Payment failures have become an inherent part of every online business, and business owners are rapidly taking steps to ensure these are kept to the minimum. However, as soon as a payment fails, it leads to a revenue loss and the possibility of losing customers, which is not ideal for any business.
So what can businesses do to prevent such scenarios? Indeed, there are ways to curb this omnipresent menace impacting customers and business owners. The clear answer is a payment orchestration platform, which we will discuss later in this guide.
What Causes Payment Failures?
If your business has been suffering from frequent payment failures, consider looking through some of the common reasons listed below:
- Do Not Honor: When banks don’t honor your transaction, it can cause an immediate payment failure. This can be due to any reason, but largely it is because of a fraudulent transaction, details mismatch, wrong verification details, and many others.
- Insufficient Funds: What happens when you are paying from your bank account directly on a seller’s website and the payment declines? An obvious issue is the lack of funds, which makes the transaction null and void.
- Limit Exceeded: Some online banks levy a limit on your online accounts, which can become another issue for a payment failure. Additionally, as a bank account holder, you can set limits for online spending, which is another added reason for such declines.
- Invalid Credit Card Number: When you are transacting online, it’s essential you update the right credit card details, including the credit card number, the date details, and the pin. Failure to update any of these incorrectly can lead to a payment rejection.
- Invalid Expiration Date: On similar grounds, do ensure your cards are replaced on or before the expiry date to ensure you aren’t levied extra costs on declined online transactions due to an expired card.
- Card Issuer Declined CVV: The CVV is the three/four digits number that appears on the card’s back. During a transaction, if you enter the wrong number or incur a typo, the card is immediately declined.
- Locational Declines: When you are using an international card that is not accepted in a particular location.
- Bank’s Fraud Rules: If the issuing bank feels your card has been used for conducting fraud transactions online/offline, the bank will immediately cease your card’s details, rendering it ineffective for any further transactions.
Some other common reasons for payment declines are as follows:
1. Payment Service Platform/Payment Gateways Down
Online businesses use payment service platforms and various payment gateways to process their payments.
However, when the primary payment processing unit is experiencing downtime, it can lead to payment errors, which are a big reason for increased customer attrition.
In such a scenario, you can use a payment orchestration platform to dynamically route payments in real-time to ensure a smooth, seamless customer checkout experience for the customer.
2. Presence and Absence of 3DS Authentication
3DS Authentication is an important aspect of an online transaction, as it relates to any form of cardless transaction when the user is conducting a payment online.
During the checkout process, the merchant directs the customer to a 3DS page, where the customer enters an authentication password/pin. This step is crucial for the issuing bank to ensure the transaction is relevant and authorized.
However, a 3DS authentication error populates when the card owner enters the wrong authentication pin/password, and the bank declines the transaction.
3. Credit Card Declines
Credit cards are a prominent reason for declined and failed payments worldwide. There can be multiple reasons leading to a credit card decline, some of which are as follows:
- Credit limit exhausted
- Server issues
- Fraudulent or identity theft
- The last volume of the outstanding unpaid balance
- Expired credit card
- The card account closed without prior intimation
No matter the reason, as soon as such an issue occurs, you will immediately notice that you can’t make any new payments online or via a point of sale. If your card is declined during a purchase, you should consult the issuing vendor and speak to them about reinstating your card services.
Until the card issues are resolved, you won’t be able to make any online transactions. Most of the time, multiple declines can even cause your card to get blocked, which takes longer than usual for the issuing company to unblock. Failure to clear the outstanding payments on your account can even reduce your credit score, which can pose a problem eventually.
4. Technical Issues
Payments are often collected via a payment gateway that’s independent of the host business. Since many channels are involved in the entire payment process, there are chances of payment declines whenever there are technical issues in any part of the payment network.
Unfortunately, this is out of the business’s control; however, these issues are usually temporary and can be resolved quickly.
5. Fraudulent Activities
Identity theft and credit card theft are the most common issues worldwide.
Did you know 46% of credit card fraud happens in the US? In fact, by 2026, credit card fraud volumes will touch a whopping $43 billion. So, what triggers online fraud on the internet?
If you are used to purchasing products online, you input your credit card details to make the purchase. Most of the time, through cybersecurity attacks, hackers can access and use your personal information for evil purposes.
To ensure you don’t fall prey to such scams, you should always use your credit cards only on trusted websites with which you are already familiar. Avoid any suspicious websites that you feel don’t look legitimate or are too good to be true.
6. Payment Method Not Supported
Finally, one of the most common reasons for a declined payment transaction is when a platform/vendor does not support the payment method. Customers have different payment methods, determining the quantity of products they purchase online.
The payment method also determines which brand a customer prefers since it leads to a hassle-free purchase via their preferred payment method.
If an online business does not support a specific payment method, it can demotivate the customer and result in a failed payment for the company.
For this very reason, many online businesses are trying to expand their payment horizons by offering plenty of options to the customers to ensure every customer’s payment experience is ideal and the loyalty levels remain intact.
Another good option for a business is to associate with a payment orchestration platform so that there is a variety of payment methods available to customers every time they purchase a product/service online.
Consequences of Payment Failures
When payments fail, what is the most significant consequence? The business loses revenue, while the customers tend to shift their loyalty towards another brand.
Let’s see the impact of payment failures on the two most important segments: customers and businesses.
1. Impact on Customer Experience
Customers love a good shopping experience, especially when they buy their product/service online without any hassles. Add a payment decline to this scenario, and you immediately face a disgruntled customer contacting customer care with his complaints.
