---
title: What is payment optimization & why do merchants need it?
description: Learn about payment optimization and why merchants need it. Discover strategies to improve transaction efficiency and enhance customer experience
image: https://inai.io/hubfs/Payment%20optimization-2.png
---

[Skip to content](https://inai.io/blog/what-is-payment-optimization-why-do-merchants-need-it#main-content)

[Webinar](https://inai.io/webinar/airlines-auth-rate)

Strategies to optimize auth rates for the airlines

- 07 Dec 2023
- 08:30 AM GMT

[Register now](https://inai.io/webinar/airlines-auth-rate)

Inai is now part of Chargebee!

[Learn more](https://inai.io/a-new-chapter)

[![inai logo - dark 1(1)](https://inai.io/hs-fs/hubfs/inai%20logo%20-%20dark%201(1).png?width=123&height=71&name=inai%20logo%20-%20dark%201(1).png) ![61d58b9a29606befe2395d4c_Mask Group](https://inai.io/hs-fs/hubfs/61d58b9a29606befe2395d4c_Mask%20Group.png?width=80&height=47&name=61d58b9a29606befe2395d4c_Mask%20Group.png)](https://www.inai.io/)

- Our Solution
  
  Show submenu for Our Solution
  
    - [https://inai.io/hubfs/Observe-icon.svg Observe Observe](https://inai.io/revenue-optimization)
    - [https://inai.io/hubfs/OptimizeReconcile-1.svg Reconcile Reconcile](https://inai.io/reconciliation)
    - [https://inai.io/hubfs/Revive.svgReviveRevive](https://inai.io/revive)
  
  
    - [https://inai.io/hubfs/involutary%20churn%20logo.png Involuntary churn Involuntary churn](https://inai.io/involuntary-churn)
  
  
    - [https://inai.io/hubfs/payment-optimize.png Payment optimization Payment optimization](https://inai.io/revenue-optimization)
    - [https://www.inai.io/hubfs/Alerts-1.svg Alerts Alerts](https://inai.io/alerts)
  
  
  ![](https://inai.io/hubfs/Read%20everything%20payments.jpg)
  
  ### Read everything payments
  
   Explore our carefully curated blogs and articles for the latest insights in global fintech and payments 
  
  [Find out more](https://inai.io/blog)
- [Pricing](https://inai.io/pricing)
- Learn
  
  Show submenu for Learn 
  
    - [https://inai.io/hubfs/digital-content.svg Blog Blog](https://inai.io/blog)
    - [https://inai.io/hubfs/documentation.svgDocumentation Documentation](https://docs.inai.io/)
    - [https://inai.io/hubfs/faqs.svgFAQsFAQs](https://inai.io/faqs)
    - [https://inai.io/hubfs/Orchestrate.svgIntegrationIntegration](https://inai.io/integrations)
- Company
  
  Show submenu for Company 
  
    - [https://inai.io/hubfs/About.svg About us About us](https://inai.io/about)
    - [https://inai.io/hubfs/careers.svg Careers Careers](https://www.notion.so/inai/Job-Board-83509f377b1a41f3b2b2ef2499c57601)

Open main navigation

Close main navigation

![inai logo](https://inai.io/hubfs/inai%20logo%20-%20dark.png)

- Our Solution
  
  Show submenu for Our Solution
  
    - [https://inai.io/hubfs/Observe-icon.svg Observe Observe](https://inai.io/revenue-optimization)
    - [https://inai.io/hubfs/OptimizeReconcile-1.svg Reconcile Reconcile](https://inai.io/reconciliation)
    - [https://inai.io/hubfs/Revive.svgReviveRevive](https://inai.io/revive)
  
  
    - [https://inai.io/hubfs/involutary%20churn%20logo.png Involuntary churn Involuntary churn](https://inai.io/involuntary-churn)
  
  
    - [https://inai.io/hubfs/payment-optimize.png Payment optimization Payment optimization](https://inai.io/revenue-optimization)
    - [https://www.inai.io/hubfs/Alerts-1.svg Alerts Alerts](https://inai.io/alerts)
  
