Most online retailers have no idea, and it’s not really their fault.
65% of them are simply not getting failed payment information from their Payment Service provider, and that skips a crucial piece of the puzzle, preventing them from understanding the potential sales they could be missing out on every single day.
And those sales equate to some pretty significant figures.
Numbers change depending on geographies and industries, but a 2019 report showed that somewhere between 5% and 20% of transactions fail after customers click to pay, and 62% of customers who receive a failed payment notice abandon their purchase.
There’s a lot of money at stake.
So, why are so many businesses not doing anything about it?
For a lot of online retailers, failed payments are simply a necessary evil, something out of their control, that they have to accept as part of everyday life.
There is also a common misconception that only large corporations or those with complex geographical or payments infrastructures should be concerned about failed payments, and it is only these businesses that can or should be doing something about it.
The fact is that every online retailer needs to ensure they maintain a low rate of failed transactions to avoid losing out on potential sales. And the likelihood of payment failures increases according to average transaction value and product category risk levels: gambling, travel, cbd, and alcohol all fall into the highest risk category.
While it’s true that every business will see some payments fail, the payment methods you accept, the quality of your payment experience, and your customers’ ability and willingness to pay all have an impact on failure rates. And businesses with the wrong payment options see almost 4x more.
It can be seriously damaging, especially if the rate at which payments fail gets too high. When you’re collecting money you’re already owed, failed payments lead to bad debt. For subscription businesses, failed payments lead to involuntary churn, where an otherwise happy customer can’t make a payment and loses access to your service.
Let alone the impact of something ‘unprecedented’, like, say… a global pandemic. When the unexpected happens, or when a merchant’s appetite for disruption and change is at an all time low, businesses can find themselves held to ransom by PSPs, who can exploit the lack of control they have.
Not exactly the kind of flexibility that e-commerce should be striving for.
The good news is, there is something you can do about it.
Our Payment Orchestration platform provides visibility of payment failures, then gives you control to decide what to do about them, that might mean instantaneously re-routing the payment elsewhere.
And control is key.
When you rely on a single PSP or acquirer, they control your flow. This increases the risk and impact of payment outages, while the provider might also favour routing your transactions in a way that may not necessarily be right for you.
That either means losing out on business, or having to accept unfavourable pricing.
With the BRIDGE Payment Orchestration platform, you can set up real-time rules for switching transactions. Not only that, dynamic routing also optimises success and processing rates.
Let’s take an example:
A £100m online retailer suffers 8.4% of payments failures (£8.4m) per-year. Statistically they should expect to lose 62% of that revenue, on average.
But, with BRIDGE, a failed payment will be picked up and redirected to a provider of the online retailer’s choice, who will accept it in milli-seconds, without the customer ever knowing there was an issue.
The revenue is captured, the customer is happy.
So, what three things should you focus on when it comes to tackling the issue of failed payments?
Make sure you have access to true data that enables you to understand the extent of the issue.
Be proactive about failures that are within your control. Know where, when and why payment failures can happen, and put in place measures to prevent them.
Establish an infrastructure that responds quickly and reactively when payments do still fail (because they will).
Most importantly, make it as simple, straightforward and reliable as possible for someone to give you their money.
We can help you work out just how much a change of mindset around payment failures could save your business.
Speak to one of our BRIDGE Builders today.