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  • 07 Dec 2023

  • 08:30 AM GMT

How to Efficiently Handle Failed Payment Recovery?

How to Efficiently Handle Failed Payment Recovery?

Payments are the primary revenue source for businesses and form the very essence of a business's structure. However, the lack of payments, failed transactions, and business losses can drill a hole in your revenue model, leading to significant losses in the long run. 

There is a rollover effect of failed payments, some of which include customer churns, uncollected revenue, increased bad debt, and much more. Nonetheless, the bottom line is that failed payments are an undesirable aspect of running a business, and every online/brick-and-mortar tries to steer clear of it.

Let's investigate the causes of failed payments and how a business can tackle this inevitable loss.

What Are the Causes of Failed Payments?

Failed payments might be an inevitable part of running a business, but a few common reasons are the major contributors. 

Here are the most common reasons to look out for:

  1. Insufficient funds:

    Customers who shop online tend to make payments online. However, what happens when the paying account does not have sufficient cash? The result is a failed payment. In such cases, while the customer might not realize he has insufficient funds to facilitate his purchase, it leads to a failed payment. 
  2. Expired or invalid credit cards

    Most banks and card issuing agencies provide sufficient notices to their customers for expired/invalid credit cards. Customers might need to realize the issues with making expired cards during online purchases, which can become a substantial reason for a failed payment. The failure to use active cards or payment sources can become an integral issue during online payments. 
  3. Technical issues:

    Technical issues are another plausible reason for a failed payment. When dealing with payments on an electronic platform, you need to stay abreast of technical downtimes and ensure relevant coverage for making and receiving customer payments. Nonetheless, technical downtime and technical issues might hinder receiving payments, leading to involuntary churns and failed payments. 
  4. Customer errors

    Finally, customer errors, typos, and incorrect card details are another substantial reason for failed card payments. When a customer enters the wrong information during a purchase, the authentication fails, and the issuing authority declines the payment, leading to a failed payment.

Analyzing Patterns to Identify Recurring Issues

Payment-related issues are common in businesses, and recurring payment issues are an integral trend. As a subscription-based business, recurring payments are the crux of your payment structure since you need to capitalize on regular customer payments. 

However, if your recurring payments fail at regular intervals, it's essential to identify the root cause and nip the problem in the bud. Analyzing the causes of a failed payment is necessary to understand revenue losses and the deficiencies in a business's subscription model.

Some common reasons for failed payments might seem trivial initially, but recurring issues can be problematic, creating long-term issues for an online business. Failure to address these issues and identify the underlying patterns can be fatal, leading to a revenue loss. 

How Do You Build Up a Robust Payment Infrastructure?

You must build a robust payment infrastructure to identify and resolve payment-related issues. This is achievable only when you look at the most pertinent resolutions, such as the following: 

  1. Scanning and Identifying Failure Patterns:

    When identifying various failure patterns, you can’t overlook the different contributing factors that lead to failed payments. Some of the most common reasons include the following:
  • Financial Issues:

    •         Insufficient Funds
    •         Expired or Invalid Card
    •         Blocked Transactions (by the card issuer)

  • Data Entry Errors:

    •         Incorrect Card Details (typos, wrong card number, expiration date, CVV)

  • Transaction Limits:

    •         Payment Limits (daily or transactional limits set by the bank)

  • Security and Fraud Prevention:

    •         Fraud Prevention Measures
    •         Expired Authorization
    •         Unusual or Large Transactions

  • Technical and Network Issues:

    •         Technical Glitches
    •         Issues with Payment Gateway
    •         Network Problems (on payer's or payment processor's side)

  • Account Issues:

    •         Bank Account Problems

  • Card and Payment Method Restrictions:

    •         Card Type Not Accepted
    •     System Downtime
    •         Server Downtime (Payment processing server issues)


  1. Real-Time View of Failed Payments:

    You can effectively tackle failed payments using a well-faceted payment orchestrator platform that offers a real-time view of the different failed payment parameters. 

inai, as a payment platform, gives you a bird's eye view of different failed payment categories. 

As a business, receiving failed payment alerts is essential, as they can help you rectify and address payment issues immediately. Despite the different reasons for a failed payment, you can still address the problem effectively and facilitate a pleasant payment experience. 

