{"id":19554,"date":"2024-12-18T09:58:33","date_gmt":"2024-12-18T04:28:33","guid":{"rendered":"https:\/\/razorpay.com\/blog\/?p=19554"},"modified":"2025-05-28T07:10:21","modified_gmt":"2025-05-28T01:40:21","slug":"online-payment-failure-best-ways-to-prevent-it","status":"publish","type":"post","link":"https:\/\/razorpay.com\/blog\/online-payment-failure-best-ways-to-prevent-it\/","title":{"rendered":"Online Payment Failure: What it is, the Reasons Behind it, and the Best Ways to Prevent it"},"content":{"rendered":"

Introduction<\/b><\/h1>\n

In e-commerce, the smallest glitch can mean the difference between securing a sale and losing a customer\u2014especially when it comes to payment failures. With 35.2% (Statista, 2020) of Indian customers saying that a failed payment is the most common payment problem they encounter while making online purchases, it is essential to address the problem effectively as a business.<\/span><\/p>\n

Customers are unlikely to retry a purchase after their initial payment attempt has failed and more often than not a failed payment translates into a lost customer. This is why it is important to nip the problem of payment failure in the bud. This article will explore why your customers see the \u2018payment error\u2019 message and how to go about minimizing the instances of payment failures as much as possible. <\/span><\/p>\n


\n<\/span>What are online payment failures?<\/b><\/p>\n

When it comes to businesses, online payment failures happen when a transaction is initiated from the customer\u2019s end but the money does not get credited to the merchant\u2019s account, regardless of whether the money has been debited from the customer\u2019s account. When a payment fails, customers are often left exasperated, staring confusedly at the \u201cpayment error\u201d message on their screen, without fully grasping why the <\/span>payment failed<\/b> to go through.\u00a0<\/span><\/p>\n

Payment failures could happen for various reasons, whether it\u2019s from the customer\u2019s end or the merchant\u2019s end. In order to understand accurately why <\/span>the transaction failed but amount debited<\/b>, we must first get to know the participants in an online transaction and the individual role they plan in making a transaction successful or not.\u00a0<\/span><\/p>\n

Who are the participants in an online transaction?<\/b><\/h2>\n

There are several participants in an online transaction and an error on any of their part could easily result in a declined or failed transaction. Let\u2019s get to know them:<\/span><\/p>\n

    \n
  1. The Issuing Bank:<\/b> The cardholder\u2019s bank from which the payment is initiated.\u00a0<\/span><\/li>\n
  2. The Acquiring Bank:<\/b> The merchant\u2019s bank in which the money is to be deposited.<\/span><\/li>\n
  3. The UPI \/Net banking\/ Card Network:<\/b> Customer’s UPI \/Net banking\/ Card network rail that supports the transaction from the initiator\u2019s account.<\/span><\/li>\n
  4. The Payment Processor:<\/b> The third-party service provider that facilitates the movement of money from the customer\u2019s account to the merchant\u2019s.\u00a0<\/span><\/li>\n
  5. The Payment Gateway:<\/b> The mechanism by which the customer\u2019s card details are encrypted and authorized for the transaction.<\/span><\/li>\n<\/ol>\n

    Why do online payments fail?<\/b><\/h3>\n

    Online payments can fail due to a multitude of reasons varying from network outages and server downtimes to fraudulent activity and insufficient bank balance. Let\u2019s delve deeper into it:<\/span><\/p>\n

      \n
    1. Insufficient Funds<\/b>: A common reason for encountering a <\/span>payment failed<\/b> message is the customer\u2019s account not having enough funds to cover the transaction. Businesses should ensure that their payment gateways promptly inform customers of this issue while customers need to ascertain their bank balance and ensure the presence of sufficient funds<\/span>
      \n<\/span><\/li>\n
    2. Incorrect Payment Details<\/b>: Errors in entering the card number, expiration date, CVV, or billing address can lead to transaction failure. Ensuring customers double-check their details can reduce this problem.<\/span>
      \n<\/span><\/li>\n
    3. Expired or Blacklisted Cards<\/b>: Using expired cards is another frequent cause of payment failure. Businesses can prompt customers to update their card information regularly.<\/span><\/li>\n<\/ol>\n

      On the other hand, some BIN numbers (generally the first 6 digits of the card number) may be blacklisted due to reasons such as suspicious activity on the card, a history of frequent non-payments, etc. These blacklisted cards are not permitted to initiate and follow through with transactions either.<\/span><\/p>\n

