India’s digital payment volume has increased at an average annual rate of 50% over the past 5 years. In the next 5 years, digital payments users are set to triple to 750 million and businesses employing digital payments could double to 100 million, according to the NPCI. And with good reason. Digital payments make it easy and convenient for customers to pay using a payment method of their choice, while being a healthy source of revenue for businesses.
Problem of failed payments
However, any breakage in payment experience has a negative impact on both customers and businesses. One such factor is payment failure. On an average, 20-25% of payments fail due to reasons that are beyond the control of the businesses.
While some payment failures are unavoidable, losing revenue because of issues as trivial as incorrect UPI Pin entry or bad data network is plain hurtful. More than 50% payment failures are due to customer errors or network issues. Especially because they are recoverable if you employ an optimal payments recovery strategy.
Why do payments fail?
Payments fail for a multitude of reasons. The primary reasons are listed below:
- Incorrect information provided: When entering the UPI PIN or card CVV, it’s possible to enter in some digits incorrectly. This also occurs when filling out the card number or UPI ID or bank account numbers online.
- Insufficient funds: Lack of funds in the account used for payment is a common reason for payment failures
- Network issues: 95% of customers use a mobile phone to make payments and 1 out of every 3 encounter network issues such as low data connectivity leading to failed payments
- Expired card details: If the customer doesn’t update their credit or debit card details after validity date, then payments inevitably fail
- Suspected fraud: If a card network or bank detects suspicious activity, they may block the transaction causing the payment to fail
Impact of failed payments
Cart abandonment: Due to payment failures, customers dropping off at the payment step leads to cart abandonment. These customers have high purchase intent and have a high probability of completing their payment. Reminding these customers to complete the payment would help revive abandoned carts due to payment failures to a large extent.
Lost revenue: As a result of failed payments, you not only lose out on revenue due to uncollected payments but also lose customers as 52% are not likely to return for future purchases. In order to recover revenue, it’s important to employ an optimal recovery strategy to successfully retrieve funds.
Understanding and recovering failed payments is fundamental to creating a positive payments experience and improving customer retention. And, Razorpay can help here.
Introducing Failed Payments Recovery
Failed Payments Recovery is a High Intent Customer Retargeting product. It is a lower funnel, checkout based tool that enables businesses to retarget customers who have either abandoned the payment process or have involuntarily dropped off at the payment step. Businesses can retarget these dropped-off customers by sending an automatic multichannel payment notification to retry and complete the payment successfully.
How does it work?
- On your website checkout, customer clicks ‘Pay’ for the order or on the cart
- Payment fails due to various reasons and customer drops offs
- Payment notification is sent to the customer via WhatsApp, Email and SMS to retry payment
- Customer retries the payment and pays successfully
How will it help businesses?
- Recover up to 20% of failed payments by bringing back dropped off visitors
- Grow your revenue by up to 10% by recovering failed orders
- Get insights on conversions & recovered revenue to make informed business decisions
With Failed Payments Recovery, win back customers lost due to payment failures and recover uncollected revenue. Want to check the product and its impact on your business? Login to your Razorpay dashboard, click on ‘Settings’ and scroll down to the ‘Failed Payments Recovery’ section.