Credit Card Declines: Time of day is critical
DID YOU KNOW? Credit card decline rates increase 44% to 55% every day during the 'Wee Hours' of the morning?
In the world of payment processing, there is a very predictable pattern of 'galloping' transaction volume throughout the day. This pattern of transaction volume also comes with a very predictable pattern of fraudulent activity, which tends to occur at a heightened rate between the hours of 1:00am and 4:00am.
By observing these patterns for many years, payment gateways and payment processors have developed fraud detection 'heuristics' which are used to mitigate fraudulent transactions by detecting patterns. As with any predictive technology, risk mitigation algorithms are imperfect. There will always be false positives and false negatives - meaning some legitimate transactions will be declined, and some fraudulent transactions will be successful.
One of the predictive factors used to determine the likelihood that a transaction is fraudulent is 'Time of Day'. Recurly processes millions of $USD in transactions per day, via 14 payment gateways around the world. We have a unique perspective on the factors leading to declined transactions.
The chart above illustrates that there is a very predictable increase in credit card decline rates every night between the hours of 1:00am and 4:00am. In fact decline rates increase from ~18% averages during peak business hours (at the height of transaction volumes), to ~25-28% decline rates during the peak 'risk' hours. (A 44%-55% increase every day)
At Recurly, we are always looking for opportunities to optimize the decline rates on behalf of our merchants. In the world of recurring billing, if you have a 'high ticket' transaction which is scheduled to run during these periods of high declines, they stand a much higher likelihood of not being processed successfully. By simply time-shifting scheduled transactions to more optimal periods of the same day, significant benefits can be gained - which fall directly to your bottom line.
If you are interested in learning more about what Recurly can do for your business by improving your credit card decline rate, please don't hesitate to contact Recurly Sales. We love applying our knowledge to help our customers improve the financial performance of their businesses.