You might think authorization rates are all about your customers—how good their credit is, whether their card is valid, or if they have enough funds. But if you’ve ever run the same traffic through two different payment service providers (PSPs) and seen wildly different results, you know there’s more to the story.
The truth? Your PSP plays a much bigger role in auth rate performance than most merchants realize.
Let’s dig into why.
1. Direct vs. Indirect Acquiring Relationships
Not all PSPs connect to the card networks in the same way.
- Direct acquirers have their own acquiring licenses and connect straight to Visa, Mastercard, etc. They often have better control over how transaction data is packaged and sent, which can boost auth rates.
- Indirect PSPs route through another acquirer (sometimes even multiple hops). Each extra link in the chain means more room for delays, mismatched data, or lost context—things issuers don’t like.
This is why some merchants see better performance when moving from an aggregator model to a direct acquiring PSP.
2. How PSPs Handle Data Enrichment
Issuers love clean, complete transaction data—it helps them approve more transactions confidently.
Some PSPs are masters at data enrichment: they pass along extra fields like MCC codes, 3DS results, recurring indicators, and issuer-preferred flags. Others… not so much.
A missing field here or a default value there might not sound like a big deal, but it can shave a few percentage points off your auth rate.
3. Smart Routing (or the Lack of It)
A good PSP won’t just send every transaction down the same path—they’ll use smart routing to pick the optimal acquiring bank based on card type, geography, and issuer preferences.
Some even use historical performance data to predict where your transaction is most likely to be approved.
PSPs without smart routing? They basically cross their fingers and hope for the best.
4. Risk & Fraud Filters
Your PSP’s fraud prevention setup can have a huge impact on whether transactions get through.
If their default risk rules are too aggressive, legitimate transactions might get blocked before they even reach the issuer. On the flip side, loose rules might let through high-risk traffic, which can hurt your MID’s reputation over time—and eventually your auth rates.
5. PSP–Issuer Relationships & Reputation
Here’s an industry secret: issuers keep internal performance and risk profiles on acquirers and PSPs.
If your PSP has a stellar track record of low fraud and clean chargeback ratios, issuers are more likely to trust and approve their traffic. If not… you’ll feel it in your decline codes.
So, What Can You Do About It?
- Compare PSP performance by issuer: The problem might be more about the PSP–issuer link than your business model.
- Ask about routing strategies: If they don’t have smart routing or issuer-specific logic, that’s a red flag.
- Push for data transparency: A good PSP should give you visibility into decline reasons and auth rate patterns.
- Test regularly: Even a small PSP switch or routing tweak can give you a measurable lift.
Bottom line: Your PSP isn’t just a “pass-through” for payments—they’re an active player in whether your transactions get approved. The right PSP can lift your auth rate by several percentage points, which translates directly to more revenue.
Want our free PSP Checklist to evaluate your PSP? Just reach out.
