Technical
Approval Rate
Definition
Approval Rate the percentage of authorization requests that are approved. Key metric for payment optimization. Varies by merchant, geography, and card mix - 85%+ is good for low-risk; 75%+ for high-risk. Factors affecting approval: card quality, fraud rules, 3DS implementation, data quality, and issuer relationships. Improving approval rates directly increases revenue.
Related Terms
Decline
An authorization request rejected by the issuer or processor. Decline codes indicate the reason: insufficient funds, suspected fraud, expired card, do not honor, etc. Not all declines are permanent - 'soft declines' may succeed on retry. Understanding decline reasons helps optimize approval rates. High decline rates hurt conversion and may trigger acquirer concerns.
Authorization
The process of requesting approval for a card transaction from the issuing bank. The authorization request includes card details, amount, and merchant information. The issuer checks available credit/funds, fraud rules, and account status before responding with an approval or decline. Authorization is the first step - funds are reserved but not transferred until capture.
Smart Routing
Dynamically routing transactions to different processors based on rules to optimize approval rates, costs, or both. Routing criteria include card geography, card type, transaction amount, processor performance, and cost. Requires multi-acquirer setup or orchestration platform. Can improve approval rates by 2-5% and reduce costs through optimal processor selection.
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