach payment acceptance rates of up to 90%? Learn about the "million-dollar" metric that will allow you to increase your revenue in Latin America.
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If you haven't already focused on improving your payment approval rate, you may be losing a lot of money. On the other hand, if you work to increase it as close as possible to 100%, the opportunities in terms of revenue, customer retention, and loyalty have no ceiling.

For any online business that sells one-time payment products (such as physical products) or subscriptions (such as SaaS or e-learning companies), the payment approval rate is the metric that measures the proportion (%) of approved payments, which competes with the rejection rate. 

When selling and collecting payments internationally in Latin America, several challenges arise:

  • How to accept your customers' preferred payment options in each country, in a region where 70% of online payments are local?
  • How to collect payments safely, reliably, and with minimum fraud rates?
  • How to recover failed payments to "combat" the rejection rate?

In this article, you’ll find all the information you need to fully understand this metric, a necessary step for your business growth and success.

In addition, how to optimize this KPI in your online business to industry-leading levels in the region (close to 90%)?

How does the payment approval rate work?

The first step is to understand: what does a payment need to be successful? A transaction, to be approved, requires the successful connection between the 3 main actors of the payment scenario: the payment method (with its respective issuer), the gateway, and the customer.

In this process, at least 3 anti-fraud engines – in the gateway and payment method issuer – evaluate the legitimacy of the transaction, or other errors can occur on the customer's side (in the data entered, for example) or in the payment method (insufficient funds, disabled card, payment method not accepted by the merchant, etc).

For this reason, payment approval – although it seems to be the "usual" outcome – is more complex and requires more factors than you can imagine.

The key to success: increase the security and coverage of payment methods in your business, as well as proactively solving failed payments.

How to calculate payment acceptance?

The formula is simple: approval rate = (number of successful payments / total number of payments) x 100.

For example, if during a certain month, 1.000 transactions were made in an online business and 900 were approved, the approval rate would be:

Approval rate = (900/1000) x 100 = 90%

Whith Rebill, you can easily obtain the comparison between both data (total payments vs successful payments) from a single and cross-gateway dashboard (unifies the metrics of all gateways and payment methods), making it easier to calculate your payment acceptance.

Additionally, you can access the declined payments metric and easily identify the reasons for rejection (we'll tell you more below).

However, how can you use this information to maximize your payment approval rate?

The 3 main drivers for payment approval

The 3 factors you need to work on to increase your acceptance rate in your business, reaching levels close to 90%.

1. Coverage of payment methods

By accepting more payment methods, your customers will have more options to pay and complete the transaction successfully, substantially reducing the chances of payment being rejected because the card is invalid or not accepted by the merchant. The result: a higher payment acceptance for your business!

However, this challenge becomes more complex if you sell throughout Latin America, where most of the transactions (70%) are local and each country is a "world" in itself, with cultures, currencies, and even consumption trends that vary greatly.

The solution: accept more than 140 payment methods with Rebill! Connect with multiple gateways in a single and simple integration, to choose the one that provides you with the broadest coverage of payment methods in each country where you sell.

Create your checkout landings in just a few clicks and, after integrating one or more gateways, you can connect each one with a different product or subscription plan, also in the currency you want.

This way, you can easily adapt to the "culture" of each market where you sell (currency + payment method preferences of your customers), which will have a direct impact on your payment approval rate.

2. Security

Every transaction, to be approved, goes through multiple security validation processes, so managing the anti-fraud laws of each country and storing your customers' payment information securely and reliably is the main challenge to reducing fraud, also raising approval rates in your business.

How can you guarantee security in each of your payments? There are 3 crucial requirements that Rebill help you solve:

  • Anti-fraud law management. Rebill, by automatically connecting with local acquirers and processors, manages the flexibility or rigidity of these fraud rules in different countries, so your business doesn't have to (which would imply an extra technological effort).
  • Customer data protection. Store your customers' payment data securely and 100% confidentially with Rebill, protecting them from unauthorized access and complying with all PCI DSS requirements (standard required for any company that accepts or processes card payments). 
  • Data requested at checkout. Create simple and intuitive checkout landings to optimize conversion, but remember that requesting more data from your customers will simplify the security validation by the gateway and the payment method issuer.

Working on the security of your online payments will allow you, in addition to boosting your approval rate, to build the credibility and trust that every online business needs to retain and build loyalty with your customers.

Learn other quick tips for security in your online business: How to reduce fraud in your international payments in Latin America?

3. Recovery of failed payments

Beyond the measures you can implement, there are other causes unrelated to your business – such as customer errors in data entry or insufficient funds on the card – that can drive more than 50 different reasons for rejection, so your company's proactivity to "rescue" these failed payments will make a real difference in your payment acceptance.

How can you recover failed payments in your company to improve payment approval? Follow these 2 steps:

1. Understand the reason for rejection reported by the gateway (you can easily find it in the Rebill "payments" section), to access the error message. 

2. Send a message to the customer with the solution. Automate communications with your users via email and SMS, also from the Rebill platform, to always provide the context and appropriate action (such as changing the payment method).

Access our guides for declined payments to learn all of the error messages in each gateway, with their respective solutions and possible messages to be sent:

Learn how Longevo, a Rebill customer, recovers more than 60% of its failed payments by using more than one gateway (if gateway A fails ❌, the payment is retried with gateway B ✅):

You can find other good practices in our article: How to solve declined and pending payments in your subscription business?

A tool to boost your sales, revenue, and payment approval rate

Scale your business regionally in a simple and agile way for your business (without technological efforts), and do it under ideal conditions: with leading payment approval rates in Latin America.

Get started with Rebill today! Visit our website to learn more about our products and solutions or directly book a Demo with us.

Nicolas Scannone
Head of Content at Rebill
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