  
  ![](https://inai.io/hubfs/Read%20everything%20payments.jpg)
  
  ### Read everything payments
  
   Explore our carefully curated blogs and articles for the latest insights in global fintech and payments 
  
  [Find out more](https://inai.io/blog)
- [Pricing](https://inai.io/pricing)
- Learn
  
  Show submenu for Learn 
  
    - [https://inai.io/hubfs/digital-content.svg Blog Blog](https://inai.io/blog)
    - [https://inai.io/hubfs/documentation.svgDocumentation Documentation](https://docs.inai.io/)
    - [https://inai.io/hubfs/faqs.svgFAQsFAQs](https://inai.io/faqs)
    - [https://inai.io/hubfs/Orchestrate.svgIntegrationIntegration](https://inai.io/integrations)
- Company
  
  Show submenu for Company 
  
    - [https://inai.io/hubfs/About.svg About us About us](https://inai.io/about)
    - [https://inai.io/hubfs/careers.svg Careers Careers](https://www.notion.so/inai/Job-Board-83509f377b1a41f3b2b2ef2499c57601)
- [Sign up](https://ai.inai.io/sign-up#)

Log in

- [![](https://inai.io/hubfs/Observe-icon.svg)**Observe**Dashboard](http://ai.inai.io)
- [![](https://inai.io/hubfs/OptimizeReconcile-1.svg)**Reconcile**Dashboard](http://ai.inai.io)
- [![](https://inai.io/hubfs/Revive.svg)**Revive**Dashboard](http://ai.inai.io)

[Payment Process](https://inai.io/blog/tag/payment-process), [Payments](https://inai.io/blog/tag/payments)  Nov 20, 2023

# What is payment optimization & why do merchants need it?

![What is payment optimization & why do merchants need it?](https://inai.io/hubfs/Payment%20optimization-2.png)

In the ever-evolving landscape of e-commerce, [payment optimization](https://inai.io/revenue-optimization)has emerged as a critical component for merchants seeking to enhance their profitability.

This is exemplified by the staggering financial impact of payment failures, resulting in substantial revenue losses. ***`“Around $800 billion is lost due to payment failure"`*** for various reasons including 3DS failures, fraud prevention measures, technical issues with payment stack, expired cards and so on.

Additionally, the lack of visibility into the health of payment systems and the detrimental effects of not having real-time insights on the authorization rate further underscore the significance of this process.

In this blog, we will delve into the concept of payment optimization, explore its key components, and understand how Inai, a payment optimization tool, helps merchants enhance their revenue, reduce fraud, and optimize costs.

## **What is Payment Optimization?**

[Payment optimization](https://inai.io/revenue-optimization) is the strategic process of improving various aspects of payment processing to enhance authorization rates, reduce fraud, and minimize costs. This multifaceted approach involves several key components:

- ### **Improve Authorization Rate**

To improve authorization rates, merchants need to offer preferred [payment methods](https://inai.io/preferred-payment-methods) in different regions, ensuring the highest success rates for their target audience. Additionally, selecting payment vendors with high uptime and minimal downtime is essential for maintaining a consistent transaction flow.

- ### **Optimize for 3DS Authentication**

In regions like Europe, 3D Secure ([3DS](https://inai.io/blog/everything-you-need-to-know-about-3ds-and-its-latest-update)) authentication is a crucial component of payment processing. Payment optimization involves optimizing the 3DS process to ensure smoother and more successful transactions while adhering to security standards.

- ### **Fraud Reduction**

Payment optimization also places significant emphasis on reducing fraud. By implementing robust fraud prevention measures, merchants can minimize unauthorized transactions and the associated chargeback costs.

- ### **Cost Optimization**

Reducing operational costs is a significant part of payment optimization. Merchants must select payment vendors and processors that offer cost-efficient solutions while maintaining high-quality service.

## **How Does Inai Help with Payment Optimization?**

Inai, a comprehensive payment optimization solution, offers a wide range of features that assist merchants in enhancing their revenue, reducing fraud, and optimizing costs.

