Commercial merchants partner with payment gateways to process their customer payments, whether from a credit card, debit card, or e-payment. The payment gateway encrypts the customer’s sensitive financial information to prevent unauthorised access to it.
There is so much trust put on the shoulders of payment gateways, both by the merchant and the customer. Any technical failure on the part of the payment gateway could spell big trouble for the merchant and customer.
How a Payment Failure Impacts the Customer Experience
Did you know that payment failures cost businesses millions of dollars each year?
When customers place orders online or in person via a point-of-sale system, the payment gateway might reject their payment for some odd reason. Perhaps it is a bug or glitch in the system that prevents the payment. Regardless, customers are never happy when their payments fail or get denied. It causes them to lose faith in the professionalism and integrity of the merchant.
Here are the consequences of a payment failure based on the customer experience:
1) Lost Customers
Businesses lose customers due to payment failures. After all, customers won’t want to keep shopping at a business if their payments continuously fail in the system. They will feel motivated to shop somewhere else, sometimes even after the first payment failure. That means the merchant could have lost a potential long-term customer from one temporary payment failure.
2) Checkout Abandonment Increases
When a customer’s payment fails, they usually don’t have the motivation to continue with the transaction. They will abandon their checkout screen and shopping cart by clicking off the online store and shopping somewhere else. That is why checkout abandonment increases when payments fail in the system.
3) Injury to Brand Reputation
Payment failures can damage the brand reputation of a merchant if they disappoint too many people. Customers will spread the word that the merchant has a buggy checkout screen, and therefore cannot be trusted. They may even post negative reviews about the merchant online for everyone to see.
How Payment Failures Impact Merchants
A merchant experiences many financial and operational setbacks from their payment gateway failures. These setbacks include:
1) Loss of Funds
Losing money is the number one setback from payment failures. If a payment gateway cannot process a merchant’s payment, the merchant will not receive that payment in their commercial bank account.
Since there are millions of dollars in failed payments for businesses each year, that means millions of dollars in losses for businesses. That is a pretty scary prospect when you think about it.
2) Increased Operational Costs
Merchants can expect their operational overhead costs to skyrocket after constant payment failures.
Think about how many hours a merchant’s team of accountants will spend trying to reconcile their accounts by tracking “ghost transactions, which are when funds may have been authorised but never fully processed due to the payment failure.
In addition, the merchant will probably receive a lot of customer complaints, which means they will have to spend more time, effort, and money dealing with those angry customers. Meanwhile, the merchant will focus less on tasks that could help grow their productivity and profitability.
3) Higher Transaction Fees
Many merchants don’t realise that payment gateways will charge transaction fees for all failed and successful transactions. Each time a customer attempts to make a payment, the merchant is usually charged a transaction fee regardless of whether the payment was fully processed or not.
What Merchants Can Do
Merchants don’t have to settle for an unreliable payment gateway to handle their transactions. There are ways in which merchants can significantly reduce the risk of payment failures. Below are the top examples:
1) Automated Retry Systems
Most payment failures are temporary due to unexpected occurrences like server outages or insufficient funds. Merchants can implement an automated retry system to automatically retry a customer’s payment a few more times, whether an hour or a day later. In most cases, the cause of the payment failure is resolved after a brief period of time.
2) Payment Orchestration Platforms
Payment orchestration is when a merchant can route customer payment transactions to more than one payment gateway.
For instance, suppose Payment Gateway A fails to process a customer’s payment. Instead of just abandoning the transaction, the payment orchestration platform would automatically route the customer’s transaction to Payment Gateway B, which is a different gateway than the original. If the second gateway is successful in processing the payment, then it means something was wrong with the first gateway.
3) Customer Communication
Always communicate clearly with the customer. If their payment transaction fails, don’t forward them to a standard “404” error webpage. The proper communication is to notify the customer of the exact reason why their payment failed. Then, offer them a solution or suggestion on how to resolve the problem, such as “try a different credit card.”
4) Multiple Payment Options
Don’t just offer one payment option. A merchant should offer multiple payment options. That way, if one payment option fails, the customer can try a different payment option to see if that works.
5) Reliable Payment Processing Partner
Finding a reliable payment processing partner is critical. It should be a payment gateway with a high number of payment approval rates and proactive monitoring systems to detect potential problems. If you can trust in the integrity of a payment gateway, you can trust that it will continuously process customer payments successfully.
6) Dedicated Resources
Merchants should dedicate a lot of time, money, and resources to their support and infrastructure departments to prevent technical issues before they occur. These teams can run quality control checks on their payment processing systems to ensure they are continuing to function as normal.
How PAYSTRAX can help
PAYSTRAX offers secure payment processing solutions in the form of both an online payment gateway and in-person Point-of-Sale (POS) payment terminals. If you are looking for a reliable payment gateway, you won’t find a better one than PAYSTRAX. It offers a robust suite of features to protect merchants from payment processing complications, including risk & fraud management, multi-currency acceptance, and a library of plug-ins and add-ons to customise the solutions exclusively for each merchant.
