E-commerce has become an integral part of our lives, to an extent that customers find it more convenient to just log into the shopping site at their convenience and make the purchase rather than floundering their way out. But what if after all the efforts they receive a notification saying, “Your payment has been declined”? No one takes shine to failure or decline message popping up on the screen at the time of checkout, while they have entered all payment details. Going through the whole procedure doesn’t take long but the agony can lead to delayed action which further results in the loss of revenue for the brand. It is not difficult to prevent payment failure, but one must dig deeper to understand the root cause of the issue before finally working to get rid of it.
What is a Failed Payment?
A failed payment is a transaction that does not go through due to some error or issue. It can occur when the card issuer or bank does not approve the transaction for various reasons, such as insufficient funds, incorrect card details, expired card, security block, etc. The result is that the payment is not completed, and the funds are not transferred.
Why Do Payments Fail?
Payments can fail due to several reasons, while some get declined because of customer error, network error also causes a significant number of failures. From the customers’ side, the error could be as trivial as inserting the wrong UPI pin, while it can be more complex from the merchant’s side. Below is the list of the most common reasons for payment decline.
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System Downtime: When the payment gateway is down, customers cannot complete their transactions and payments cannot be processed. This can result in payment failures and frustrated customers. If the payment system is running adagio due to high traffic or technical issues, customers may experience timeouts or errors when trying to make a purchase. If the payment system experiences a data loss or corruption during downtime, transactions that were in progress may be lost or become corrupt. System downtime can also expose security vulnerabilities, as attackers may attempt to take advantage of the unavailability to access sensitive information or launch attacks
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Technology failure: Technology can be responsible for digital payment failure if the systems and processes required to complete a payment transaction are not functioning properly. For example, if a payment gateway experiences a technical issue, it may not be able to securely process transactions. Other factors such as network outages, software bugs, or system upgrades can also contribute to payment failure if not properly managed. In such cases, it is important for organizations to have contingency plans in place to minimize the impact of technology failures and ensure that payments can be completed in a timely and reliable manner.
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Insufficient Funds: "Insufficient funds" is a term used to describe a situation in which there is not enough money in a bank account to cover a payment or withdrawal. This is a common reason for a payment failure, as the bank will not allow the transaction to go through if there are not enough funds available to cover it. If you encounter this issue, the payer will typically need to deposit additional funds into the account or find another payment method to complete the transaction.
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Compromised Security: Compromised security" refers to a situation in which the security of a system or information has been breached, potentially leading to unauthorized access or damage. In the context of a payment failure, compromised security could mean that someone has gained access to sensitive information (such as credit card numbers) and is using it to make unauthorized transactions. To avoid this type of payment failure, it's important to follow best practices for online security, such as using strong passwords and avoiding public Wi-Fi networks when making payments. Over time artificial intelligence has transformed FinTech and has been acting as a shield to secure the transaction.
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Incorrect information : "Incorrect information" is the inaccuracies or errors in the data that is being used to make a payment. For example, if the wrong account number or routing number is entered when making a bank transfer, the payment may fail. If the incorrect expiration date or security code is entered when making a credit card payment, the payment may also fail. Incorrect information can lead to payment failures and it's important to double-check all information before submitting a payment to ensure that it goes through successfully.
Effective Methods to Reduce Payment Failure
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Using a Payment Gateway that routes the payment to multiple processors. When a transaction is initiated, it is sent to various stakeholders including the payment processor. If you are integrated with a payment gateway that routes your payment through a single processor, then it may result in a higher probability of payment failure. It is recommended to route your payment through multiple processors, so the chances of payment failure due to downtime reduce.
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An Integrated Payment Platform with advanced functions. Payment processing may appear as a swift process, which might seem easy and simple, but there is a complex procedure that takes place at the backend. The Payment Gateway that supports basic features might support your business during the initial phase, but as the business grows the need for advanced features grows.
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Prioritising Online Payment Security and ensuring the Despite entering all the information correctly, a payment may fail. This can account for a suspicion of a security breach. It can be prevented by integrating a payment gateway that provides all-around security.
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Wide range of payment solutions renders freedom to choose the preferred mode of payment to engage more people leading to enhanced reach. To reduce payment failure, it is recommended to integrate a payment platform with local payment solutions and alternative methods of payment.
Albeit, the thought of completely avoiding payment failure is non-viable. But understanding the reason behind the failures can help in working around the issues that might be responsible for the cause. An easier payment process will help you in making the payment process convenient for customers. To avoid payment failures, a reliable payment Gateway is extremely necessary for maintaining liquidity and smoother transactions. Pay10 is amongst the most reliable and secure Payment Gateways that cater to businesses irrespective of size and scale. We offer multiple payment solutions including, Payment Gateway, Online payments, Payouts, and Reseller Services among many more. For more information check Pay10 Official Website.