Let's explore how Inai can assist merchants in achieving their payment optimization goals:

![How Does Inai Help with Payment Optimization ](https://inai.io/hs-fs/hubfs/How%20Does%20Inai%20Help%20with%20Payment%20Optimization_.png?width=1000&height=1143&name=How%20Does%20Inai%20Help%20with%20Payment%20Optimization_.png)

- ### **Enhanced Revenue with Improved Authorization Rates**

Inai provides real-time insights into authorization rates at the order level. Merchants can track order level auth rates, build funnels to get insights on auth rates across retries and get actionable insights to identify and rectify issues promptly. This granular data ensures that no revenue potential is left untapped.

- ### **Improved 3DS Authentication**

Inai offers detailed overview insights into 3DS transactions which includes your total card transactions segregated based on:

#### **1. Transaction Flow**

Visualize transaction failures throughout the 3DS transaction phase.

- Attempts based on 3DS and Non 3DS Transactions
- Authentication based on 3DS Versions, & Platform
- Authorization Transactions based on Authorized, MIT and CIT Authenticated Transactions and Declined Transactions by Card Issuers, & Issuer Bank.
  
  ![3DS Transaction Flow](https://inai.io/hs-fs/hubfs/image-png-1.png?width=1563&height=684&name=image-png-1.png)

 

#### **2. Flow Comparison**

Get an overview of 3DS transaction outcomes (attempted, authenticated and authorized transactions) as well as the comparative effects of frictionless and challenge flow on those 3DS transaction outcomes.

![Transaction Flow Comparison](https://inai.io/hs-fs/hubfs/Screenshot%202023-11-21%20014851.png?width=1000&height=611&name=Screenshot%202023-11-21%20014851.png)

#### **3. SCA Exemption**

Analyze the distribution of Strong Customer Authentication Exemptions based on:

- Low-Value Payment
- Low-Risk Payment
- Trusted Beneficiaries Payment
- Secure Corporate Payment

![SCA Exemption](https://inai.io/hs-fs/hubfs/Screenshot%202023-11-21%20014923.png?width=1000&height=740&name=Screenshot%202023-11-21%20014923.png)

#### **4. 3DS Failure Analysis and Error Reason Breakdown**

Analyze a comprehensive breakdown of authentication failures and transaction decline reasons, by thorough examination with a focus on identifying specific issuers or problematic cards that may be contributing to these errors.

![3DS Failure Error Reason Breakdown](https://inai.io/hs-fs/hubfs/Screenshot%202023-11-21%20015218.png?width=1560&height=528&name=Screenshot%202023-11-21%20015218.png)

#### **5. 3DS Across Different Versions**

You can evaluate 3DS across various versions, it's essential to identify opportunities for improvement that revolve around user experience, security fortification, compliance with evolving regulations, and expanding its reach across various regions and payment processors.

![ 3DS Across Different Versions](https://inai.io/hs-fs/hubfs/Screenshot%202023-11-21%20015127.png?width=1000&height=757&name=Screenshot%202023-11-21%20015127.png)

#### **6. Variations between Apps and Browsers**

You can recognize 3DS experience and specific issues on website and app flow, and tailor your 3DS implementation to address platform-specific challenges, ensuring a seamless user experience while also resolving any issues specific to the web or app flow.

![Variations between Apps and Browsers](https://inai.io/hs-fs/hubfs/Screenshot%202023-11-21%20015152-1.png?width=1000&height=734&name=Screenshot%202023-11-21%20015152-1.png)

This level of granularity is invaluable for understanding and improving your 3DS authentication rates.

- ### Immediate and Effective Alerting

Inai offers personalized alerts, ensuring that you are promptly informed about the status of your payments. There are three types of alerts supported by inai:

 

- **Threshold-based**: alerts that are triggered when a metric breaches a threshold, which is useful when there is a continuous stream of data. This can also be used In cases where the metric is a sporadic event where the metric can take a value from a pre-defined list.
- **Variance-based:** alerts that are triggered when a metric changes over a period of time by a user-defined threshold. This is useful for issuing change alerts, i.e. when the difference between the metric now and a past period of time exceeds a certain threshold.
- **Range-based**: alerts that are triggered when a metric breaches a pre-defined range over a period of time by a user-defined threshold. This is useful for detecting anomalies for instance a metric is usually in the 75-85% value range. Any deviation from this is an anomaly and needs to be alerted.

