Bank of America Taps Merchant Data to Boost Payment Approval Rates

An optimal payment experience, which is frictionless in nature, involves collaboration.

Issuers and merchants must work together to ensure that the merchant makes the sale, and the issuers want their cards to be top of wallet.

Amy Pierce, managing director of merchant engagement at Bank of America, told PYMNTS that to get to that optimal state, data sharing must take place and collaborators must be aware that the payments are themselves shifting.

“We’re seeing a rise, of course, in card-not-present (CNP) transactions and a significant increase in eCommerce … at Bank of America, we’re seeing a 7.5% increase in debit CNP volume year over year,” she said.

Against that backdrop, merchants queried by the bank said approvals and declines were top of mind for their businesses, Pierce told PYMNTS.

In the meantime, the data that’s so essential for a smooth payments experience remains siloed. Merchants have information on customers, issuers have other data, and digital wallet providers have still other tidbits of insight — all of which, when taken together, allow issuers to make better authorization decisions by reducing false positive declines, she said.

Technology has a role to play in data sharing. Trusted merchant IDs (MIDs for short) allow merchants to segment their volume and route trusted transactions through a dedicated MID. The Trusted IDs tell issuers that the merchant has a relationship in place with the customer — and that transactions have a higher likelihood of being valid, which reduces false positive declines, she said.

Other solutions include issuers’ use of APIs, where merchants as well as acquirers/processors send data that is ingested into authorization platforms. This additional data can be used by the issuer to make a more informed authorization decision. That same data can be used to aid in claims investigations should the need arise, Pierce said.

A simple form of data sharing includes credentials on file that further optimize the payments experience, as merchants store the card number for future purchases. This helps the checkout experience to be frictionless, Pierce said, adding that industry solutions such as card account updater and tokenization make it possible to keep the credential on file current. This helps maintain customer relationships and uninterrupted commerce (especially with subscriptions and recurring transactions). If a card on file is lost or stolen, for example, by using card account updater or tokenization the merchant can obtain the new card number and process the transaction on the new credential.

It is also important for merchants to include the credential-on-file indicator, which informs the issuer that the merchant stored the card and advises that the cardholder has a history with the merchant.

“When that transaction comes to us as an issuer, we know what the relationship is between the customer and the merchant, and we can decision it appropriately,” Pierce said.

Security is top of mind for everybody. PYMNTS asked Pierce about the state of 3DS 2.0 and 3DS Data Only. Although 2.0 has yet to truly “take off in the U.S.,” Pierce said, it is being used by merchants for large-ticket items or if that merchant has been experiencing relatively higher levels of fraud.

Consumers in the United States are getting used to validating transactions with a text or multifactor authentication (MFA). From an issuer perspective, we need to balance introducing friction into the checkout process with the enhanced security received from an authenticated transaction, she said.

With Data Only, the merchant, through the ACS provider, sends more information to the issuer (in this case, Bank of America) that is used to sharpen decision making, she said.

No matter where or when the transaction is occurring, data and collaboration are used in pursuit of a common goal.

“We want to reduce those false positive declines and create the best experience for our mutual customers,” Pierce said.