FIS innovates to prevent POS debit card declines

FIS, a fintech company that provides back-end processing for community banks and credit unions, formed a strategic partnership with Letskipp Ltd. (Kipp) to support a non-sufficient funds authorization solution for its debit clients. Kipp is a fintech company that provides a collaboration platform for card issuers and merchants.

The collaboration between FIS and Kipp provides a solution that offers debit card issuers the ability to approve transactions even when the available balance is insufficient—without imposing overdraft fees on consumers—by enabling merchants to voluntarily pay a premium to authorize NSF transactions.

"This reimagined economic model can generate additional revenue for issuers while helping to preserve the customer experience at the point of sale," FIS said in a press release. "Through this partnership, issuers can quickly take advantage of this interconnected solution, helping money move dynamically through debit accounts, card networks and payment systems."

The leading cause of card declines

Industry data shows that the leading cause of card declines is insufficient funds, causing revenue loss, customer frustration and higher contact center costs. It has been estimated that 57 percent of POS card declines are due to NSF. In the United States alone, declined transactions account for $300 billion in lost revenue annually, according to Coin Law, a website that keeps track of finance data.

For merchants, these declines result in lost sales and wasted product and time. For issuers, declined transactions bring unpredictability at the POS for customers, increasing consumer frustration and impacting loyalty.

Deeper customer relationships, more revenue

This first-to-market solution combats these challenges, which can help issuers recover lost revenue and drive top-of-wallet status with customers.

"As money moves between merchants, companies, and financial institutions and card issuers, every transfer should be timely and seamless," said Jim Johnson, co-president for banking solutions at FIS. "This partnership underscores FIS' commitment to helping our clients unlock new revenue streams and deliver smooth payment experiences."

"Our NSF authorization solution with Kipp," Johnson continued, "tackles a key point of friction in the payments journey, helping issuers retain customers and drive long-term value throughout the money lifecycle."

"By reducing declines, we're helping merchants and issuers deepen customer relationships, protect transaction volume and grow revenue, without burdening consumers," said Chanan Lavi, CEO and co-founder of Kipp.

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