Declined transactions are no joke but unfortunately, every business operating in the virtual space falls victim to the dreaded involuntary churn.
Most companies running on a subscription management model have their fair share of declined cards. Hopefully, you’re bringing in more subscribers than losing them. But that shouldn’t be your main goal. You want to ensure that all clients are happy.
Whether you’re selling digital goods or looking for viable eCommerce solutions, losing a customer not only costs money but also customer satisfaction. Whatever the reason for the declined transaction, it is preventable.
Below, we’ll explain how to solve declined transactions and increase your customer base.
Identify the Reasons
First things first, you need to dig deep to understand the cause of declined transactions. These may include:
Expired Card
Debit and credit cards typically have a three-year lifespan. For some U.S. cardholders, it might be less due to the EMV chip and pin mandates, issued by big credit card companies to reduce credit card fraud.
Insufficient Funds
Also known as non-sufficient funds (NSF), this declined transaction carries a fee for the cardholder.
Processing Error
This reason falls on you. Network or processing errors are preventable. PayPro Global advises the first thing to do is check your payment gateway reports.
Pay special attention to decline codes and the reasons.
Fraudulent Activity
Any fraudulent activity is a huge red flag. Look for irregular transaction patterns and whether the billing and shipping addresses match.
Possible Solutions
For every problem, there is an answer. We’ll take a closer look below.
Optimize the Checkout Process
A user-friendly payment process is key to keeping your customer satisfied. That’s why leveraging SaaS tools is so important.
Ensure a seamless flow from the moment your customer starts their buying journey. Ask only for essential information and automate the rest. Use clear labels and instructions. Autofill saves time and reduces errors.
When it comes to payment methods, understand the customer’s purchasing habits and personalize the process by offering multiple payment options and localized currencies.
Entrepreneur says there’s a big disconnect between consumer payment preferences and business offerings.
Citing recent data, the publication found that about 90% of U.S. consumers prefer paying with a credit card. Yet, 30% of small businesses still don’t accept card payments.
The best advice is to integrate major credit cards, digital wallets and local payment methods into your payment gateway.
Outsource Payments to an MoR
Operating on a global scale does come with challenges. From ensuring your company is tax-compliant to navigating legal liabilities, it can become overwhelming.
Many businesses outsource their payment methods to a Merchant of Record (MoR) to avoid these headaches. Tech startups in the SaaS space specialize in cloud-based software to take the hassle out of complex payment systems.
MoR helps firms transverse cross-border payment complications, optimize payment routing and ensure regulatory compliance.
Fraud Prevention
About 85% of businesses globally reported an increase in online fraud in the past 12 months. It provides little comfort for companies battling to protect their financial assets and data.
TechNative adds the threat of fraud has driven many organizations to invest in advanced ID verification technology.
Another way of securing valuable information is to implement 3D Secure 2.0 protocols. The mechanism adjusts authentication requirements according to the risk level of transactions.
Leveraging Email Marketing Tools
It’s a simple yet effective way of reminding clients their cards will soon expire.
Export your list of customers with cards that expire in a few months and send them reminder emails to update their payment methods. This is a great solution for businesses using the subscription software model.
To prevent further churn, contact customers via multiple online channels who keep having their transactions declined. Offer assistance and talk them through the process.
A dunning management system helps businesses communicate with customers about overdue invoices and collect accounts receivable. Another solution is to automate retries for failed payments at varying intervals.
In Closing
Declined transactions can eat into your revenue and turn loyal customers into disgruntled ones. That’s the last thing you want. Instead, find viable solutions to decrease involuntary churn.
Investigate the reasons for the declined transactions. Do a UX audit and scrutinize every step of the purchasing journey.
Simplify and streamline the payment process. Ask only for important information and autofill the rest. Real-time validation reduces errors and typos.
Offer various payment methods and, if needed, outsource global payments to an MoR service to lessen the headache of dealing with complicated tax laws and compliances.
Invest in fraud prevention tools that are effective without compromising the purchasing experience. Automate email marketing software to remind customers of expiring cards.
By implementing the above solutions, you’ll reduce the number of declined transactions and keep happy clients.
