Payment Optimization in Retail: Where Retailers Lose Revenue and How They Can Recover It

Payments in retail today impact not only transaction processing costs but also directly influence sales value. The Retail Systems and ACI Worldwide report, “The revenue hidden in plain sight: Closing the retail payments optimisation gap,” shows that most retailers recognize the need to improve the performance of the payment process, but still too rarely evaluate it through the lens of recovered revenue. The keys to increasing it are better data analysis, effective retry of declined transactions, payment localization, and payment orchestration.

Key insights:

• Only 30% of surveyed retailers consider their payment metrics to be at the highest level.
• 60% of companies evaluate optimization effects solely through the prism of processing costs, while only 37% analyze revenue directly generated by improving the effectiveness of the entire process.
• 55% of respondents point to budget and resource limitations as the main barrier to growth.
• 57% plan to implement or expand payment orchestration within the next 12 months.
• 29% intend to use artificial intelligence (AI) and machine learning (ML) to optimize the payment path.

– In retail, payment is not merely the technical culmination of a purchase – it is a critical moment that determines whether a transaction is finalized or potential revenue is lost. Therefore, retailers should combine data analytics, smart routing, local payment method localization, and effective decline management – says Marek Nowakowski, Business Development Manager at Exorigo-Upos – The effects of such actions should be measured not only by savings, but above all by an increase in the transaction approval rate and the value of recovered sales.

Why Payment Optimization is Crucial in Retail Today

In retail, even minor frictions at the checkout stage can lead to cart abandonment, false declines of valid transactions, and loss of revenue. Only 30% of surveyed retailers believe their payment system operates at a level equal to or higher than market standards. The remaining companies notice untapped potential, performance gaps, or lack sufficient data and resources to accurately assess the situation and implement necessary changes.

A customer may be ready to buy, but the transaction fails to complete due to improper routing, suboptimal authentication, incorrect risk assessment, or the lack of an effective retry for a declined payment. Therefore, payment optimization should be treated not only as a technological upgrade and a way to cut costs, but also as a tool for increasing completed orders and recovering revenue.

Do Retailers Measure Payments as a Cost or a Revenue Source?

The most common metric for payment optimization effectiveness remains processing cost, considered by 60% of respondents. Direct revenue achieved through payment process improvement is analyzed by only 37% of respondents. At the same time, 58% monitor conversion and cart finalization, 39% check whether payment-related abandonments are decreasing, and 36% track improvements in authorization and transaction acceptance rates.

These data show that many retailers monitor sales-related metrics, but do not always measure their direct impact on revenue. As a result, payment optimization may be perceived primarily as a cost-cutting measure rather than a business growth tool. Linking improvements in conversion, transaction acceptance, and finalized carts to recovered sales value can make it easier to justify investments in this area.

Where Should the Retail Industry Look for the Greatest Reserves?

Retailers most frequently focus their optimization efforts on increasing the number of correctly authorized and accepted transactions, strategies for cooperating with acquiring banks, and payment routing (directing transactions to a selected provider or acquirer based on specific criteria). Adapting payment methods to customer preferences in individual countries is also important. Small differences in responses for these actions show that the effectiveness of the entire process depends on the consistency of all its elements, rather than isolated improvements.

Huge, still untapped potential lies in handling declined transactions. Only 22% of surveyed companies use automated mechanisms that in real-time – based on bank responses or transaction data – decide how and when to retry a payment. 43% attempt to recover transactions using simple, rigid rules or by redirecting to another provider, while 35% have no specific strategy in this regard. As a result, some sales are lost at the final stage, even though the customer had already decided to buy and proceeded to payment.

Why Must the Payment Strategy Be Adapted to the Local Market?

As many as 93% of surveyed retailers adapt payment processing to the specifics of the market where they sell. Modifications most frequently concern:

• fraud detection rules and accepted risk levels;
• transaction routing methods to payment providers;
• authentication requirements and methods (e.g., 3D Secure);
• the set of locally preferred payment methods.

Therefore, a single, universal approach across all countries is used by only 7% of companies. A rigid, fully standardized strategy often lowers acceptance rates and makes it harder to finalize purchases, as individual markets differ in legal requirements, consumer habits, and local banking specificities.

What Does Payment Orchestration Offer in Retail?

Payment orchestration allows managing various providers, acquirers, and payment methods within a single, cohesive system. Its most frequently cited advantage is access to more accurate data on payment performance across all sales channels – mentioned by 47% of respondents.

Among the key benefits, retailers also mention:

• Failover: redirecting a transaction to another provider in case of an outage at the primary one.
• Smart routing: selecting the path that ensures the highest probability of payment acceptance at the lowest cost.
• Smart retry: recovering declined transactions in the background, completely imperceptibly to the customer.

Additionally, orchestration facilitates quick entry into new markets and eliminates the risk of vendor lock-in. No wonder this solution is gaining importance – as many as 57% of retailers plan to implement or expand an orchestration system within the next 12 months. Currently, only 7% indicate orchestration as their main source of optimization.

The Role of Cloud EFT in an Agile Payment Ecosystem

Driven by rising consumer expectations and the need to seamlessly bridge online and offline sales, retailers are increasingly turning to Cloud EFT (Electronic Funds Transfer) technology. Migrating payment authorization and processing to the cloud frees retail chains from the burden of maintaining legacy hardware infrastructure. The Cloud EFT payment hub by Exorigo-Upos delivers exceptional scalability, guaranteed payment continuity, rapid transaction processing, and the highest standards of security.

What Hinders Improving the Effectiveness of the Payment Process?

The biggest obstacle is limited resources and budget – indicated by 55% of respondents. Retailers also struggle with:

• outdated infrastructure;
• insufficient data on the reasons for transaction declines;
• difficulty in maintaining a balance between fraud protection and avoiding false declines of legitimate customers;
• the complexity of integrating new partners and technologies.

A frequent organizational problem is also the fragmentation of responsibility for payment optimization. E-commerce, finance, IT, risk, and payment teams pursue diverse goals and use different success metrics. Without coherent management and a clear division of roles, it is difficult to precisely assess which actions bring real revenue improvement and return on investment.

How Do Retailers Intend to Develop Payment Optimization Over the Next 12 Months?

Nine out of ten surveyed retailers plan to expand their payment optimization efforts over the next 12 months. The most important ones are:

• cooperating with external experts or using managed optimization programs (61%);
• implementing or expanding a payment orchestration platform (57%);
• reviewing and renegotiating commercial terms with acquirers (38%);
• implementing new, alternative payment methods (36%);
• improving data quality and expanding analytics (31%);
• using AI and machine learning-based tools (29%).

The survey results indicate that retailers do not intend to limit themselves to isolated implementations. Increasingly, they choose solutions covering the entire payment process, combining external partner expertise, orchestration, better data, and reviewing and renegotiating terms of cooperation with acquirers. Such an approach can facilitate problem detection, evaluation of the effectiveness of undertaken actions, and a gradual increase in successfully completed transactions.

Summary

The retail industry can recover part of the revenue it currently loses. To limit these losses, retailers should better analyze data, more effectively retry declined transactions, adapt the payment process to the specifics of individual markets, and flexibly route payments to various providers.

Such actions should increase the number of successfully completed orders without the need to acquire additional traffic. Companies that begin to evaluate payments not only in terms of costs, but also their impact on finalized orders and revenue, will find it easier to justify necessary investments and build a more effective and resilient payment process.

The report is based on a survey conducted among 203 payment specialists in retail companies from Europe and the United States.

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