How is an FTD counted?
An FTD is counted when a newly registered customer’s first payment is approved, not when it is attempted. FTD conversion rate is FTDs divided by registrations in the same cohort. Merchants also track the share of new customers who attempt a first payment and the approval rate of those first attempts, because the gap between attempts and approved first payments is where payments lose customers. In e-commerce the same measure is first-purchase conversion: approved first orders divided by new accounts or checkout starts.
Why does first-payment approval matter?
Acquisition cost is spent before the first payment, so every declined first payment raises the cost of each customer who does convert. As an illustrative example: an online store spends USD 500,000 on campaigns that bring 10,000 new account sign-ups. 4,000 start a first checkout and 2,600 first payments are approved, a 65% first-purchase approval rate and a cost of about USD 192 per first-time customer. Raising first-purchase approval to 75% gives 3,000 first-time customers and a cost of about USD 167 each, with no change in marketing spend.
What are the risks around first payments?
First payments attract stolen cards, promotion abuse and duplicate accounts, so they need fraud checks, and where the account holds a balance or receives payouts, customer verification. Too many checks before the first payment lower conversion. Most merchants use light checks and modest limits for the first payment and higher customer verification levels before larger amounts and payouts.
Where does Omno use it?
Omno’s customer groups and customer verification levels can be used in routing rules so first purchases go to the PSPs and methods that suit new customers, cascading moves a rejected payment to the next provider, and the hosted checkout presents local methods alongside cards.