Online payments have transformed the transaction process entirely, and it has almost replaced the cash transactions. Despite its ease, it has certain dependencies on card networks, bank servers, payment processors, etc., and due to a small glitch on any of these, online payments end in failure. Let's take a look at the causes and solutions of online payment failures.

What Is An Online Payment Failure?

An online payment failure is a situation where a sender initiates a transaction, but the fund does not reach the recipient. In such circumstances, there may or may not be money deduction from the sender’s account, but it does not reach the recipient at all due to unsuccessful payment processing.

An online payment is initiated by the sender, then the payment request passes through the payment gateway to request authorization from the card network and issuing bank, and then the amount reaches the acquiring bank. A slight glitch on any of these may prevent a successful money transfer.

Causes of Online Payment Failure

The common causes behind online payment failures are:

1. Card Issuer Declined Payments

An issuing bank refuses the payment when the card issuer declines it – this is Hard Decline. Due to the following reasons, the card issuer can decline a transaction:

1. Card expired
2. Insufficient funds
3. Incorrectly entered card information
4. Exceeded card limits
5. Area limitations
6. Payment method or card restrictions
7. Account inactivity

2. Issuing Bank Blocked Payments

Even after the card issuer approves payment, the issuing bank may decline the payment due to the following reasons:

1. Suspicious and fraudulent payment attempt
2. Technical glitches
3. Downtime in payment processing
4. Network problem
5. Slow server

This type of decline is Soft Decline.

So, primarily due to incorrect data, risk, and network issues, payments failures occur.

What If the Money Is Debited, But the Online Payment Ended in Failure?

In case, money is debited yet an online payment is failed, the money will automatically reach the sender within 5-7 business days. If it is not credited to the sender's account after a week, the sender needs to reach the bank and inform the problem with all the necessary details like transaction ID, amount, etc.

If the money deduction is because of any fraudulent activity, the sender must go through proper legal proceedings. Alternatively, they can go through consumer redressal mechanism to recover the money.

Will the Failed Transfer Reflect on the Statement?

In case of no money deduction, it will not be visible on the statement. If debited, it will be shown on the statement; when it reverses to the sender's account, it will also be shown.

Solution to Prevent Payment Failures

To avoid online payment failures, make sure you

• Check the card’s expiration date and account balance before initiating a transaction
• Crosscheck card number, CVV, and expiry date while entering and avoid typos
• Remove transaction limits or send money within the specified limits
• Get approval from banks for the required geographical locations in case of any location-related transaction failure
• Opt for a different payment method or get another card
• Activate the account and then conduct a transfer
• Use different payment integrations
• Use payment routing technology
• Integrate spam protection system
• Monitor the payments
• Take help of analytics for further insights and improvement areas

In a nutshell, even though many failed transactions are the result of technical glitches; customers sometimes enter wrong credentials – as a result, the online payment results into failure. So, the buyers have to be very cautious during transactions.

End Words

Payment failures are very common during online shopping, and customers are very less likely to return to the merchant or the app/website where they once experienced payment failure. So, it is the merchant's loss because it increases the churn rate.

If you want to save yourself from such a loss, you can get assistance from a payment gateway. PayG Payment gateway guarantees 99.9% payment success by mitigating all the reasons that can cause an online payment failure. Along with that, there are multiple payment methods. Hence, your business will be in a win-win situation. Having multiple payment options and successful online payments will reduce the payment failure rate, thereby decreasing the churn; hence, your business will succeed. Not just that, our payment gateway regularly checks for payment failures and offers refunds very smoothly.