All of the above alerts can be used to handle metrics that are computed from a continuous stream of data or from a discrete set of values.

Here’s how you can configure it through the Inai dashboard:

### ![Configure alert](https://inai.io/hs-fs/hubfs/Configure%20alert.png?width=1000&height=819&name=Configure%20alert.png)

---

- **Low Success Rate Alert:** This helps you keep track of when your success rates dip below your predefined standards. you will receive an alert on your Slack or, your email, when your success rate falls below a specified percentage, based on a minimum number of transactions within a defined time frame.
  
  ![](https://files.readme.io/50f5219-small-Low_SR_alert.png)
- **High Pending Rate Alert:** Ideal for monitoring the accumulation of pending transactions and their progress toward a terminal state. You will receive an alert on your slack or, your email when your pending transaction rate falls below a designated percentage, based on a minimum number of transactions within a specific time frame.
  
  ![](https://files.readme.io/e5ad0c9-small-High_PR_alert.png)

You can also customize it as per the parameters of your requirements based on the **minimum transaction count, time window, evaluation delay time, time zone and so on.**

Your customer success manager will activate Slack notifications by default, ensuring you receive real-time alerts on your payment Slack channel.

### 4. **Cost Reduction and Efficiency**

Inai provides granular fee insights to merchants, helping them understand the various fees they pay to their payment vendors.

You can get a breakdown across the **scheme, markup, interchange, and processor fees**. This enables you to identify outliers in the fees you might be paying and consolidate your reporting across additional fee components like chargeback fees and excess retry fees that are typically sent only monthly via PDF.

It's not uncommon for the same card to incur differential interchange fees/scheme fees depending on the processor. We will shortly launch features to identify these and benchmark the interchange and scheme fees. Look Out 👀

### 5. Actionable **Insights**

Our platform analyzes merchant’s payment data across 100+ dimensions (including brand, scheme, issuer, time, processor etc) and leverages machine learning models trained on billions of data points.

Our machine learning-based recommenders are able to unearth anomalies in your payment data and able to surface recommendations to help fix revenue leaks in your payment stack.

You can also leverage our Gen AI chatbot to display insights/ data visualizations using natural language. For e.g.: "Show me the authorization rate on Visa cards in the UK and show a comparison against Stripe and Adyen."

## **Conclusion**

In a challenging macro environment, merchants need to prioritize adding to their revenue by reducing payment failures and lowering the costs of accepting payments. Payment optimization tools such as inai Optimize empower merchants to improve their authorization rates, increase 3ds authentication and optimize costs effectively.

Ready to take control of your payment processes and boost your success rates?

[![Expand globally with inai ](https://inai.io/hs-fs/hubfs/CTA%20(44).png?width=1000&height=265&name=CTA%20(44).png)](https://inai.io/demo)

### Subscribe to our newsletter to get the latest updates

### **Ready to get started? Create an account today**

![Picture of Riya Ram](https://inai.io/hs-fs/hubfs/cropped%20profile.png?quality=low&width=150&name=cropped%20profile.png)

[Riya Ram](https://inai.io/blog/author/riya-ram)

 An outlander on a quest to dissect the complex payments terminologies and weave them together into a narrative that makes sense.

## Related posts

[![3DS success rate](https://inai.io/hs-fs/hubfs/3DS%20(1).png?height=400&name=3DS%20(1).png)](https://inai.io/blog/whats-3d-security-and-how-to-optimize-for-3ds-success-rate-in-europe)

[Payment Process](https://inai.io/blog/tag/payment-process), [Payments](https://inai.io/blog/tag/payments), [Payment Failure](https://inai.io/blog/tag/payment-failure)

## [What is 3D Security and How to optimize for 3DS success rate in Europe?](https://inai.io/blog/whats-3d-security-and-how-to-optimize-for-3ds-success-rate-in-europe)