  1. Offering Multiple Payment Methods as Per the Localization

Payment orchestrators can improve their payments and reduce failures by offering customers an option to make payments in the local currency. This way, an online business can employ the services of a payment gateway while reducing the dependencies on currency conversions and excluding the need to incur extra transaction fees.

Such localized payment methods go a long way in helping reduce dependencies on external parties, routing agents, and payment processors. It is straightforward for both the merchant and the customer, who is billed in the local currency. 

  1. Implementing Multi-PSP With Backup Processor

Payment failures can have cascading effects on an online business, especially if it is dependent on a single payment processor. If you want to strengthen your business and enhance your payment processing prowess, you can't afford to put all your eggs in a single basket. 

In other words, here are a few things you can do:

  • Avoid redundancy: You can avoid redundancy by employing backup options. For instance, if one provider experiences downtime or technical issues, all payments can be routed to the backup payment process to maintain a smoother payment processing experience.
  • Diversification: By diversifying your risk, you can minimize the disruption impact caused by service outages, network failures, and regulation changes. Diversification allows you to avoid dependencies on a single provider. 
  • Dynamic routing: Finally, you can increase the chances of successful payment by employing dynamically routed payments based on various factors such as payment methods, historical performances, and payment origination location.

All these methods together go a long way in helping improve customer experience, thereby creating an effective payment recovery process. 

  1. Customize the Checkout Experience for the User and Experience

Every merchant and customer is different. In other words, as one size does not fit all, it is essential to customize the checkout experience for different users. With a personalized experience in tow, you can enhance the credibility of your brand, inculcate loyalty, and increase usage. 

Additionally, you can add specific customization parameters such as localized currency payments, faster processing time, and real-time payment failure alerts, amongst other reasons.

The requirements differ from user to user, but the customization option should be readily available to the users for the best results.

  1. Payment Retort Types:

Finally, an online business can adopt various retort options, some of which include the following:

  1. Time-Based Retries: 

    As a system option, time-based retries involve using an intelligent system for reattempting failed transactions. Such attempts are based on set time parameters, which allow the system to adapt its retry intervals based on various factors. Such conditions and factors can be pre-programmed to meet the needs of the business. 

    Let's understand this point with a basic example. Let's say a user's payment failed during a specific time of day in the past. In such a case, the system can intelligently schedule the retry for a different time when success rates are historically higher. The system is rigged dynamically to adjust the retry timings based on past trends, customer behaviors, and other relevant factors.

  2. Card Type Identification: 

    Card type, the issuing firm, and other card/customer identification parameters are equally crucial in payment failures. However, the card type should not be a restricting factor for increased failed payments. 

    As an illustration, consider American Express cards. Amex cards are widely used globally. Despite their global acceptability and reach, many merchants don't accept them, and payments are often declined because a viable processor is unavailable. In such cases, you can use alternate payment processors that identify specific card types and are equipped to handle payments effectively without processing lags.

  3. Smart Retries: 

    Smart retries are most effective when dealing with recurring and subscription payments. Such a payment model is ideal for improving payment processing rates within a dynamic, multi-processor setup with multiple payment processors available. 

    As soon as payment declines on a specific processor, the payment is rerouted to another processor to ensure a quick, seamless charge. This prevents involuntary churns and provides a direct collection of subscription-based payments without unnecessary hiccups. 

How Does inai Help With Handling Failed Payment Recovery?

You can increase your top-line revenue by fixing payment failures, identifying root causes, and plugging in the gaps. inai's no-code solution addresses all the above points to reduce payment failures. 

Here's what you get in terms of features on their no-code platform: 

  • Extensive payment insights
  • State-of-the-art payment intelligence
  • Intelligent payment routing
  • Reduced involuntary churns
  • Approval rate optimization

These are just some of the best features available on inai's payment optimization platform for managing failed payments. Alternatively, you can centralize all your payments, gather insights, run analytics, and use over 50 payment connectors to enhance connectivity.

Join us today for a free consultation about our services and how we can help your business grow multi-fold.

How to Efficiently Handle Failed Payment Recovery?


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