We’ve long believed that merchants shouldn’t have to choose between strong fraud protection and smooth customer experiences. That belief is driving our newest innovations in card-not-present (CNP) payments, and in a recent pilot with Square, Arcot by Broadcom proved just how powerful smarter, frictionless authentication can be.
False declines have quietly become one of the costliest issues in digital commerce. These occur when a perfectly valid transaction is rejected by the issuer, frustrating customers and eroding revenue. U.S. merchants lose more revenue to false declines than to actual fraud, according to industry research. Arcot has set out to change that.
Rethinking What Secure Payments Can Look Like
Square faced elevated false declines across CNP transactions in the U.S., impacting both conversion and customer satisfaction. They approached Arcot for help to reduce false declines for legitimate customers and to improve online payment approval rates, all while maintaining strong security and fraud protections on CNP transactions.
By using 3DS data only, Arcot helped Square deliver enriched transaction intelligence to issuers to drive more precise and intelligent risk decisions. This lets issuers more confidently approve legitimate transactions, without interrupting the checkout flow.
“Arcot’s implementation of 3DS Data Only has been very positive for our authorization rates,” said Conrado Brenna, Product Manager at Square. “By enabling the seamless sharing of consistent and meaningful data signals with issuers, we’ve seen significant improvements in both authentication and authorization success rates. This approach not only enhanced approval rates but also kept fraud rates in check, showcasing Arcot’s commitment to merchant success.”
Data That Drives Better Outcomes
The pilot delivered clear, measurable improvements for Square:
- Chargebacks fell by 6%, thanks to improved risk management and fraud mitigation.
- Authentication success increased by 19%, without added friction.
- Authorization rates improved significantly, rising by as much as 646 basis points across major issuers.
For Arcot, the numbers validate what the business has championed for years: better data leads to better outcomes for merchants, issuers, and customers alike.
Scaling Smarter Payments
This pilot is just one part of Arcot’s broader work to modernize digital commerce. Through the Arcot Merchant Initiative, we equip merchants to securely share rich transaction data, risk signals, and transaction intelligence with issuers. This empowers issuers to approve more good transactions while maintaining rigorous fraud controls.
We also operate The Arcot Network, the world’s largest 3DS data consortium. It allows merchants already using 3DS to identify issuer approval and denial trends, compare critical indicators against peers, understand how issuers perceive the risk of their transactions, analyze their transaction performance by top issuers and regions, and identify issuer challenge rate patterns over time.
Shaping the Future of Payments
Arcot’s work with Square shows what’s possible when merchants and issuers focus on improving fraud prevention without hindering customer experience.
You can learn more about our work with Square at www.arcot.com.