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HOW TO REDUCE ECOMMERCE FRAUD LOSSES AND INCREASE AUTHORIZATION RATE: A REAL CASE STUDY

  • Apr 1
  • 3 min read


The Growing Problem of eCommerce Fraud and Low Authorization Rates

eCommerce businesses worldwide faces increasing challenges related to fraud prevention, declining authorization rates, and growing chargeback rates. While marketing investments drive traffic and customer acquisition, many online retailers lose significant revenue at the payment stage.


Low payment acceptance rates combined with high fraud losses can severely damage profitability and even threaten operations due to card scheme monitoring programs and potential fines.


This case study demonstrates how a premium footwear brand transformed its payment performance, reduced fraud losses, and achieved sustainable online revenue growth.


Why Businesses Must Reduce Fraud Chargeback Rates and Improve Payment Acceptance to Drive Online Growth

A high fraud loss rate in eCommerce not only reduces margins but also:

  • Triggers card scheme monitoring programs;

  • Increases processing costs;

  • Damages relationships with payment providers;

  • Increases customer friction;

  • Causes lost legitimate sales due to strict fraud rules;

  • Reduces customer trust.


At the same time, a low authorization rate directly limits revenue growth. Even a 5–10% improvement in authorization can generate substantial additional income, especially in large markets like the US.


Effective payment optimization strategy and online payment fraud management are no longer optional. They are critical growth drivers.


Fraud Prevention Case Study: How Allyiz helped the client Increase Authorization Rate


Who Was the Client and What Was the Fraud Challenge?

The client, a premium footwear brand, launched its online store. Their website traffic was steadily increasing, supported by strong marketing efforts.


However, in two years, major problems emerged:

  • Authorization rate dropped to 45%;

  • Fraud loss rate reached 48%;

  • Fraud attacks intensified during the Holiday Season;

  • The US market became particularly exposed;

  • The company lacked in-house payment and fraud expertise;

  • Risk of fines from card schemes increased.


Despite growing demand, the company lost revenue due to poor payment performance optimization and ineffective fraud risk management for the online store.


What Allyiz Did: Payment Optimization Strategy and Fraud Management Solution

The Allyiz team brought the expertise in online payment fraud management and payment optimization strategy to:

  1. Reduce fraud losses and prevent card scheme fines;

  2. Increase authorization rates and improve key payment metrics;

  3. Optimize relationships with payment solution providers.


The implemented solution included:

  • Definition of key performance metrics for fraud and payment monitoring;

  • Establishment of strong collaboration with payment providers;

  • Adjustment fraud prevention rules to balance risk and acceptance;

  • Implementation of selective manual review for suspicious orders;

  • Introduction of new, risk-free and popular payment methods;

  • Set-up local acquiring in the US market;

  • Build of daily and weekly monitoring dashboards;

  • Support for the recruitment of an in-house fraud manager.


This comprehensive chargeback reduction strategy and payment provider optimization created both immediate and long-term impact.


The Results: Fraud Chargeback Rate Reduced Below 0.1% and Revenue Growth in the US Market

The transformation was significant:

  • Fraud chargeback rate reduced below 0.1% (well below industry benchmark);

  • The authorization rate increased from 45% to over 75% over 7 months and continued to climb.

  • Removal from card scheme monitoring programs;

  • Incorporation of new popular payment methods;

  • High-performance US local acquiring;

  • Strong partnerships with payment providers;

  • Additional revenue generated in the US market;

  • Online revenue increased from 5% to up to 15% of total revenue;

  • Permanent fraud manager hired for long-term sustainability.


The improved payment acceptance rate in the US alone generated substantial additional revenue, proving how impactful US payment acquiring optimization can be.


Today, the client operates independently with a strong internal payment and fraud team and a sustainable fraud prevention consulting services framework.


Summary: Sustainable Fraud Risk Management and Long-Term Growth

This case demonstrates how a strategic approach to eCommerce fraud prevention, payment performance optimization, and authorization rate improvement can dramatically transform profitability.


By reducing fraud losses and increasing authorization rates simultaneously, businesses can unlock hidden revenue potential while ensuring compliance with card schemes.


For fast-growing brands, fraud management is not just about protection, it is a powerful revenue growth lever.


FAQ

What is a good fraud chargeback rate for eCommerce?

Industry benchmarks vary, but maintaining a fraud chargeback rate below 0.9% is typically required to avoid card scheme monitoring programs. In this case, it was reduced to below 0.1%.

How can merchants increase eCommerce authorization rate?

Improving authorization rate requires:

  • Payment provider optimization;

  • Local acquiring setup;

  • Fraud rule adjustments;

  • Appropriate data;

  • Alternative payment methods;

  • Monitoring and analytics dashboards.

Why is local acquiring important for the US market?

Local acquiring improves approval rates, reduces cross-border friction, and enhances payment performance, especially for high-volume US eCommerce operations.


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