An enjoyable payment experience ends with a successful transaction. Unfortunately, declined payments are not a thing of the past, and they can very much deter customers from coming back to your website. In fact, research shows that 62% of the customers that experienced a failed transaction won’t return to the same website again (Finance Magnates report). In this article, we discuss some of the reasons why payments get declined and what you can do to avoid failed payments.
There are various reasons why payments fail. On the customer side, a declined payment may be due to a mistake in the bank details or billing address details they inserted, insufficient balance of funds to cover the purchase or even a suspended/blocked account. Merchants may also block the payment manually, or the transaction may be flagged by the bank should there be any suspicion of potential fraud. From a technical standpoint, the payment gateway may not accept the payment method that the customer used, or there could be network infrastructural issues.
Whilst online payment failure is often times inevitable, there are certain factors that can help prevent payments from being declined. Below we list some of the most common:
In traditional payment routing, each gateway connects to one single processor. This means that if your transaction details are routed to that processor and the payment fails, there is no way to salvage that. However, in smart routing, the transaction is sent to the processor that is most likely to settle that payment. This means that gateways can connect to multiple processors and, once they receive a transaction, they will send it to the most appropriate processor. Even if this transaction fails, the transaction is rerouted to the next best processor. Therefore, the chances of payment failure are much lower.
Offering a wide range of payment methods enables you to give your customers the option to pay in whichever way they prefer. This could include digital wallets, alternative payment methods or bank transfers, amongst others. The more options you give to your customers, the more customers you will attract and retain. Even though this doesn’t necessarily contribute to preventing failed payments, it plays a crucial role in preventing checkout abandonment, ensuring customer satisfaction and increasing profit.
Having strong security measures in place is not only important for regulatory compliance reasons, but to protect your customers and your company. Therefore, security is of utmost importance and should never be compromised. Make sure that the providers you connect to are PCI-compliant, and that all the other security protocols are being used (such as KYC). However, authentication may also generate false positives, flag certain accounts that aren’t actually fraudulent and decline payments for “no reason”. Adopting 3D Secure 2.0 technology enables you to automate a lot of the authentication process, maximise authentication methods and create a more frictionless payment experience for your customers.
Payments may fail due to expired cards. This can be a huge pain for businesses that take recurring payments and require updated customer details to collect funds. However, it isn’t feasible to manually request customers to change their details online, and to have to rely on this manual work on an ongoing basis. Tokenisation is the replacement of actual bank details to a set of randomly generated numbers that represent the card and are safely stored within a token vault. As opposed to card details, the token has no expiry date, so it reduces the risk of payment failure. Tokenisation is also a crucial security tool that prevents customers from having their details stolen when paying online, as fraudsters could never have access to their actual bank details).
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using a variety of payment technologies and providers around the globe.
In a world where consumers payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
Reach out to our team below should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.
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