Episode 2 “Manual Reviews: Helping or Hurting?”
Think more Manual Reviews mean more profits? They might be costing more than you imagine. Depending on your transaction volume and average sale value, Manual Reviews may be eating away at your profits. Don Bush, VP of Marketing, Kount, compares the Manual Review strategies for merchant types.

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Video Transcript

Don Bush: There's a level in every business where additional manual reviews don't equal additional sales. It equals additional cost, which actually takes from your profit.
Every company is a little bit different in what they determine is a proper manual review rate. We think somewhere in that three to five percent range is about right. There are companies out there that can eliminate manual reviews, and that fits perfectly into their strategy. But those companies that choose to do a manual review, we think about that three to five percent range as proper. Once you go past that, you're simply paying more for those transactions that probably would have been approved anyway. The real cost of manual review is based on merchant and merchant type.

Let's do the math. Let's take merchant A. Merchant A does about 100 orders a day, about $45 average sale, 25% manual review, it costs them, they figure about two dollars per review, and they have a cancellation rate of about five percent. On an annual basis, this costs that merchant over $100,000. I think that surprises most merchants, is how much they're spending on manual review. Let's look at another one. They have a little higher volume, with 1,250 transactions a day. Ticket price is about $35. They manually review about 15% of their orders. Same cost, about two bucks a piece. They have a little higher cancellation rate, but you can see that the cost for manual review for this merchant is over a million dollars a year. What does it cost your business? Take a look at each one of these elements, and see what manual review is costing you.

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