Successful Authorization Rate KPI

Successful Authorization Rate

The Successful Authorization Rate KPI tracks the proportion of payment authorization requests that are successfully approved by the issuing bank out of all attempted transactions. This metric, expressed as a percentage, is calculated by dividing the number of approved transactions by the total number of authorization attempts and multiplying by 100. For example, if 90 out of 100 payment attempts are approved, the successful authorization rate is 90%. A high authorization rate, ideally above 90% as per industry standards, directly correlates with increased sales, enhanced customer satisfaction, and reduced transaction abandonment, as it reflects a seamless checkout experience.

This KPI is critical for merchants because it highlights the efficiency of their payment processing system and the effectiveness of their Payment Service Provider (PSP). A low authorization rate may indicate issues such as incorrect payment data, insufficient funds, fraud detection triggers, or suboptimal routing to issuers, which can lead to revenue loss and customer frustration. For instance, cross-border or high-risk transactions may face higher scrutiny, lowering approval rates if not optimized. By monitoring this KPI, merchants can work with their PSP to address decline reasons—such as adjusting transaction routing, improving fraud detection, or enhancing data submission to issuers. Regular tracking also helps identify patterns, benchmark performance against industry standards, and implement strategies to boost approval rates, ultimately fostering customer trust and maximizing revenue.