What are Authorisation Rates?

An authorisation rate is the percentage of card payment authorisation attempts that are successfully approved, usually by the customer’s issuing bank.

For any business that accepts cards, it’s a core payment performance metric - showing what proportion of customers who try to pay can complete a transaction - and it directly affects conversion, revenue, and customer experience.

How is Authorisation Rate Calculated?

An authorisation rate is usually calculated by comparing the number of approved authorisation attempts with the number of submitted authorisation attempts. Please find the equation below:

Authorisation Rate = Approved Authorisation Attempts ÷ Submitted Authorisation Attempts × 100

For example, if you send 1,000 charge requests and 920 are approved by the customer's bank, your authorisation rate is 92% (920/1,000 x 100).

This single percentage of transactions is a key payment performance indicator for online businesses, subscription services, and any company taking payments. It also allows you to compare performance across payment methods, acquirers, and regions so you can prioritise where to focus optimisation efforts.

Think of your authorisation rate as the bouncer at checkout - if it’s grumpy, fewer customers get into the party!

How the Authorisation Process Works

The payment authorisation process is the payment flow that happens in seconds between your checkout form and the customer’s issuing bank. It involves multiple parties and decision points that together determine whether a transaction is approved or declined.

Understanding each step helps merchants and payment partners reduce failed transactions and improve customer satisfaction.

Transaction Initiation

The customer chooses a payment method — such as a debit card, credit card, or digital wallet like Apple Pay or Google Pay — and submits payment credentials through the checkout. These may be card details, wallet credentials, or a tokenised version of the card.

The payment processor receives the charge request and passes it along the payment flow.

Routing

The payment gateway or processor passes the transaction to the acquirer, which sends it through the relevant card network, such as Visa or Mastercard, to the issuing bank.

Smart routing and acquiring strategy can help select the most appropriate acquiring route, network option, or local processing setup, which may improve authorisation rates and reduce avoidable declines.

Issuer Evaluation

Once the transaction has been routed, the customer's issuing bank evaluates the request.

This can include checking available funds, card status, issuer fraud rules, velocity patterns, authentication results, merchant risk, transaction history, and other issuer-specific risk signals.

Response

After evaluation, the issuer returns a response code indicating whether the transaction has been approved or declined. Declines may then be interpreted as soft, hard, fraud-related, technical, or authentication-related.

The payment gateway translates decline codes into human-readable reasons so merchants can apply retry strategies or use account updater services to replace expired cards and recover revenue.

Why Authorisation Rates Matter

Authorisation rates directly affect conversion rates and your bottom line.

Higher authorisation rates mean fewer declined transactions, fewer payment issues, more revenue, and an overall better customer experience.

Even small improvements in payment authorisation rates - say a few percentage points - can recover significant revenue through recovered revenue from retries, account updater, and optimising authorisation rates with a payment partner.

Better authorisation rates also reduce friction for legitimate customers, improve customer satisfaction, and provide a competitive advantage.

What is a Good Authorisation Rate?

“What is a good authorisation rate?”

Well, that depends on a multitude of factors, including region, business model, and payment method mix.

“Many merchants aim for authorisation rates above 90–95% for lower-risk domestic card transactions, but the right benchmark varies significantly by sector, region, transaction type, customer base, payment method, and whether transactions are domestic, cross-border, one-off, or recurring.”

The important thing is comparing yourself to peers and focusing on continuous improvement: smart retries, better data, accepting digital wallets, and reducing network declines.

Tracking trends over time and benchmarking by payment method provides a clearer picture than a single target figure.

Common Reasons for Declined Transactions

Several things can cause transaction declines: insufficient funds in the account, expired cards or incorrect card details in the checkout form, suspected fraudulent transactions (stolen card, high-risk patterns), network declines or processing issues between acquirer and issuer, merchant misconfiguration with the payment gateway or payment processor, and cards not supported for the merchant’s business model or country restrictions.

Understanding the mix of decline codes you receive is key to prioritising fixes and reducing failed transactions.

Soft Declines

Soft declines are temporary and often recoverable. Examples include:

Merchants may be able to use smart retries, offer the customer an alternative payment method, or ask them to update their payment details. In some cases, adjusting the transaction amount may be appropriate, but this should only be done where commercially and contractually valid.

Using retry strategies and account updater services can recover some failed transactions, especially in recurring or card-on-file scenarios.

Hard Declines

Hard declines usually indicate that the transaction should not be retried without updated customer action, such as using a different card or contacting the issuing bank. For example:

Hard declines will generally not be fixed by retries; the customer needs to use a different payment method or contact their bank.

Fraud Scoring Declines

When a transaction fails fraud checks, it may be declined by the issuer, blocked by the merchant’s fraud system, or rejected by the payment provider depending on how risk controls are configured.

Machine learning-based fraud detection and scoring can reduce false positives, but overly strict rules can block legitimate customers.

Balancing fraud prevention and authorisation rates is critical. Being too relaxed invites fraud, whereas being too strict can sacrifice conversion and customer satisfaction.

Factors That Influence Authorisation Rates

Authorisation rates depend on many variables across the payment flow.

Factors Within Merchant Control

Factors Outside Merchant Control

Authorisation Rates & Strong Customer Authentication

Strong Customer Authentication (SCA) can affect authorisation rates and conversion. When implemented well, SCA and 3DS2 can increase issuer confidence, support fraud prevention, and enable liability shift in certain cases. However, additional authentication steps can also introduce friction if the checkout flow is poorly configured.

However, if not implemented smoothly, SCA can create friction in the checkout, harming conversion rates.

A well-configured 3DS2 integration, use of exemptions where applicable, frictionless flows where available, and support for digital wallets can help balance security, compliance, approval rates, and customer experience.

Authorisation Rates in Recurring & Subscription Billing

Recurring billing poses unique challenges and opportunities:

Measuring & Monitoring Authorisation Rates

Authorisation rates should be tracked by payment method, acquirer, issuer country, card type, transaction type, payment channel, currency, customer segment, and domestic vs cross-border status.

Key metrics to evaluate include:

Continuous monitoring helps to spot issues such as sudden increases in issuer declines, acquirer-specific declines, authentication failures, gateway errors, or network-related problems…”

The Role of the Acquirer in Authorisation Rate Optimisation

Acquirers and payment processors are essential partners for increasing authorisation rates. They offer:

Choosing the right acquirer and payment partner with strategic partnerships and technology can be a competitive advantage.

Master Your Payments with DECTA

Payment performance depends on more than simply accepting card payments. From smart routing and network tokenisation to digital wallets and fraud prevention, modern payment infrastructure plays a critical role in maximising revenue and customer experience.

With acquiring, processing, and gateway capabilities available through a single platform, DECTA helps businesses improve payment performance, reduce avoidable failed transactions, and scale payments more efficiently across markets.

Explore DECTA's payment processing and acquiring solutions today.

FAQs

What is the Difference Between an Authorisation Rate & a Conversion Rate?

An authorisation rate measures the percentage of payment transactions approved by the card issuer, making it a key indicator of payment performance.

A conversion rate measures the percentage of website visitors who complete a purchase, reflecting the overall effectiveness of the customer journey.

The conversion rate is calculated as:

(Number of Purchases ÷ Number of Website Visitors) × 100

For example, if a site receives 5,000 visitors and records 125 purchases, the conversion rate is 2.5%.

While declined payments can reduce both metrics, conversion rate is broader because it also includes drop-offs such as cart abandonment or customers leaving before checkout.

What is a Decline Rate & How Does it Relate to Authorisation Rate?

A decline rate measures the percentage of payment transactions that are rejected by the issuer or payment provider. It is directly linked to the authorisation rate, which measures the percentage of transactions successfully approved.

Decline Rate = 100% - Authorisation Rate

Understanding why transactions are declined can help businesses optimise payment performance and improve authorisation rates.

Can I See the Reason Why a Transaction Was Declined?

Yes, in many cases. When a transaction is declined, the issuer or payment provider usually returns a response or decline code. However, the level of detail can vary, and some codes are intentionally generic. These codes are interpreted by payment gateways and payment processors to identify issues such as insufficient funds, expired cards, suspected fraud, or technical/network errors.

Analysing decline data can help businesses identify recurring payment issues, optimise retry strategies, and improve overall authorisation rates.

Is it Possible to Appeal or Reverse a Decline?

“In most cases, declined transactions cannot be formally appealed by the merchant, particularly hard declines linked to stolen cards, blocked accounts, or suspected fraud. Customers usually need to contact their bank directly to resolve these issues.

For recoverable or temporary declines, businesses can often improve payment success rates by using smart retry strategies, prompting customers to update payment details, or offering alternative payment methods.

How Does 3DS2 Affect Authorisation Rates?

When implemented effectively, 3DS2 can support authorisation performance by giving issuers more data, enabling frictionless authentication where available, reducing fraud risk, and supporting liability shift in certain cases.

However, poorly optimised 3DS2 flows can introduce unnecessary friction during checkout, potentially reducing conversion rates. The most effective approach is to use frictionless, risk-based authentication wherever possible, while triggering additional verification challenges only when needed.

What is the Impact of Network Tokenisation on Authorisation Rates?

Network tokenisation replaces sensitive card details with secure payment tokens linked directly to card networks. Because network tokens can support credential lifecycle management, they can help reduce declines caused by outdated, replaced, or expired card details.

As a result, network tokenisation can improve authorisation rates, increase payment continuity, and help businesses recover revenue that might otherwise be lost through failed transactions.

Why Do Cross-Border Transactions Have Lower Authorisation Rates Than Domestic Ones?

Cross-border transactions often face lower authorisation rates due to higher perceived fraud risk, currency conversion issues, regional restrictions, and unfamiliar merchant activity. Issuing banks are typically more cautious when approving international payments.

Businesses may be able to improve approval rates by supporting local payment methods, using local or regional acquiring where appropriate, enabling digital wallets, and applying smart routing across markets.

What Should I Do if My Authorisation Rate Suddenly Drops?

Start by reviewing decline codes and payment analytics to identify whether the issue affects specific payment methods, acquirers, regions, or customer segments.

Recent checkout or routing changes should also be reviewed. Working with your payment partner to enable smart retries and offer alternative payment methods can help stabilise authorisation rates while the issue is investigated.

How Often Should I Review My Authorisation Rates?

For high-volume merchants, authorisation rates should be monitored daily using alerts, with weekly reviews to identify trends. Lower-volume merchants may review less frequently, but should still monitor for sudden changes or recurring decline patterns.

A broader monthly review can help assess larger optimisation opportunities, such as adding new payment methods or adjusting acquiring strategies.

Does Offering More Payment Methods Improve My Overall Authorisation Rate?

Yes. Supporting a wider range of payment methods — including Apple Pay, Google Pay, local payment methods, and relevant card networks — can help improve overall payment success by giving customers a suitable fallback when one payment method is declined or unavailable