A failed payment is a transaction that – whether through human error or technical error – did not go through. The payment was unsuccessful despite the customer completing the full checkout process, including entering their card details.

Failed payments typically make up a small percentage of your overall transactions, and are dwarfed by other ‘leaks’, like cart abandonment. 

So most brands don’t pay too much attention to their payment failure rate (the number of failed transactions expressed as a percentage of the total) – partly because the percentage is typically small, and partly because it feels out of their control. On average, 2% of transactions fail for technical reasons, and around 11% fail due to human error (incorrect card details, or insufficient funds). 

But devoting just a small amount of time to improving this rate could be incredibly worthwhile. You put all the work into bringing this customer to your site, and getting them to the point of purchase. If their transaction fails for technical reasons, there’s only a 38% chance that they’ll return to try again. 

So, where should you start? 

Get down into the data 

The first step to improving your payment failure rate is to understand where things are breaking down. 

Analyse the data from your payment gateway and fraud prevention services to understand the root cause of the issue. Each failed payment will have its own decline code depending on the reason for the failed payment. 

For failed payments caused by human error:

• If you’re taking automatic payments, experiment with the time you take these, and automatically try twice (with a gap of time in between) 
• People frequently enter their card details incorrectly, review the form fields are clear and localised where necessary (e.g. postcode vs ZIP code) 
• Consider offering a wider variety of payment options so your customers can choose the right one for them
• Try offering a Buy Now Pay Later option, too. Most ‘human error’ payment failures are due to insufficient funds

For failed payments caused by a technical error: 

• Test your checkout experience across a range of devices and browsers, and experiment with different payment options to flag any bugs
• Review your fraud prevention settings, and ensure you’re accepting payments from the countries your customers are actually shopping from
• The same applies to currencies – check there’s no mismatch between the currencies you accept and the ones your customers pay with
• If one payment gateway seems to be the issue, this could be down to connectivity issues, or repeated outages – this is worth investigating deeper

At FERO, we understand that it’s not always easy to get to the bottom of why transactions are failing – or to dedicate time and resources to implementing solutions. 

FERO plugs straight into your e-commerce store and provides easy-to-understand insights into what’s going wrong and recommendations for putting it right. You’ll find them in your customised dashboard, alongside our other tailored recommendations for optimising your checkout conversion rate. Try it free for 30 days.