Eugenio Orozco is the Cofounder and COO of Tonder.
Scaling a payments company is not for the faint of heart. The stakes are high, margins are thin and the competition is relentless. It is a business where a fraction of a percentage point in authorization rates can mean millions in lost revenue, where fraud is an ever-evolving threat, and where a single integration issue can bring everything to a halt.
I have been in the trenches building a payments company in Latin America, and I have learned firsthand that leadership in this space is not just about vision. It is about execution at scale. Here is what it really takes to build and scale a payments infrastructure that lasts.
Mastering Authorization Rates: The Game Of Inches
If you are processing payments, your authorization rate is your lifeblood. Every transaction that gets declined unnecessarily is lost revenue for you, your merchants and your acquiring partners.
Let’s talk data. The average global authorization rate is around 85%, but top-performing merchants can push this into the 90% range. In Latin America, cross-border transactions often see declines of 20% due to fraud concerns, bank restrictions and inconsistent issuer policies.
So what is the fix?
• Implement smart routing that dynamically sends transactions through the best acquirer based on historical success rates.
• Network tokenization to increase approval rates and reduce false declines.
• Retry logic that adapts based on time, issuer response and risk signals.
• Develop an internal dashboard to track declines and sub-declines in detail.
Many banks do not provide precise reasons for declined transactions. For example, a “Do Not Honor” response can stem from multiple issues, such as insufficient funds, suspected fraud or issuer restrictions. To optimize authorization rates, maintain strong communication with your acquiring banks to gain deeper insights into these declines and implement data-driven solutions.
Fighting Fraud Without Killing Conversions
Fraud is a $400 billion problem, and payments companies live at the heart of the battle. But here is the catch. Being too aggressive with fraud prevention can hurt your real customers just as much as fraudsters.
The best payments companies strike a balance between security and approvals. That means using machine learning-based fraud detection instead of rigid rule-based systems, leveraging behavioral biometrics to separate fraudsters from legitimate users and optimizing 3DS 2.0 to push challenges only when necessary.
You can start with transactions that are:
• Low risk ($0 to $500): No 3DS after 2+ successful transactions.
• Medium risk ($501 to $4,999): No 3DS after 3+ successful transactions.
• High risk and FTDs ($5,000+): Always require full 3DS.
A key leadership lesson here is that your fraud team and revenue team need to be best friends. Too many companies have a disconnect. Fraud teams block transactions, sales teams complain and leadership sits in the middle, frustrated. Aligning these teams should be a non-negotiable.
Your Pricing API: The Backbone Of Monetization
One of the most overlooked parts of scaling a payments company is pricing complexity. Payments is not a flat-fee business. You are pricing across multiple dimensions, including volume-based pricing, 3DS versus non-3DS transactions, rolling reserves, refund and chargeback fees and other merchant-specific variables.
If you do not build a robust pricing API that can handle these complexities dynamically, you could leave money on the table or create operational chaos. A well-designed pricing API allows you to offer custom pricing based on risk and volume, adjust fees dynamically without breaking existing integrations and simulate pricing changes before rolling them out.
This is not just a financial problem. It is a product and engineering challenge that needs to be solved early. If your pricing logic is hardcoded into multiple systems, every charge can become a nightmare.
Defining Transaction Status Flow: Avoiding Merchant And Acquirer Misalignment
Another critical but underestimated challenge is the transaction status flow when connecting with acquirers.
Here is what happens when this is not well-defined: A merchant sees a transaction as pending even though it was successfully processed by the acquirer. A payment gets captured but does not get reflected properly, leading to reconciliation issues. A timeout during authorization leaves transactions in limbo, creating customer complaints and refund headaches.
It might sound simple, but different acquirers and banks use different status mappings. If you do not normalize these into your system and communicate them properly to merchants, you can experience operational chaos at scale.
Building A Microservices Infrastructure That Will Not Collapse At Scale
In payments, architecture is everything. If you are still running a monolithic system, you may be one failure away from an outage.
A robust payments infrastructure needs to be modular, resilient and highly available. That means acquiring should be a standalone service, tokenization should be decoupled from transaction processing, fraud prevention should operate as an externalized system and pricing should be managed by a flexible API.
Payments companies must build modular, well-defined services that interact through APIs. This can allow for faster iterations, better resilience and the ability to switch out underperforming providers without breaking everything.
Final Takeaways
At the end of the day, leadership in payments is about relentless iteration. Here are the most important leadership takeaways:
• Know your numbers better than anyone. If you cannot rattle off your latest authorization rates, fraud losses and chargeback ratios, you are not close enough to the business.
• Make infrastructure a leadership priority. Payments is not just a product. It is an ecosystem. If your system is not built to scale, you can hit a wall.
• Build deep relationships with banks, acquirers and networks. Payments is still a relationship-driven industry. The right partnerships can unlock better approval rates, better fraud tools and better economics.
• Fix pricing early. Your revenue model is just as critical as your payment flows.
In my opinion, scaling a payments company is one of the hardest things to do in fintech. But if you get it right, you won’t just be moving money, but shaping the future of commerce.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
