Accepting online payments is a complex process. Brands that can reduce failed transactions will increase sales and customer satisfaction.
Nothing can bring an online business to a screeching halt like a payment failure. In addition to customer irritation created from disrupted transactions, business owners risk losing customers for good.
Research shows that online merchants lose 62 per cent of customers who experience a failed transaction. Whether the failure occurs during the front-end consumer experience or when the payment is being processed, shoppers will remember the negative experience and likely associate it with your brand.
Why pay attention to payment failures?
The damage of payment failures to your business is multi-layered. An obvious downfall is the loss of incremental – and cumulative – sales. In addition, payment failures can negatively impact the long-term reputation of your brand. And rebuilding and recovering can be an incredibly expensive and arduous process.
Online stores that are able to reduce the number of failed transactions will consequently increase sales and customer satisfaction.
Why do payments fail?
Accepting online payments is a complex process involving a series of orchestrated steps among the cardholder, merchant, acquirer and issuing bank. One glitch in the payment system can cause a cascade of errors that eventually hamper the complete transfer or exchange of money between the two parties involved.
When examining payment failures, challenges generally fall into one or more of the following areas:
- Inaccurate data
- Payment orchestration failures
- Errors related to consumer details
Let’s take a closer look at some of the risks within each area.
The importance of clean data
Online payments have a strict and sensitive authentication system. Because money and personal data are involved, checkout processes are stringent when it comes to false, inaccurate or missing data.
Inaccurate data can crop up at many stages of the transaction process, and it can be propagated by many stakeholders in the chain of the transaction. Any transaction with mismatched credentials or incomplete information is likely to backfire. Experienced payment providers can manage these complexities and collect the right information on each type of transaction.
Payment orchestration failures
Payment orchestration is the handling of everything required for a payment throughout its lifecycle with all of the steps and providers involved.
Payment orchestration involves many details that vary by region, bank, processor, types of transactions (such as one-time purchases or recurring purchases) and more. All these moving parts, along with advancing technology and e-commerce trends, come with possible risks that can threaten successful payment processing.
The consumer’s role in payment failures
When it comes to payment failures, consumers and businesses often assume the payment gateway is at fault. However, transactions can be declined for a number of reasons that involve the consumer. Some of the most common are expired cards, insufficient funds, incorrectly entered information or not enough available credit.
Reducing payment failures: front to back
Once you determine why payments are failing, you can prepare to reduce the number of failed transactions and consequently increase sales and customer satisfaction. Mitigate payment failures by assessing challenges and implementing solutions within two major categories: front-end consumer experiences and back-end payment processing.
Front-end consumer experiences
A better front-end consumer experience on your website can greatly reduce payment failures and the risks associated with them. Important elements of a positive front-end experience include an easily navigable website, clear customer service options, and an intuitive and localised checkout experience.
While it may sound simple, you can never overcommunicate the steps you need customers to take to reduce cart abandonment and ensure a successful transaction. This customer-centric approach, paired with thorough back-end payment processing systems, can reduce failed payments.
Back-end payment processing
Keeping up with technology changes, industry regulations, localisation nuances and other payment processing complexities is crucial in reducing payment failures. Technologies such as machine learning and intelligent transaction routing can increase the likelihood of payments being accepted and minimise the declinement of legitimate transactions.
The right payments partner can navigate these challenges and implement the optimal solutions on behalf of your brand so you can focus on your core competencies.
The bottom line
It’s important to find a partner with proven payment orchestration expertise and the ability to route payments through an extensive network of processors. They should use new technologies and integrations to reduce payment failures for your business.
One of the most effective and efficient ways to reduce payment failures is to leave the back-office payments complexities to a partner, such as Digital River. Get help navigating the ins and outs of the ever-changing global payment processing landscape from a partner with dedicated resources and established expertise in this area.
Want to dive in further? Learn more about how to optimise payments for global conversions and boost your commerce strategy in new markets in our ebook here.
By Ronald De Bos, Director of Product Management, Payments, Digital River