Midtrans' goal is to become the leading payment infrastructure in Indonesia. One of the ways to actualize our goal is by increasing acceptance rate. Why acceptance rate is a crucial factor to measure the performance of a payment system like Midtrans? Let us explain.
The acceptance rate in the context of payment system services is a number that represents how many successful transactions or settlements of all transactions that occur in our system. Acceptance rate is one of the concrete metrics that shows a system can be considered stable and reliable. It correlates with the continuity and success of our merchant business. Because as Midtrans' acceptance rate grows, so does the successful transactions that will occur at our merchants.
Therefore, we at Midtrans never stop developing products that aim to advance our merchant businesses. Currently Midtrans is trying to meet the acceptance rate standard of Singapore which reaches ~90% acceptance rate (source: Midtrans' Internal Data). However, please keep in mind that the numbers achieved were constantly supported with adequate payment infrastructure and digital accessibility. The fact that Indonesia's payment infrastructure and digital are still under development is another challenge for us.
Given these challenges, we must find the best solution framework to achieve these goals.
These are the steps that Midtrans are taking to increase the acceptance rate:
In processing data, our focus is on failed/rejected transactions. We categorize failed transactions into 3, which are transactions rejected due to indications of fraud, rejected by the payment system, and failed transactions due to technical issues such as network problems.
Next, we will analyze all the data that enters our system. In addition, we will also group data by payment method and feature (such as two-click, installment, recurring, etc.) to facilitate in viewing transaction patterns.
Midtrans and banks work together to increase our acceptance rate. One of the things we do is by improving the infrastructure system between Midtrans and banks. In addition, we also analyze and resolve failed transaction issues, both from the receiving bank (acquiring bank) and the issuing bank (issuing bank) by performing integration and technical changes to make transactions that had failed due to some restriction to become successful (whitelisting). Of course, this needs to be adjusted to the rules applied in each bank.
Failed transactions can occur because they are rejected by our fraud detection system. Usually, this is due to an unusual sign of the transaction. To avoid false-positive transactions, our team regularly updates the system rules. However, another aspect that we pay attention to when renewing the rules is feedback from our merchants. For example, when our merchants felt that the rules were too strict or didn't fit their business needs. We take note of their feedback and incorporate adjustment to our rules, so the transaction can be safe and convenient for our merchants.
Other transaction failures can occur because the buyer uses a card with an ineligible Bank Identification Number (BIN) for online transactions. Therefore, we have developed the Midtrans payment page, known as SNAP by providing a warning notification to the buyer that BIN cannot be used. With this notification, buyers will be educated about this issue and use other cards instead to make transactions.
Through some research, we want to understand the transaction patterns of buyers in completing payments. Can the buyer complete the payments? At what step did the buyer fail to process the payment? We will share the results of this research with our payment providers to use in updating our system.
Since taking these steps, we have been able to increase the Midtrans acceptance rate to ~9.1% (as of May 2021) for card payments and ~10.3% (as of May 2021) for asynchronous payment methods consisting of bank transfers, Indomaret and Alfamart outlets, e-money, cardless credit, and debit payments.
To this day, we still take initiatives to increase our acceptance rate. One of our latest initiatives is that we will be launching soon the revamp of user experience (UX) on the Midtrans payment page (SNAP) and the Midtrans dashboard (Merchant Administration Portal). In addition to improving the capabilities of the Midtrans payment system, we will also continue our collaboration with payment providers to upscale the system's reliability.
With the technological development and payment infrastructure in Indonesia, Midtrans will continue to strive for a better acceptance rate in the future to compete with the capabilities of international payment systems.