Failed transactions: reasons and escape routes
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Failed transactions: reasons and escape routes

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“Transaction failed” — 2 words, 17 letters, and so much pain. Unfortunately, online transactions sometimes fail, and it’s not good for both payers, providers, and payees. There are different scenarios but as a rule it results in low conversion rates, spoilt customers’ shopping experience, and a profit decrease.

Keep calm, we’ve figured out the main causes of conversion rate problems due to failed transactions and ways to minimise such incidents.

Top reasons for failed online transactions

The conversion rate is the number of successful payments out of the total number of transactions. According to global statistics, only 75-90% of payments are processed successfully. A failed transaction or payment means that a person has tried to pay online or somebody has tried to charge a customer’s card (in the case of automatic subscriptions or recurring payments), and the transaction ended up with a payment failure, i.e. was not successful.

why transactions fail

Some reasons for failed payments are out of your control, like insufficient funds or expired cards. They happen on the customers’ side, and any steps to optimise conversion are impossible to perform in such cases.

There are decline reasons that you can check, and they are within your control. We’ve highlighted the main ones below.

Why do online payments fail?

3DS authorisation error

3D Secure authorisation errors represent the most generic reason for failure, they make up about 45% of all failures. Such errors happen when a user doesn’t enter the security code or enters incorrect data, or doesn’t receive the code, and the 3DS authorisation page does not open.

Decline by the issuing or acquiring bank

This error accounts for about 32% of all declined transactions. Most often, this happens due to the lack of funds in a client’s account, so the only solution is to refill the funds in a bank account and retry.

Suspicious payer’s activity and further block by antifraud systems

Up to 19% of declines occur due to this reason. In some cases, this is caused by fraudulent activities on the buyer's part. Antifraud solutions track unusual behaviour or activity and may take further actions like blocking or adding the cardholder to a blacklist.

Errors made by payers

The rarest reason which makes only 3% of all failures. Not everyone knows about the CVC2 code required for 3DS authentication. And it’s not a hopeless task you can’t influence. You'll eliminate this type of decline reason by providing your customers with an intuitive checkout. Customer experience plays a big role here.

Payment gateway issues

At times, the payment gateway that you are using may decline your transaction. This happens because certain merchants' accounts may have an upper limit on transactions in their provider settings. If the transaction exceeds that amount, it gets declined. In such cases, the consumer has to check whether there are other payment methods available or make multiple transactions until the desired amount is reached. Another reason is a payment gateway fault or simply its downtime.

Security check issues

A security threat from the side of the issuing bank can lead to a decline. For example, a card is marked only for domestic use and is being used for an international website.

There can also be a range of other issues that may happen, for instance, due to a poor internet connection, the two-factor authentication not occurring correctly, or the connection timing out due to a slow response from the initiator’s end.

3 tips on payment failure management

  • Users are more likely to make successful payments if the payment form is helpful with it: splitting the card number input field into four-digit blocks with automatic cursor transfer to the next block, visual imitation of a bank card, and no unnecessary fields or information. Provide tips at each stage of filling out the payment information: everyone appreciates convenience and time savings.
  • Owners of online businesses can contribute to the conversion rates themselves, for example, by reducing the requirements for 3DS control, which, however, implies increased risks. A lot depends on the companies that process card transactions — the technological capabilities of a payment gateway can maximise the conversion.
  • Analyse the reasons for payment failure and abandoned carts. According to statistics, after several reminders to customers about an unfinished purchase, sales results increase by 2.4 times compared to cases when one was just sent a formal message.

Useful tip: optimise emails for viewing from portable devices (in e-commerce, 54% of views are made from smartphones and tablets), especially the “buy now” and “order now” action buttons.

How can we help

We at Corefy offer a holistic solution for proper payment processing with minimum failed transactions. Our user-friendly and intuitive Checkout offers step-by-step instructions for making hassle-free payments. It provides a high transaction approval rate, features a 99.99% uptime, and agile monitoring service. Thus, each payment declined during automatic verification can be verified manually. Checkout can be customised based on personal requirements: an individual form made under the terms of an online store sharply increases the status of the operation, increases the payer’s confidence, and, as a result, boosts conversion.

In fraud monitoring, Corefy uses robust security filters that meet all the requirements of the PCI DSS Level 1, which makes it possible to recognise and prevent fraudulent transactions quickly and with the maximum degree of probability.

Sure, failures in online payments are not entirely avoidable. But knowing the main reasons can help you make payments in a much easier manner. The main entrepreneur’s task is business development, not technology. Contact our sales, and we’ll help you find the best solution for hassle-free transaction processing tailored to your business needs.

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