What is cascading and how does smart routing help my online business?

Cascading or smart routing is an essential technique for online businesses that accept credit card transactions. It can help to reduce costs, increase the chances of a transaction being approved, reduce the risk of chargebacks and fraud, avoid merchant account suspension, and improve customer experience.

Smart routing

What is smart routing/cascading?

Smart routing, also known as cascading, is a technique used by payment processors to route credit card transactions through the most efficient and cost-effective payment networks. The goal is to ensure that the transaction is processed quickly and at the lowest possible cost for the merchant. This technique is especially important for businesses that process a high volume of transactions, as it can help to reduce processing fees and improve the speed and reliability of transactions.

A payment gateway is a service that connects merchants to various payment networks, such as Visa, MasterCard, and American Express. Smart routing systems work by analyzing a variety of factors, such as the type of card being used, the amount of the transaction, and the location of the merchant and cardholder. Based on this information, the system will determine the best payment network to use for the transaction. The payment gateway then uses cascading to route the transaction through the most appropriate payment network.

For example, if a transaction is small and being made with a debit card, it may be routed through a cheaper network. If this network is unavailable, the transaction is routed through the next network. On the other hand, if the transaction is larger and being made with a credit card, it may be routed through a more expensive network that offers more protection against fraud.

Cascading allows businesses to increase the chances of a transaction being approved and processed quickly. It also helps to reduce the risk of chargebacks, which can occur when a customer disputes a transaction with their credit card company. Chargebacks can be costly for businesses, as they result in the business losing both the sale and the merchandise.

Smart routing can also help to reduce the risk of fraud. Many payment networks offer different levels of fraud protection, and by routing transactions through the most appropriate network, businesses can reduce the risk of fraudulent activity. This can save businesses money, as they may be held liable for fraudulent transactions if they do not take appropriate steps to prevent them.

Smart routing can also help to avoid situations where a merchant's account is placed on hold or suspended due to excessive chargebacks or fraud. This can be a significant problem for businesses that process a high volume of transactions, as it can disrupt their operations and lead to lost sales.

In addition, smart routing can save businesses money on processing fees. Different payment networks charge different fees for transactions, and by routing transactions through the most cost-effective network, businesses can reduce their processing costs. This can have a significant impact on the bottom line for businesses that process a high volume of transactions.

Overall, smart routing is an essential technique for businesses that accept credit card transactions online. It can help to reduce costs, increase the speed and reliability of transactions, and reduce the risk of chargebacks and fraud. By utilizing cascading and a payment gateway, businesses can optimize their credit card processing and make the most out of the payment networks available to them.

What are the benefits of cascading for online businesses?

  1. Increases chances of a transaction being approved: Cascading allows online businesses to increase the chances of a transaction being approved by trying multiple payment networks. This can be especially beneficial for businesses that operate in high-risk industries or that process a high volume of transactions.
  2. Reduces the risk of chargebacks: Cascading can help to reduce the risk of chargebacks by routing transactions through the most appropriate payment network. Chargebacks can be costly for businesses, as they result in the business losing both the sale and the merchandise.
  3. Reduces the risk of fraud: Cascading can also help to reduce the risk of fraud by routing transactions through the most appropriate payment network. Many payment networks offer different levels of fraud protection, and by routing transactions through the most appropriate network, businesses can reduce the risk of fraudulent activity.
  4. Avoid merchant account suspension: Cascading can help businesses to avoid situations where a merchant's account is placed on hold or suspended due to excessive chargebacks or fraud. This can be a significant problem for businesses that process a high volume of transactions, as it can disrupt their operations and lead to lost sales.
  5. Cost reduction: Cascading can save online businesses money on processing fees by routing transactions through the most cost-effective payment network. Different payment networks charge different fees for transactions, and by routing transactions through the most cost-effective network, businesses can reduce their processing costs.
  6. Improves customer experience: Cascading can also improve customer experience by providing them with more options to complete their transactions, this can be especially beneficial for customers who may have issues with their preferred payment method.

Overall, cascading is an essential technique for online businesses that accept credit card transactions. It can help to reduce costs, increase the chances of a transaction being approved, reduce the risk of chargebacks and fraud, avoid merchant account suspension, and improve customer experience.

What is cascading and how does smart routing help my online business?
Benjamin Joyeux
Founder & Managing Director of eFlow Processing.

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