56% of Consumers Have Faced a False Payment Decline

Merchants may have more revenue to gain from approving good customers than from tightening fraud controls another turn.

That opportunity runs through “The Performance Gap: Why Every Transaction Is a Growth Opportunity,” the August edition of the “Optimizing Payments Tracker® Series.” The report finds that failed authorizations, processing costs and fraud controls can weaken payment performance at several points in a transaction. Newer payment platforms aim to improve those results by combining authorization, cost and risk tools in one system.

The third key finding focuses on this intelligence layer and its ability to improve payment decisions in real time. The report identifies three ways it can help merchants protect sales and margins.

Key Findings:

• Artificial intelligence can reduce the collateral damage from fraud controls. Four in five respondents, or 83%, said AI meaningfully reduced false positives and related customer churn during the previous year, according to Mastercard research cited in the report. Instead of relying only on fixed rules, AI systems examine behavior, past transactions and current signals. The goal is to separate suspicious activity from legitimate purchases more accurately.
• Risk controls can protect revenue as well as prevent losses. An earlier PYMNTS Intelligence study found that 56% of U.S. consumers had experienced a false payment decline during the prior three months. Another 42% of consumers abandon their carts after a failed payment. For merchants, a legitimate transaction rejected by an overly cautious system can erase a sale and weaken the customer relationship. Smarter screening can help reduce both risks.
• The financial upside extends beyond approval rates. Mastercard research found that 42% of issuers and 26% of acquirers had each blocked more than $5 million in attempted fraud during the previous two years using AI-powered detection. The technology works like a better airport security lane, directing closer inspection toward higher-risk activity while helping legitimate customers move through with less delay.

The report also examines authorization and cost optimization. Sixty-nine percent of companies using core orchestration tools achieve approval rates above 97%, compared with 32% of firms relying on manual routing. Payment orchestration can also cut processing fees by as much as 30%.

Together, these findings suggest merchants don’t have to choose between stronger protection, lower costs and easier checkout. Intelligent payment systems can advance all three goals while recovering more revenue from demand that already exists.