FIS and Kipp Team to Prevent Debit Card Declines

FinTech company FIS teamed with Kipp, a collaboration platform for card issuers and merchants.

The partnership introduces what FIS called a non-sufficient funds (NSF) authorization tool for debit card issuers, according to a Wednesday (May 21) press release.

“This first-to-market offer is designed to combat the long-standing challenge of declined transactions due to insufficient funds, which can help issuers recover lost revenue and drive top-of-wallet status with customers,” the release said. “With this solution, FIS is unlocking growth for its card issuing clients by helping to streamline financial operations, reduce friction and improve efficiency.”

The solution lets issuers approve transactions even when the available balance is insufficient, without imposing overdraft fees on consumers, by allowing merchants to pay a premium to authorize NSF transactions, the release said. This can provide more revenue for issuers while helping to preserve the customer experience at the point of sale.

“As money moves between merchants, companies, and financial institutions and card issuers, every transfer should be timely and seamless,” Jim Johnson, co-president of banking solutions at FIS, said in the release. “…Our NSF authorization solution with Kipp tackles a key point of friction in the payments journey, helping issuers retain customers and drive long-term value throughout the money lifecycle.”

The PYMNTS Intelligence report “Financially Struggling Consumers Are Twice as Likely to Face Payment Declines” found that debit card transactions are more than three times as likely to be declined compared to credit cards.

In the last two years, the share of payment declines from debit card transactions has climbed by 40%, while the share involving credit cards has dropped by half, falling from 32% to 16% during the same period. The trend highlights the challenges tied to debit cards, where declines are often unavoidable due to insufficient bank balances.

The drop in credit card declines can be attributed to greater access to financial tools such as mobile banking apps, which help consumers monitor their accounts and more effectively stay on top of payments.

“The increase in debit card declines and decrease in credit card rejections highlight the financial pressures facing consumers today,” PYMNTS wrote in February. “As debit cards remain a primary payment method for daily transactions, many people are experiencing payment failures due to insufficient funds, adding to the financial strain for those already struggling.”