How to Reduce Declined Transactions
To reduce revenue loss and enhance customer satisfaction by lowering declined transactions, refer to this guide. When there’s a noticeable increase in declined transactions, consider examining both the checkout flow and customer experience for opportunities to optimize them.
Identify Decline Reasons
Before you can resolve the problem, you must understand it. So, the first thing you can do is play detective and look for reasons why your customers’ transactions are being rejected. Here’s where to start:
- Analyze Payment Gateway Reports: Review detailed reports from your payment gateway. Pay attention to decline codes and reasons. These codes, standardized across the industry, offer insights on why a transaction failed. Identify patterns or trends that indicate underlying issues with your checkout process or customer base.
- Segment and Categorize Declines: Go beyond the raw data and create relevant categories for your declined transactions. This includes:
| Category | Description |
|
Payment Problems: |
|
|
Fraudulent Reasons: |
|
|
Technical Complications: |
|
|
Other: |
|
There are two main types of declines:
– Hard Declines: These are like a brick wall. The card is invalid, expired, or closed. There’s no need to retry, so ask the customer for new payment details.
– Soft Declines: These are like a speed bump. It could be a temporary lack of funds or a fraud alert. Retrying again later or adding extra security might solve the problem.
- Speak to Your Customers: If you see several declined transactions, ask your customers directly. Collect customer feedback with a quick survey on your failed payment page or through an email to those who’ve had multiple declines for valuable information.
- Ask yourself key self-assessment questions:
– What are the top 3 most frequent decline reasons? (e.g., incorrect card information, insufficient funds?
– Are there specific customers (e.g., location, age group, subscription type) experiencing higher decline rates? (e.g., students, Asian, etc.)
– Do some subscription plans or pricing tiers have increased declines? (annual, trial)
Understanding the root causes of your declined transactions is the foundation for implementing targeted solutions and improving your payment success rate.
Free Payment Decline Analysis Worksheet
Download this worksheet to analyze and address payment declines.
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Track decline reasons
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Categorize issues
-
Identify solutions
Optimize Your Checkout Process
A friction free and user-friendly checkout experience is key to decreasing errors and reducing customer frustration.
- Conduct a UX Audit: Examine every step of your purchase path. Use heat maps or session recordings to identify how users interact with your page.
- Simplify and Streamline the Form: Ask only for essential information. Pre-populate fields when possible and use clear labels and instructions.
- Implement Input Validation and Autofill: Real-time validation shows users errors as they type, preventing them from providing incorrect details. Autofill saves time and reduces typos.
- Offer a Variety of Payment Methods: Understand your customers’ preferences and local payment habits by offering multiple payment options, including:
- Major credit and debit cards (Visa, Mastercard, American Express, etc.)
- Digital wallets (Apple Pay, Google Pay, PayPal)
- Local payment methods (e.g., SEPA Direct Debit in Europe, Alipay in China)
- Provide Clear Error Messages: Instead of generic messages, guide the user on how to fix it.
- Display Security Badges and Trust Seals: Reassure customers that their payment details are safe by showcasing security certifications and trust seals from reputable organizations.
Free Payment Decline Analysis Worksheet
Download this worksheet to analyze and address payment declines.
-
Track decline reasons
-
Categorize issues
-
Identify solutions
Implement Fraud Prevention
Protect your business and customers from fraudulent transactions without creating unnecessary friction. Implement main fraud prevention measures like:
- Adopt Risk-Based Authentication: Implement 3D Secure 2.0 or similar protocols that dynamically adjust authentication requirements based on the risk level of each transaction. This provides a balance between security and user experience.
- Utilize Machine Learning Models: Advanced fraud detection tools powered by machine learning can analyze vast amounts of data to identify subtle patterns indicative of fraud. This allows you to block suspicious transactions without impacting legitimate customers.
- Implement Basic Security Checks: AVS and CVV verification are simple yet effective ways to add an extra layer of security to your checkout process.
