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The conversion rate is often one of the first metrics companies use to measure the success of their online store. Naturally, this makes sense considering how an uptick in conversion rate usually signals that customers are actively purchasing on your site. However, there is another lesser-known metric that also deserves a lot of attention – payment card decline rates.
According to Ethoca, over 1.9 billion card-not-present purchases are declined each year globally. This represents $145 billion dollars in lost sales.
To protect your business and ensure you’re on the right track to future growth your business should keep a close eye on your payment card decline rate. Keep reading to learn how you can better protect your online store.
Why Do Transactions Fail Online?
Like a brick and mortar retail store – digital stores can also experience their share of payment decline. Here are the top 3 reasons below:
1. Incorrect information
Human error can play a role in causing card transactions to fail. This often occurs when shoppers incorrectly enter the wrong payment information during checkout. Inputting an invalid security code (CVV code), wrong credit card number, or incorrect account name might cause the issuing bank to reject the payment.
2. Outdated/Expired Accounts
Expired credit and debit cards naturally expire so it’s in your best interest to make sure that your customers are aware so they can take precaution to double-check their payment information and make any updates to their account.
3. Insufficient Funds
This one is pretty self-explanatory, your card payment will fail to go through because there are insufficient funds in your account to cover the cost of the transaction.
How Does Payment Failure Affect Online Businesses?
Payment card declines impact more than your sales revenue, failed credit and debit card transactions can also leave a lasting impression on your customers as well. For first time shoppers on your online store, a credit or debit card rejection can discourage these customers from returning to your site and placing another order. For returning shoppers, having to retry a failed payment can prove to be a frustrating experience that weakens customer loyalty.
Both of these experiences are akin to walking into a physical store and trying to checkout at the counter only to be turned away because your credit or debit card failed to process. The entire experience can be embarrassing and might cause you to not want to do business with the retailer ever again.
What Should Your Business Do to Combat Payment Card Decline Rates?
So we’ve established that payment card decline is a real problem for your online business, it’s now time to focus on preventive measures to help curb the payment card decline rate on your site.
The most common fix would be to dedicate an internal team to manage payment card declines and resolve any billing issues. While this is a good idea, in theory, this tactic requires a significant investment in human resources to effectively execute. Your team will have to notify each buyer when their transaction is declined or notify your subscribers to update their payment information to prevent a lapse in the service they are paying for.
Save Time and Money with Intelligent Dunning Management Features
FastSpring’s dunning management features can help your business reduce card payment failure by proactively notifying your customers to update their payment card before it expires. Not only will you be able to protect the revenue stream coming into your business, but you’ll ensure your customers don’t experience an interruption in their subscription due to expired payment information.
Additionally, because all of FastSpring’s dunning management features are fully automated, your company can more efficiently curb payment failure without investing additional resources. Automatically follow up with your customers when their payment fails or is past-due. FastSpring’s platform allows you to set up flexible plain text or HTML email reminder notifications at two, five, seven, 14, and 21 days after a payment method fails.
FastSpring’s complete ecommerce platform has the features to help your business better manage delinquent accounts, reduce your payment card declines, and inspire greater customer loyalty.
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