How do false declines impact approval rate?

Approval rates are important because they give you an accurate picture of what’s happening with your orders – if you calculate correctly. Otherwise, you can underestimate the revenue you’re leaving on the table.

In particular, declined orders don’t show up on your P&L. They’re bad orders, right? Not necessarily. If you’re excluding all auto-declined transactions from your approval rate calculation because you believe all your auto-declined orders weren’t good, your approval rate won’t tell you the whole (or the right) story.

For example, your orders might look like this:

$ Orders	$100,000,000
Auto-approved orders	$95,000,000
Auto-declined orders	($2,000,000)
Orders needing further review	$3,000,000
Orders approved after review	$2,100,000
Orders declined after review	($900,000)
Final approved orders	$97,100,000

If you’re excluding auto-declined orders from your order approval rates, you might think your approval rates are:

$ Orders (excluding auto-declines)	$98,000,000
Final approved orders	$97,100,000
Order approval rate	99.1%

However, you don’t know for sure that all the auto-declined orders are in fact fraudulent. In actuality, this is what your approval rates really are: