Payment failures in online payments happen every day, even when the best payment gateway in India is in place. They are annoying for both the buyers and the sellers. Buyers spend a lot of effort and time searching for a product and entering the payment details, only to find that the payment got declined. When it occurs, the sellers lose business, and the buyers get a second chance to rethink their purchase. Rethinking a purchase may, several times, mean no retry. Besides losing business, frequent payment failures damage an eCommerce site’s reputation, repelling users from buying again.
Understanding the types of payment failures is the key to avoiding them. Therefore, an eCommerce merchant must take additional measures to minimize payment failures and increase business.
Different Types of Payment Failures
Depending on the situation, payment failures are of two different types:
- Consumer-Induced Payment Failure: This type of payment failure happens when the buyer enters incorrect payment details, wrong OTP, or has an insufficient balance in their account. In such a situation, the payment remains incomplete and eventually fails.
- Merchant-Induced Payment Failure: Online merchants are responsible for the technology behind digital payments. The payment may fail if there is a technical error from the merchant’s side.
Possible Reasons for Payment Failures
Apart from incorrect details, insufficient balance, and wrong OTP, there are numerous reasons for online payment failures. These are a few:
System Downtime: An online payment involves multiple players, including the online payment processor, payment gateway, issuing bank, an acquiring bank. Whether planned or sudden, one or more of them may have downtime. The server does not approve the transaction during downtime, and the payment is bound to fail.
Technology Failure: Several technical steps are involved in transaction processing to transfer the amount from the payer’s account to the merchant’s. The customer selects their preferred payment method and enters the payment details to make the payment. Then the details reach the gateway to transfer to the card network. After verification and authorization, the acquiring bank receives the amount and transfers it to the merchant’s account. A payment may fail even if a minor glitch happens during these technical steps.
Security Error: Each party involved in an online transaction must uphold security measures to avoid and detect any payment fraud. Banks and issuers have advanced technology to detect and analyze fraud. They use previous spending behavior to verify transactions and prevent fraud. They have the right to block and decline a payment if something feels out of place. Some common red flags for declined transactions include:
- Blacklisted BIN: Banks keep records of cardholders showing inconsistent transactions and activities. They use filters to blacklist customers who are not trustworthy. Blacklisted BIN (Bank Identification Number) may cause a payment failure.
- Surpassed Maximum Transaction Limit: Some merchants have limits on the maximum transaction amount. If a transaction exceeds that limit, the payment gateway will decline the payment.
- Suspicious Activity: Suspicious activity from the issuing bank often results in a declined or blocked payment.
Tips to Reduce Online Payment Failures
Although eliminating payment failures in eCommerce is not possible, using a secure PSP with advanced functions reduces them to a great extent. These tips help boost the transaction success rate significantly:
Routing Transactions Through Multiple Payment Processors: A transaction passes across various parties, including the payment processor. The best payment gateway in India allows payment to route through several processors. It is an effective way to minimize downtimes and reduce failed payments. When one processor is down, the payment goes to another processor instead of getting canceled immediately. It helps approve more transactions, thereby completing more sales and improving customer experience.
Using Advanced Functionalities: Although an online payment takes just a few seconds to process, it involves a lot of work behind the scenes. Rather than opting for basic payment features, look for an online payment processor with advanced support. A robust architecture will process higher volume transactions without technical failures or system crashes.
Accepting Multiple Payment Methods: The best way to increase the transaction success rate is to use a gateway that accepts multiple payment methods. That’s why it’s crucial to aggregate all the primary payment methods into the online platform.
Altogether avoiding payment failures is impossible. However, understanding their types and reasons can help work around the problems and find a way out. The tips mentioned above will make the online payment process easier and faster with minimal failed transactions. When an online payment failure occurs, the merchant knows the best payment gateway in India has its back.
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