Sounds a little annoying, isn’t it? Customers want a seamless shopping experience, especially when short on time.
A good experience leads to brand loyalty, return visits, and an increasing revenue cycle for the business. So, how do you ensure a good customer experience? You can sell a good product and service on your website. But wait, that’s not enough on its own. The checkout experience, wherein the customer pays for your product/service, is equally important.
To ensure a hassle-free payment experience, your business must associate with one or more payment processing platforms to help you route payments, manage reporting, reduce abandoned carts, and offer customers the comfort of a secure payment.
All such services are available on inai’s platform, an orchestration platform that provides the best payment-related services to merchants, businesses, and customers.
2. Revenue Loss for Business
When businesses face the wrath of unhappy customers, it leads to a loss of revenue, customer disappointment, and brand tarnishing. These by-products of customer dissatisfaction can wreck an online business and force it to undergo unforeseen circumstances, which aren’t ideal for any firm.
Some major companies, such as e-commerce businesses, travel agencies, and many other industries, can get stuck in such a trap, as all these payments happen online.
Considering these consequences, what’s the solution for these interconnected problems?
It’s simple; the idea is to hand over your payment handling to a payment orchestration firm, such as inai, who can handle all your payment woes, routing problems, payment downtime and even ensure a smooth customer checkout experience for your customers.
Tips to Reduce Payment Failures
To curb payment failures, you must prudently address the problem right at the source. Here are some things you can look out for:
1. Leverage Smart Retries
Payment orchestration platforms play it smartly with their payment routing logic, which allows them to be the best in the market.
By dynamically rerouting the customer and merchant payments, your business can ensure successful customer payments with minimum effort. All you need is a set of complete functional logic and a renowned orchestration platform to manage your payments.
2. 3DS Authentication
As an online business, you must provide extra security for your customer's data. The 3DS authentication layer helps keep the hackers at bay while securing each payment. While 3DS authentication is relatively secure, you can still take it up a notch by basing it on the payment’s risk profiles.
Risk-based authentication (RBA) is a dynamic, parameter-driven concept that gauges an online transaction's riskiness in real-time and automatically tweaks the customer's checkout process. You can prevent different attacks during the processing of online payments.
Each transaction is gauged on specific criteria and categorized into low, medium, or high risk. The payments are further actioned as per the designated risk profiles.
The entire concept is quite helpful in preventing fraud, as you deal with different customers regularly.
3. Multiple Payment Gateways
A payment orchestration platform like inai allows you to manage multiple payment gateways from a single platform. What's the benefit of associating yourself with numerous payment gateways when even one gateway can handle payments?
With multiple payment gateways, a reliable payment orchestration platform can dynamically route payments from one channel to another to ensure a smooth checkout process, provide a better transaction cost to the merchant, and even create a balanced customer experience.
Since payment gateways are technologically driven, it's essential to factor in any relevant downtime, which can create issues during a customer's checkout process. However, the chances of all the associated payment gateways experiencing downtime simultaneously are rare.
In such a scenario, the payments can be routed to the next available channel, preventing an abandoned cart scenario.
4. Wider Local Payment Methods
Depending on the locality of your business's functions, it's advisable to provide an option to the customer to pay in a wide range of local payment methods.
While charging a customer in a foreign currency is correct, it's always an issue for the customer to perform elaborate conversions and incur extra transaction and convenience fees before purchasing a product/service.
When local currencies are available, customers can purchase the goods and services effortlessly without paying extra charges at checkout. Add a level of convenience to this list, and you are already on your way to becoming one of the most preferred businesses in the area.
5. Tokenization & Auto Account Updater
You must provide your customers with the most up-to-date services as an online business. Among the list of issues, people also need to remember their card details, which can deter customers from being proactive during an online purchase.
Tokenization and auto account update procedures replace sensitive cardholder information with an unidentifiable token number, masking the actual customer details. Such a process stores the card details for a quick checkout so that the customer doesn't have to re-enter the details all over again.
Such a process goes a long way in reducing payment failures, thereby reducing the chances of typo errors and forgotten card details.
6. Payment Intelligence for Detecting Anomalies
A payment platform is rigged to detect anomalies and smoothen out any issues. With artificial intelligence algorithms in place, such platforms can tackle payment issues in real-time and reroute payments to the next available channel.
The system also alerts the listed owners of urgent tasks that need to be looked at in case the machine can’t solve them directly.
How inai’s Payment Optimization Helps You Reduce Payment Failures?
Did you know you can increase your top-line revenue by up to 10% by fixing payment failures? Yes, that statement holds the crux of a successful business model.
inai’s no-code proprietary solution works with your existing payment processors to help you reduce payment failures. Some additional features include:
- Payment insights
- Payment Intelligence
- Payment routing
- Reduce Involuntary Churn
- Checkout Optimization
- Approval Rate Optimization
You can use the platform’s payment insights to centralize all your payments without writing a single line of code. With such detailed analytical reports in your kitty, you can expect some of the best payment insights for your payments.
inai has excellent connectivity with over 50 payment connectors, offering you a good service package for your existing systems.
Considering all the above factors, if you run an online business, you can benefit immensely from these features, which promise to make payment management a cinch. Payment orchestration firms like inai can provide excellent services to businesses and companies alike, especially when dealing with multiple payment gateways and a large customer base.
From innovative routing payments to managing reporting to providing a dynamic no-code platform, there is a little bit of everything available for customers and merchants alike. If you want to experience our services firsthand, you can contact us, and we can help you make the right choice, which can benefit your business.