Postmates boosts authorisation rates with Stripe, adding $70+ million in revenue

Postmates offers a leading on-demand delivery marketplace for customers to find and purchase from local restaurants and stores across 4,200 US cities. Postmates processes billions of dollars in payments and needed a payments solution with higher auth rates to reduce customer declines at checkout and drive impressive revenue gains.

Products used

    Connect
    Issuing
    Payments
    Radar
North America
Enterprise

Challenge

With more than 80% coverage across 4,200 US cities, Postmates’ on-demand delivery requires highly complex business infrastructure. As such, it needed a payment platform that was robust enough to handle multiple payment methods, recurring payments, instant courier payments, and that also offered a white-labelled KYC merchant onboarding experience.

Most importantly, Postmates recognised the value in having excellent authorisation rates. Samantha Philips, Payments Product Lead, said, “Postmates is in the on-demand service industry. To provide the best customer experience possible, our product teams are dedicated to optimising each step of the journey for our customers. At checkout, that means selecting a payment processor with the highest success rates to ensure the best customer experience.”

In a competitive industry with high customer-acquisition costs, even a small percentage increase in authorisation rates would increase revenue while maintaining high customer satisfaction.

Solution

Postmates ran an 18-month-long A/B test involving Stripe and a leading payments processor. The focus was on authorisation rates across credit card networks like Visa, Mastercard, and American Express. During the testing period, Postmates examined the success across both platforms.

Philips said, “If one customer was processed on Stripe and later processed on ‘processor B’, Postmates could compare the authorisation rates for the same card fingerprint head-to-head to clearly see the payments platform with better rates. Stripe’s authorisation success rate was one full percentage point higher than the competition.”

Results

In the 12 months since the A/B test, Postmates has seen an additional 2.16% uplift in authorisation rates with Stripe, generating additional revenue exceeding $70 million. Here is a breakdown of Postmates’ 2.16% uplift with Stripe:

+0.33% uplift from Adaptive Acceptance leading to $11 million in revenue

"The Adaptive Acceptance innovation uses amazing multivariate machine learning techniques to optimise auth rates for Postmates by intelligently deciding when to retry transactions. That extra uplift is additional revenue for our business." Adaptive Acceptance alone was responsible for increasing Postmates’ revenue by $11M in the last year.

+1.72% uplift from Card Account Updater (CAU) leading to $60 million in revenue

Rather than asking customers to manually update information on saved cards that have expired or been replaced, Stripe’s direct connection with card networks allows for seamless updating of cards without a frustrating service interruption, avoiding customer churn and lost revenue. By intelligently updating the credentials on saved cards that have expired or been replaced, CAU increases authorisation rates to keep subscription payments recurring seamlessly. In the last year, over two million cards were automatically updated on Postmates leading to an additional $60 million in revenue.

+0.11% Billing Smart Retries leading to $3+ million in revenue

Smart Retries is a feature of Stripe Billing that helps users retry failed subscription charges at the optimal time to increase the chances of successful payments. Powered by machine learning, Smart Retries uses hundreds of purchaser and transaction signals to choose the best moment to retry. Postmates used Smart Retries to recover more than 200,000 payments last year, leading to over $3M in additional revenue.

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