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 identified the main causes of transaction failures and ways to minimise such incidents.

Why do transactions fail?

According to global statistics, only 75-90% of payments are processed successfully, and others fail for various reasons.

A failed transaction or payment means that a person has tried to pay online or somebody has tried to charge a customer's card, as in the case of automatic subscriptions or recurring payments, and the transaction ended up with a payment failure, i.e., was unsuccessful.

why transactions fail

Failed transactions: top reasons and ways to cope

All reasons for failed transactions can be divided into two large groups: those that can be influenced by a business and those that can't. For instance, one can't take any steps to cope with wrong card numbers, insufficient funds, or expired bank cards. But some other reasons can be influenced and even minimised.

Below we've highlighted the most widespread reasons for failed transactions. Let's explore them.

3D Secure authorisation friction

3DS errors represent the most common reason – about 45% of all failures. They happen when a user doesn't enter the security code, enters incorrect data, or doesn't receive the code. The 3DS authorisation page does not open in such cases, and the payment fails. The requirements for 3D Secure authorisation differ among banks and the degree of payment riskiness, so merchants should discuss it with their payment service providers and card issuers to minimise errors and ensure their customers can complete transactions smoothly.

Insufficient funds

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

Block by antifraud systems

Up to 19% of declines occur due to suspicious payers' behaviour, fraudulent activity, and blocklisting. Antifraud solutions track unusual behaviour or activity and take further actions like declining a transaction and adding the cardholder to a blocklist. Merchants can utilise smart antifraud tools with customised blocklists and allowlists or monitor certain payments and allow for their processing manually.

Payers' errors due to complex UI/UX

It makes up only 3% of all failures but can be decreased to 0. For example, only some payers know that the CVC2 code is required for 3DS authentication. Businesses can eliminate this reason for payment failure by providing customers with a user-friendly and intuitive payment page with clear prompts for the needed actions.

Payment gateway issues

Some payment gateways may decline transactions. One of the reasons is that certain merchant accounts have an upper limit on transactions. If a transaction exceeds that amount, it gets declined. In such cases, the payer can opt for another payment method. Another reason is payment gateway 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.

Three tips on payment failure management

  • Users are more likely to make successful payments if the payment page is helpful: 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 details – 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 failures and remind your customers of abandoned carts. According to statistics, after several reminders about an unfinished purchase, sales results increase by 2.4 times compared to cases when only one formal message was sent.

Ensure your reminders are optimised for portable devices (in e-commerce, 54% of views are made from smartphones and tablets). Pay special attention to the 'Buy now' and 'Order now' action buttons.

How can Corefy help?

We at Corefy offer holistic solutions for frictionless payment acceptance with minimum failed transactions for different industries. Our intuitive Checkout improves customers' payment experience through clear instructions and a user-friendly interface. Moreover, each payment declined during automatic verification can be verified manually or routed to another provider. Opting for our Checkout, you can customise it based on your brand's look and feel, and it sharply increases the payer’s confidence and, as a result, boosts your conversion rates.

Corefy uses robust security filters that meet all the PCI DSS Level 1 requirements, making it possible to recognise and prevent fraudulent transactions quickly and with the maximum degree of probability. Our Firewall allows for the protection of clients' transactions without sacrificing conversion.

Sure, failures in online payments are not entirely avoidable. But knowing the main reasons can help you increase acceptance rates and minimise the possible failure reasons. Contact our sales to find out how your project can benefit from our solution for hassle-free transaction processing tailored to your business needs.

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