![Picture of Anta Pattabiraman](https://inai.io/hs-fs/hubfs/61f773e45259c0183174da05_Headhosts_Anta.png?width=50&name=61f773e45259c0183174da05_Headhosts_Anta.png) [Anta Pattabiraman](https://inai.io/blog/author/anta-pattabiraman) 

 Nov 24, 2023 7:18:45 PM

[Read more](https://inai.io/blog/whats-3d-security-and-how-to-optimize-for-3ds-success-rate-in-europe)

[![](https://inai.io/hubfs/inai%20-%20twitter-1.jfif)](https://inai.io/blog/the-blurred-line-between-your-payment-solutions)

[Payment Gateways](https://inai.io/blog/tag/payment-gateways), [Payment Process](https://inai.io/blog/tag/payment-process), [Payments](https://inai.io/blog/tag/payments)

## [Payment Gateway Vs. Payment Processor Vs. Payment Orchestration: What's the Difference?](https://inai.io/blog/the-blurred-line-between-your-payment-solutions)

![Picture of Riya Ram](https://inai.io/hs-fs/hubfs/cropped%20profile.png?quality=low&width=50&name=cropped%20profile.png) [Riya Ram](https://inai.io/blog/author/riya-ram) 

 Jun 22, 2023 1:33:04 PM

[Read more](https://inai.io/blog/the-blurred-line-between-your-payment-solutions)

[![What is payment routing? | Why your business needs it?](https://inai.io/hs-fs/hubfs/What%20is%20payment%20routing_.png?height=400&name=What%20is%20payment%20routing_.png)](https://inai.io/blog/payment-routing)

[Payment Process](https://inai.io/blog/tag/payment-process), [Payments](https://inai.io/blog/tag/payments)

## [What is payment routing? | Why your business needs it?](https://inai.io/blog/payment-routing)

![Picture of Karthik Narayanan](https://inai.io/hs-fs/hubfs/karthik%20(1).png?width=50&name=karthik%20(1).png) [Karthik Narayanan](https://inai.io/blog/author/karthik-narayanan) 

 Jan 23, 2023 5:27:41 PM

[Read more](https://inai.io/blog/payment-routing)

##### PRODUCTS

- [Observe](https://inai.io/revenue-optimization)
- [Reconcile](https://inai.io/reconciliation)
- [Revive](https://inai.io/revive)

##### RESOURCE

- [Blog](https://inai.io/blog)
- [Ebook](https://inai.io/ebook)
- [Guide](https://inai.io/guide)
- [Comic strip](https://inai.io/comic-strip)

##### COMPANY

- [Contact Us](https://inai.io/contact-us)
- [Documentaton](https://docs.inai.io/docs)
- [Careers](https://www.notion.so/Job-Board-83509f377b1a41f3b2b2ef2499c57601)

##### LEGAL

- [Terms & Conditions](https://inai.io/terms-and-conditions)
- [Privacy policy](https://inai.io/privacy-policy)
- [Security](https://inai.io/security)

---

![inai logo - dark 1(1)](https://inai.io/hs-fs/hubfs/inai%20logo%20-%20dark%201(1).png?width=123&name=inai%20logo%20-%20dark%201(1).png "inai logo - dark 1(1)")

[Follow us on LinkedIn](https://www.linkedin.com/company/inai-in/mycompany/) [Follow us on Twitter](https://twitter.com/inaitech) [facebook-f icon](https://www.facebook.com/inaitech/)

```json
{
  "@context" : "https://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "Riya Ram",
    "url" : "https://inai.io/blog/author/riya-ram"
  },
  "dateModified" : "2024-05-06T15:25:45.207Z",
  "datePublished" : "2023-11-20T20:31:35.000Z",
  "headline" : "What is payment optimization & why do merchants need it?",
  "image" : [ "https://inai.io/hubfs/Payment%20optimization-2.png" ],
  "mainEntityOfPage" : {
    "@id" : "https://inai.io/blog/what-is-payment-optimization-why-do-merchants-need-it",
    "@type" : "WebPage"
  },
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "url" : "https://inai.io/hubfs/inai_logo_horizontal_black-2.png"
    },
    "name" : "inai Technologies C.o."
  }
}
```