- Partner with Payment Processor: Work with your payment gateway to leverage their fraud prevention expertise and tools. They can give insights into fraud trends and help you fine-tune your security measures. Some payment providers like PayPro Global provide all-in-one solutions which includes payment processing, fraud prevention, 3DS, sales tax remittance, subscription and dunning management, customer portal and much more.
Free Payment Decline Analysis Worksheet
Download this worksheet to analyze and address payment declines.
-
Track decline reasons
-
Categorize issues
-
Identify solutions
Set Up a Dunning Strategy
When payments fail, clear and timely communication can help you recover revenue and maintain positive customer relationships. To do so:
- Set Up Automated Email Notifications: Configure your system to send instant email notifications to customers when a payment fails. Include the reason for the decline and clear instructions on how to update their payment information or resolve the issue.
- Personalize Communication for High-Value Customers: For customers with recurring payment failures or those on high-value plans, reach out via phone or email to offer assistance and prevent churn.
- Implement a Dunning Management System: Automate failed payments to retry at different intervals and escalate communication to shoppers based on certain criteria. This saves time and gives consistent follow-up. Personalize your dunning strategy to align with your business model, customer segments, and the reasons for payment failures.
|
Attempt |
Time Interval |
Action |
|
1 |
Immediate |
Retry payment, send email notification |
|
2 |
3 days |
Retry payment, send reminder email |
|
3 |
7 days |
Retry payment, send urgent email |
|
4 |
14 days |
Suspend account, send final notice |
Free Payment Decline Analysis Worksheet
Download this worksheet to analyze and address payment declines.
-
Track decline reasons
-
Categorize issues
-
Identify solutions
Outsource Payment Headaches to an MoR
If you’re selling globally or dealing with complex payment situations, an MoR (Merchant of Record) can simplify payments and boost their success rates. Here is how PayPro Global can help:
- Global Expansion: Navigate cross-border payment complications with ease. PayPro Global manages currency conversions, local payment methods, and tax compliance in over 170 countries.
- Optimized Payment Routing: We make sure your transactions are routed efficiently through reliable channels, maximizing authorization rates and minimizing processing fees.
- Ensures Regulatory Compliance: Handles issues of local laws and regulations related to payments and data privacy.
- Fraud Management: Our expert fraud detection systems and personalized checkout options help keep your business and customers safe from fraud.
- 24/7 Customer Support: Our billing support team is available around the clock to help your shoppers with payment-related questions or problems.
- Subscription Management: Automate recurring billing, dunning processes, and customer communications and give your team time to build your business..
- Tax Compliance: We handle tax calculations and remittance in various jurisdictions, ensuring compliance with regulations.
- Customer Portal: Our user friendly customer portal allows your users to manage their subscriptions, update payment information, and access invoices.
Conclusion
Implementing a plan to optimize the checkout experience, prevent fraud, and implement a dunning strategy reduces declined payments, leads to increased revenue, improves customer satisfaction, and produces business results. By addressing the causes, you have control over one of the most crucial parts of running a business – revenue generation and smooth customer interactions.
This focus on improvement paves the way for sustainable growth and a strong competitive edge in today’s marketplace.
FAQ
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Insufficient funds are the most typical reason for declined transactions. This is due to the customers current balance in their account or exceeding their credit card limit.
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Your payment gateway can provide decline codes that help. Look for codes related to AVS mismatches, CVV failures, or suspicious activity flags.
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3D Secure (like Verified by Visa or Mastercard SecureCode) add an extra authentication step to online payments, minimizing fraud and increasing approval rates.
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Utilize a dunning management strategy that uses automated retries at increasing intervals, along with email notifications to the customer.
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Offer various payment methods, optimize your checkout process for mobile devices, and give clear error messages with troubleshooting tips.
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MoRs can improve authorization rates by using intelligent payment routing, offering local payment methods, and managing cross-border transactions efficiently.
They also provide fraud prevention and compliance mgt, which contribute to a decrease in failed payments.
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Offer local payment methods, use a payment solution which specializes in global payments, and partner with an MoR to alleviate cross-border complexities.
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Send email notifications with clear instructions as soon as possible, offer support channels for assistance, and maintain a professional and empathetic tone.
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