Why do online payments fail, and how to prevent it?

Digital payments are common in our daily purchases and services, whether from eCommerce marketplaces or brick-and-mortar outlets. Yet, you experience a failed payment after you have traveled all the way purchasing or seeking service. 

Digital payment failures challenge all online businesses affecting both shoppers and merchants. A single glitch cascades into several errors, abruptly truncating the deceptively fast online payments. However, you can avoid failures by understanding why it happens. But without grasping the payment process flow, you will still be groping. So, let’s take a short detour.  

Online Payment Process Explained

Online payments are quick, safe, and convenient in a technology-driven ecosystem, where you are spoilt for choice in the available methods. However, though the transactions are accomplished in seconds, the process is complex. You enter the payment details at the checkout to embark on the payment journey, with many role-players helping you succeed. Hence, the steps are briefly elucidated. 

  • The merchant’s system picks up your purchase and payment signal. 
  • The payment gateway facilitates routing the transaction to and from the merchant’s processor.
  • The data is validated through fraud checks and 3D authentication and sent to the acquiring bank. 
  • Then the data is sent to the relevant scheme depending on the chosen method like cards, wallets, etc.
  • The issuing bank receives the transaction data following several security checks for authorization. 
  • The transaction is either approved or declined, and the merchant is informed accordingly.
  • Finally, the fund reaches from the payment gateway to the merchant’s bank account to complete the transaction cycle. 

Why do online payments fail?

The online payment cycle is complex, with several role-players performing a specific task, including security and overcoming technological barriers. That makes us understand what hampers the money transfer or exchange between the merchant and the customer. 

The “failing” is explained primarily in two role-playing tasks in the transaction journey covering security and technological deficiencies. Therefore, we understood the various reasons for payment failure that compromises the online shopper’s privacy and dent the merchant’s reputation. 

Understanding Online Payment Failure Types

All possible payment failures are summarized into two broad categories –the amount is charged or not charged. While the former is relatively trivial, the latter engulf multiple ramifications as the money is processed yet not materialized. Alternatively, payment failures are attributed to security issues (authentication) and technological errors (internet and Ecommerce payment gateway). Having zeroed in on the elementary, let us explore the online process discrepancy types.

  • Consumer’s Failure: 

Incorrect card details are the primary reason for failure at the consumer’s end. Among the various wrong inputs, OTP verification is the most common. Insufficient account balance is the other reason for an incomplete payment.

  • Merchant’s Failure:

Technical or security error leads to online payment failure in the digital marketplace or the physical stores relying on POS terminals. 

  • Data Transfer Error:

A payment error message is not accurate, yet the payment is a success as the issuing card account is debited.

  • Uncharged Amount: 

The transaction is a total failure as the customer’s account is not charged, implying a failed conversion. 

What causes online payment failure?

Online payment failures are far more complex at the merchant’s end than the customer’s. While the latter fails the system with incorrect credentials or a lack of balance to support the purchase, the latter cope with many factors. So, let us have a close look at them.

  • System Downtime: 

The pivotal role- players involved in online payment processing are the payment gateway, processor, acquirer, and the issuer bank. Each of these is prone to unforeseen downtime. Any downtime during the payment process impacts its approval, and the transaction fails. Zaakpay integrates the merchant’s system to mitigate downtime-induced failures. 

  • Technology Fails: 

The selected payment method, like the card, wallets, etc., goes through multiple layers, with the Ecommerce payment gateway playing a crucial role. What you see as the money transferred from the shopper’s account to the merchant’s is a complicated series of steps. Any miss along the way leads to a failure. Zaakpay credentials help eliminate failures. 

  • Compromised Security:

Security parameters bind every role-player within the online transaction cycle. The banks employ advanced technological tools to insulate the process from frauds. Any deviation from the protocol raises a red flag, and the transaction is declined and blocked. Here is an indicative red flag list for denying approval.

  • Black-listed Bank Identification Number
  • Maximum Transaction Limit Exceeded
  • Security Threat
  • Card Expired or Canceled
  • Blocked Consumer’s Account
  • The payment gateway does not support the chosen payment method

Tips to Prevent Online Payment Failure

While digital payment systems evolve as the preferred and primary payment utility, failures are inevitable. A Payment Service Provider (PSP) can make or mar your business. Integrating your internal system with a technologically advanced and reliable solution can best help reduce technology-induced payment failures. Here is what you can do.

  • Multitasking Payment Gateway:

Engage a payment gateway capable of routing transactions to multiple payment processors to prevent failures from system downtime. A “smart” routing engine engages multiple processors. It handles several transactions simultaneously to enhance customer experience and sales. Therefore, look for a PSP value for money, providing a quick response to calls for help. Explore Zaakpay and their signature payment gateway and payment link products shielding you from technical glitches. 

  • Advanced Payment Platform:

Choosing a payment eCommerce platform with advanced functionalities sustains a growing business best. A serverless architecture helps scale transactions in high volumes but shields them from crashes and failures. 

  1. Engage Security Protocols:

Adhering to online payment security protocols protects your business and customers from fraudsters. A PCI DSS Level 1 compliant PSP ensures captured data integrity and insulates the system compromise. 

  • Multiple Payment Methods:

One surefire way to prevent online payment failure is entrusting system integration to a PSP providing merchant services, including a payment gateway that supports a wide range of payment methods. In addition, a centralized dashboard aggregating several payment methods in a single platform helps enhance the target audience and sales. 

Wrapping up

It is impossible to eliminate online payment failure in the ever-expanding digital payments ecosystem. But, understanding their anatomy can help you work around deficiencies that cause them. In addition, Zaakpay is the one-stop destination that can identify the gaps and bridge them effectively with an Ecommerce payment gateway that also supports a broad spectrum of payment methods. So, even if payment failure occurs, you are on firm ground with a solution.

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