Published on April 12th, 2017 | by Guest0
Shedding Light on Failed E-Commerce Payment Transactions
With mobile devices making it easier for people to access the internet, more shopping is now being done online than ever before. The result has been a shift from cash-based purchases to online debit and credit card transactions.
However, the added convenience that online payment options provide customers can bring some big headaches for e-commerce businesses. One particular problem is when these online transactions fall through. But failed payment transactions can happen due to a variety of reasons. What’s more, each occurrence also has a chance of chasing away customers and putting a dent in your company’s profits. This raises the stakes and demonstrates the need to successfully handle failed transactions.
Why Transactions Fail
Before we go deeper into failed transactions, it’s best to explain why they usually happen. In truth, they stem from more than just insufficient funds and expired cards. This can make dealing with them harder than it first appears. To start, here are just some of the reasons why online payment transactions usually fail:
- Insufficient Funds. As mentioned, this is one of the most common reasons for a failed transaction, and is self-explanatory. Your customer simply didn’t have enough money in their account, or they may have gone above their credit limit.
- Incorrect Details. Here’s yet another common reason for a failed transactions, which happens when a customer inputs the wrong account information. It doesn’t matter if it’s a mismatched card number or a misspelled name. This will lead to the bank rejecting the transaction.
- Closed or Expired Account. Related to the above entry, this instead happens when a customer has closed their bank account or when their credit card has expired. The result is still the same: the bank will reject the transaction.
- Withheld Authority. As a means to prevent fraud, banks and credit card holders can request stop orders for debit processing. When this happens, the customer will have to contact their bank to re-authorize transactions.
- Bank Reversal. In this case, the bank reverses the transactions in the customer’s favor, who may have been a victim of fraud or any other unauthorized transaction. Other possible reasons may include clerical or system errors.
Addressing the Problem with Manpower
Minimizing profit loss from a number of transaction failures needs a lot of effort. But before you worry, this can be solved by having a dedicated team to keep track and keep up with the orders. Indeed, having employees that are solely focused on monitoring and resolving billing issues is a sure way to get things done.
Just keep in mind that collecting on failed transactions requires plenty of re-billings, follow-ups, and plenty of other repetitive tasks. Unless you structure your team correctly, this can lead to high turnover rates and low worker efficiency—the amount of work can simply burn your employees out.
Embracing a Subscription Billing Platform
If you’re wary about hiring more people or stressing out your employees, then you might want to look into incorporating a software as a service (SaaS)-based solution. Indeed, automated subscription billing and payment platforms are highly useful for tackling payment transaction failures. They may even be easier-to-use and more cost-effective tools for E-commerce enterprises who are working on a tight budget.
These solutions function primarily to automatically analyze failed transactions, identify the issue, and recover the lost profits. Typically, they are also cloud-based for easier collaboration, mesh well with existing systems, and can be successfully incorporated in as quick as a few days. This allows you to easily improve customer retention rates and increase your revenue.
Indeed, both established juggernauts and optimistic startups in e-commerce should expect a lot of challenges when it comes to online transactions. This is especially true since we now live in a world that relies more and more on cashless transactions with each day. Hence, it’s fortunate that SaaS-based solutions can now help with reducing the amount of failed payment transactions, without putting any extra burden on customers.