Docs
Authorization Rates and what they mean for your business
An authorization rate is the percentage of successful authorizations compared to total authorization attempts. It's a key metric that indicates the efficiency of your payment process and can significantly impact your bottom line.
Understanding these rates can help you optimize your payment processes and increase revenue.
We measure authorization rates in two ways: by count and by volume. Each method provides unique insights for both transactions and orders.
a) By Count:
Definition: The percentage of individual transactions that are approved.
Calculation: (Number of approved transactions / Total number of transaction attempts) x 100
Why it matters: This metric shows how often your transactions are being approved, regardless of their monetary value.
b) By Volume:
Definition: The percentage of transaction value that is approved.
Calculation: (Total value of approved transactions / Total value of all transaction attempts) x 100
Why it matters: This metric weighs each transaction by its monetary value, giving you insight into the financial impact of your authorization rate.
a) By Count:
Definition: The percentage of orders that are fully approved and captured.
Calculation: (Number of fully approved and captured orders / Total number of order attempts) x 100
Why it matters: This shows how many customer purchases are successfully completed, regardless of the number of payment attempts or the order value.
b) By Volume:
Definition: The percentage of order value that is successfully approved and captured.
Calculation: (Total value of approved and captured orders / Total value of all order attempts) x 100
Why it matters: This metric indicates the proportion of potential revenue that you're actually capturing.
Was this article helpful?