Authorization Rates: What to Know When Migrating PSPs

Upon completing the migration to a new payment service provider (PSP), payment professionals often let out a sigh of relief. The 6-month (or longer) process of migrating all the data, flows, and processes to a new PSP finally ends with green checkmarks and live checkout flow. 

This new PSP promises improvements over the previous solution, and you, being in charge of payments, can’t wait to see your numbers head up and to the right.

However, shortly after going live, you realize not all numbers have improved; authorization rates are worse with this new PSP.

This is a common but lesser-known scenario that occurs after migrating payments to a new PSP. Here’s what you should know about authorization rates after PSP migrations and how you can reduce the impact to the bottom line.

Authorization Rates May Decline Temporarily

While your new PSP may not have mentioned this during the onboarding process, it is not uncommon for merchants to see a temporary decline in authorization rates when processing with a new PSP. This is not permanent but may come as a surprise in the short term, especially with impending lost revenue and customers on the line.

There are many reasons why this happens, including:

• Systems have to learn: During a migration, fraud detection algorithms have to start at square one. These become better and more sophisticated as more transactions are processed.
• Risk management tolerance: By default, the system will likely have a different risk tolerance level than the previous system. While this may level out after additional transactions are processed, you may find a stricter risk tolerance benefits your organization.
• Network routing: Depending on the integration, transactions may be routed through entirely different networks than previously used. As the data may be new to the network, it may be overzealous with declines 
• Integration setup: Your defined integration settings may not be the ideal setup right away. Inconsistencies and errors can cause card declines that will have to be addressed over time.

Reducing the Shock and Impact

Not only could this decrease shock the business, but it could also put the project and people’s roles at risk. Taking necessary steps both prior to and after the migration launch can lessen the overall impact and keep the business running smoothly.

Before Launch

Work with both Processors: Collaborate with your old and new processors to ensure a smooth transition and minimize data discrepancies. Ensure that all parties understand when testing, rollout, and cutoff dates will occur so that there is no lapse in processing.

Provide historical data: If possible, share historical transaction data - including transaction IDs - with your new processor to help them train their fraud models and reduce false positives. In some cases, this historical data can be input as “recognized” cards so that authorizations truly only need to occur on net new cards.

Test thoroughly: Before going live, rigorously test your integration with the new processor to identify and resolve any technical issues that might cause declines.

Do extensive card warming: Most PSPs will require that you “warm” the PSP by transacting what you know is good data with it to teach the algorithms. If you warm more cards than necessary, you have less of a chance of the PSP false declining cards after launch.

Build in backups: Consider running both PSPs simultaneously - one as a primary and the other as a backup. This is beneficial not only during an active migration, but also in day-to-day scenarios, like with cascading payments, where a failed authorization automatically retries with a backup processor. If you choose to vault your cardholder data first, building out payment routing becomes a breeze.

Post-Launch

Monitor Rates Closely: Keep a close eye on your authorization rates after the migration. If you see a significant decline, work with your new processor to understand the reasons and adjust risk parameters if necessary.

Socialize the issues: While prepping stakeholders of potential issues is important before launch, so is providing updates on the status post-launch. Be sure to socialize why the decline in authorization rates is happening, and what you and the PSP are doing to remedy the situation.

The Benefits Outweigh the Risks

If it is time to try a new PSP, do not let the fear of authorization rate declines keep your business from migrating to a new processor. By planning ahead, preparing data, and testing extensively, you can ensure you have the best chance of softening authorization rate declines.

A good first step before making any data migration decisions is to send your data to a token vault. With this approach, a merchant stores its data in a secure vault and receives a token that they can confidently store without having to solve the significant and ongoing challenge of attaining and maintaining PCI compliance. With the token safely in hand, the merchant can then decide where and how the migration happens - and enjoy peace of mind knowing the data is safe in a vault.

If you are interested in learning more about vaulting payments with Basis Theory, contact us today.