With more than 80% coverage across 4,200 U.S. 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 whitelabeled KYC merchant onboarding experience.
Most importantly, Postmates recognized the value in having excellent authorization 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 optimizing 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 authorization rates would increase revenue while maintaining high customer satisfaction.
Postmates ran an 18-month-long A/B test involving Stripe, which it runs on AWS, and a leading payments processor. The focus was on authorization 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 authorization rates for the same card fingerprint head-to-head to clearly see the payments platform with better rates. Stripe’s authorization success rate was one full percentage point higher than the competition.”
In the 12 months since the A/B test, Postmates has seen an additional 2.16% uplift in authorization 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 optimize 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 authorization 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.
If one customer was processed on Stripe and later processed on ‘processor B’, Postmates could compare the authorization rates for the same card fingerprint head-to-head to clearly see the payments platform with better rates. Stripe’s authorization success rate was one full percentage point higher than the competition.