Successful payment transactions increase business revenue and encourage repeat purchases. An increase in payment success rate strengthens the business and builds goodwill in the market. On the other hand, an increase in the number of payment failure cases results in a loss of revenue and reputation. As per a study, 62% of customers do not return to the stores where they have experienced payment failure. A failed transaction may occur because of issues at the customer’s end or some problem with the bank or payment gateway. Businesses must identify its cause and address it to lower the failure rate.
This article discusses common reasons for payment failure, ways to avoid it, tips for choosing the right payment gateway, and more.
Understanding Payment Success in eCommerce
A payment is said to be successful when a shopper completes the checkout process by placing an order and making a payment. To encourage payment success, an e-commerce store must ensure a secure and smooth transaction process. A high payment success rate shows that your checkout process is on point. It contributes to customer satisfaction, leading to an increase in the number of repeat purchases.
On the other hand, payment failure causes dissatisfaction among customers and increases the cart abandonment rate. As stated, most customers do not return to such portals to complete the transaction. With so many options available, they move to the next store for shopping. Frequent payment failures give the business a bad name. To attract new customers and encourage them to complete the transaction, it is crucial to offer a smooth and fast checkout process.
Why Do Transactions Fail? Common Issues Explained
Transaction failure can occur due to a number of reasons. Here is a look at its common causes:
- Payment Ecosystem Issue
A transaction failure may occur due to issues at the bank or payment gateway. For example, the issuer bank or payment gateway may be temporarily under maintenance and not accepting payments.
This problem also occurs when a payment gateway does not accept all kinds of payment methods. For instance, a shopper may want to make the payment through a debit card or net banking, but the payment gateway does not accept it.
- Fraud Detection
Payment errors can also occur if the bank suspects fraud. Banks have set some ground rules for fraud detection. They block transactions when they witness any deviation from those rules. For example, if a customer purchases an item that is much more expensive than the products he usually buys, the transaction may be blocked. Although the bank does this to prevent online fraudulent activities, it results in cart abandonment and missed sales opportunities. It increases the payment failure rate and causes dissatisfaction among shoppers.
- Issue at Customer’s End
Many times, an eCommerce store may not be at fault. It may offer a fast checkout process and facilitate secure transactions. However, the payment may not be completed due to an issue at the customer’s end. One common issue is entering incorrect card or account details, such as a wrong card number, CVV code, IFSC code, or account number. At times, the customer may start the transaction but then return to the previous window to cross-check the details, which can also result in a failed payment.
There are cases when the customer does not receive OTP which is necessary for verifying the payment. Network issue can cause message delivery failure. Another reason for a failed transaction is using an expired debit or credit card or insufficient funds in the customer’s account. It is also possible that a customer is unable to make the payment because of a previously set limit. In all the new cards being issued, the default setting is “disabled”. If a person uses the card without changing the default setting, it results in payment failure.
How to Minimize Payment Failures on Your Site
The cases of payment failure are on the rise, with some businesses experiencing the issue more than others. The good news is that one can lower the payment failure rate with some effort. Here is a look at some of the ways to do so:
- Provide multiple payment methods to the customers
- Use a reliable payment gateway that has the capacity to handle multiple transactions
- Incorporate different payment gateways
- Make use of dynamic routing to direct the payments via trusted payment processors
- Validate the credit card details at the time of registration
- Employ auto-retry features
- Provide one-click checkout by creating optimised checkout page where the personalised payment details of the customer are already filled.
What to Do When Payments Fail on Your Store?
An increase in payment failure rate results in an increase in the operational cost and loss of revenue. It is also detrimental to the company’s reputation. And though such transactions can be reduced, it is often impossible to prevent them. What to do in such a case? What to do if the payment fails? Here’s a look:
- Keep the Customers Informed
Customers tend to trust businesses that keep them informed about their payment or order status. In case a payment fails, one of the first things a business must do is inform the customer. Many big brands tell their customers about the failed transaction and prompt them to make another attempt. The cause of failure is notified quickly, and so is the duration of time after which the customer may try again. Such transparency encourages customers to return to the portal to complete the transaction.
- Reach out to the Customer
There are cases when a buyer is unable to complete a transaction because of an issue at their end. However, he may not be aware of the same. There is a general tendency to believe that the site is at fault. In such cases, it is imperative to reach out to the customers to inform them about the actual issue. This way, they can address the problem and return to your store to complete the transaction. Customers may be reached via email, SMS or call.
- Periodic Checks
The payment system should be reviewed periodically to identify any problems that may be hindering successful transactions. For example, payment gateway plugins or payment router issues may exist. Addressing these issues will ensure a smooth checkout process and increase the payment success rate.
Choosing the Best Payment Gateway for Seamless Transactions
Here are a few simple tips to choose the best payment gateway:
- The payment gateway must possess a record of processing multiple payments successfully.
- It should offer a one-click checkout solution. A quick checkout process that does not require entering passwords or OTPs increases the chances of a successful transaction.
- Ensure the payment gateway has strict security measures in place and adheres to the Payment Card Industry Data Security Standard.
- It should have an intelligent payment router connecting your portal with different payment aggregators. This advanced router routes shoppers to their preferred method of payment for quick order placement.
- It should integrate easily with your existing eCommerce platform and software systems.
- Consider the transaction fee charged by the payment gateway before finalising the deal.
Platforms such as Shiprocket Checkout can help to retain and impress buyers with a quick and hassle-free checkout experience.
Conclusion
A high payment failure rate can lead to declining sales and drive away potential customers forever. In order to improve the payment success rate, it is important to identify the reason behind its failure. Some of the possible reasons include incorrect account or card details, unavailability of preferred mode of payment and lengthy checkout process. Businesses must work on such issues to prevent failure of payment. If the payment does not get through because of customer issues, they must be notified about the same. By offering multiple payment gateways, diverse payment options, and a streamlined one-click checkout process, you can boost payment success rates, ultimately increasing sales and improving customer satisfaction.