        \n
      1. Bank or Issuer Declines<\/b>: Banks or card issuers may decline transactions due to various reasons such as suspicious activity on the card or the cardholder surpassing their spending limit for the day. Clear communication with customers can help resolve these issues quickly if the <\/span>transaction failed at bank end<\/b>.<\/span>
        \n<\/span><\/li>\n
      2. Technical Issues:<\/b> Sometimes the customer\u2019s mobile network or internet connectivity may experience an outage, leading to failed payments. On the other hand, the merchant\u2019s website itself may experience downtime due to issues that can range from coding errors and routine maintenance to hardware problems and hosting issues. During such events, payments will not go through as the website becomes inaccessible. Ensuring reliable infrastructure and connectivity can mitigate these issues.<\/span>
        \n<\/span><\/li>\n
      3. Payment Gateway Downtime:<\/b> Payment gateways may sometimes schedule intended downtimes for maintenance, security checks, etc. due to which payments will fail to go through during the scheduled period of downtime. Other than that, payment gateways may also face server outages which can result in unintended downtimes, leading to payment failure.<\/span>
        \n<\/span><\/li>\n
      4. Fraud Prevention Measures<\/b>: Transactions flagged as suspicious by fraud detection systems can lead to declines. Implementing robust yet customer-friendly fraud prevention measures is crucial so authentic customers are not left wondering why their payment failed.<\/span>
        \n<\/span><\/li>\n
      5. Currency or Regional Restrictions<\/b>: Some payment methods do not support certain currencies or regions, leading to failures. Offering multiple payment options can help address this issue. <\/span><\/li>\n<\/ol>\n

        Related Read: What is Friendly Fraud?<\/a><\/strong><\/em>
        \n<\/span><\/p>\n

        How do payment failures affect businesses?<\/b><\/h4>\n

        Offering a seamless patient experience is crucial to your business thriving as digital payments are quickly becoming Indian customers\u2019 favorite mode of payment. Apart from the obvious issue of revenue loss, payment failures can give rise to a plethora of problems that tarnish the overall image of your brand. Let\u2019s look at them:<\/span><\/p>\n

          \n
        1. Revenue Loss<\/b>: Failed transactions directly translate to lost sales, impacting the bottom line.<\/span><\/li>\n
        2. Customer Dissatisfaction<\/b>: Frequent payment failures can frustrate customers, leading to a poor shopping experience and potential loss of repeat business.<\/span><\/li>\n
        3. Increased Operational Costs<\/b>: Handling failed transactions often requires additional customer service resources, increasing operational costs.<\/span><\/li>\n
        4. Damage to Reputation<\/b>: Persistent payment issues can harm a business\u2019s reputation, leading to negative reviews and decreased customer trust.<\/span><\/li>\n<\/ol>\n

          Best ways to prevent online payment failure<\/b><\/h4>\n

          Although payment failures are an inevitable part of the online payment ecosystem, there are certainly measures that you can take to mitigate them as far as possible. Let\u2019s look at a few things you can do as a business to avoid payment failures:<\/span><\/p>\n

            \n
          1. Implement a robust payment gateway:<\/b> Ensure that your payment gateway is reliable and capable of handling a high volume of transactions.<\/span><\/li>\n
          2. Use multiple payment gateways:<\/b> Having multiple gateways can provide a backup in case one fails, ensuring smoother transactions and avoiding instances of the \u201c<\/span>payment failed<\/b>\u201d message popping up.<\/span><\/li>\n
          3. Offer multiple payment methods:<\/b> Including a variety of online payment methods such as cards, e-wallets, UPI, etc. can cater to a wider range of customers.<\/span><\/li>\n
          4. Implement auto-retry features:<\/strong> Automatically retrying failed transactions can help recover potentially lost sales.<\/span><\/li>\n
          5. Make use of dynamic routing:<\/b> Dynamic routing is the process of directing online payments through the pathway of the most effective payment gateway or processor. Dynamic routing works wonders in preventing online payment failures as it redirects the initiated payment to another payment gateway in case the primary payment gateway is facing downtime or outage, ensuring the payment processing is uninterrupted on your end.\u00a0<\/span><\/li>\n
          6. Regularly monitor and update systems:<\/b> Ensure that your CRM software, e-commerce plug-ins, and other related systems are up-to-date and functioning correctly.<\/span><\/li>\n<\/ol>\n

            Dynamic Routing: A Game-Changer for Payment Reliability<\/b><\/p>\n

            Dynamic routing is a sophisticated feature that can drastically reduce payment failures. It works by intelligently directing transactions through the most efficient payment processors<\/a> in real time. Here\u2019s how it benefits businesses:<\/span><\/p>\n