False declines: the hidden profit-killer
Sometimes you can’t really start talking about a problem until somebody puts a number next to it. So a big thank you to the folks at Riskified for this number:
That’s how much they say US merchants are losing each year due to online transactions being wrongly declined as fraud.
It’s a shockingly high number. But it starts to make sense when you think about the total cost of improperly flagging good shoppers. Riskified’s research reported 32% felt so wronged that they choose to take their business elsewhere ongoing.
In other words, a false decline doesn’t just mean losing that transaction — it often means losing a lifetime of subsequent transactions.
This takes us right to a related point that folks often miss. Risk management isn’t often discussed in the context of user experience, when in fact it should be front & center.
Developers spend hours agonizing over stuff like the placement of buttons in their app, or what font they should use. Yet I defy you to find a font so bad it permanently turns away a third of the users who encounter it.
Bottom line: regardless of whether you’re in a role to care about revenue or user experience, smart risk systems must be a forethought vs. an afterthought.