When card transactions don't go through in a store, or even online, issuers bear the brunt of consumers' blame, no matter what cause of the denial. And with automated payments innovation outpacing the ability of still-siloed institutions to consistently and quickly resolve a new range of card denials or payment issues, research indicates bank relationships are in jeopardy.
"[Successful and fast problem resolution] is something that sets the better banks apart, and most banks do relatively poorly in most of the surveys," says Emmett Higdon, a senior analyst at Forrester Research.
Fresh research reveals the extent of the resolution problem-and the impact on bank relationships. A survey of 2,146 British consumers by Chase Paymentech found that 76 percent of e-commerce sites can't automatically explain to consumers why their card was declined-which translates to a call to a bank contact center, and places the onus on banks to solve the problem. "Customers expect that as the issuer of the card, you'll have some answer for them. To say 'contact the merchant' is not really acceptable," Higdon says.
When consumers' cards are rejected they worry first about fraud, according to the Chase Paymentech research. After that, the unhappy trio of embarrassment, anger and frustration are the norm. But resolving card denials and disputed payments can be directly linked to consumer loyalty. In a recent Forrester survey of North American consumers, 81 percent said they would be very likely do repeat business with a company whose resolution capabilities exceeded their expectations. And Aite reports that nearly half of travelers outside of North America have encountered some problem using a payment card, and nearly two thirds changed their card usage behavior as a result.
"Banks still have tons of room to improve when it comes to resolutions. It's a foundation of the relationship, and it's frustrating when it doesn't work, or when you have to use a cell phone to resolve a card issue, which can be expensive when you're traveling," says Gwenn Bezard, research director at Aite Group. Bezard suggests SMS could be a way for consumers to verify their identity quickly and cheaply so payments issues can be resolved, or a rejected card can be used again.
Given the attention on resolutions, the field to provide corresponding tech and services is heating up, with new products from most CRM providers, as well companies that offer payment processing, such as Chase Paymentech and Adeptra.
In most cases, the products use transaction monitoring to spot and enable fixes that clear bad charges, activate a rejected card at the point of sale, or search for pending "good" transactions that weren't executed while a card was on hold. Marc DeCastro, a research manager at IDC Financial Insights, says banks eventually "make the customer whole" when consumers have a problem with card payments, but speed is important.
Adeptra's technology, for example, uses a blend of recorded voice and automated "text to speech" call center technology to inform consumers of a card or erroneous payments problem via phone or SMS, then leverages its relationship to the institution to respond to the problem during the consumer call. "It's all about the time that it takes to get back to the customer and validate the information," says Bill Brown, a director at Adeptra. And Chase Paymentech offers "In-depth Authorization," which enables the authorization request to be resubmitted at the point of sale to determine the reason for a payment issue with a card, which can expedite the resolution process.
Analysts say another tech shortcoming that plagues resolutions is a silo-driven "gap" between the IT product that enables the card payments channel and the tech systems that power other customer service channels. Marcia Wakeman, a partner at tech consultant Capco, says one option is to install middleware on top of the legacy systems, which can enable cross departmental consumer activity monitoring, as well as provide a cross-channel view of a consumer's status. But she says there aren't many banks that excel at this multi-channel resolution strategy, if any. "Banks may have enhanced the customer communication in one channel, but not the other," she says. "Problem resolution is a much bigger [issue] than even payments. It's bigger in terms of being proactive and in terms of optimizing customers experience."