(advertorial) Anyone who occasionally buys online has probably experienced it: at the very last moment, when you want to pay, something goes wrong. Whether it is a connection problem or an incompatible payment system, it is always very frustrating – also for the retailer, for whom such problems have a major impact.
A shared frustration
Low authorization rates – the percentage of successfully approved transactions – are one of the biggest concerns for retailers. Too many digital payments still fail, which is a shame because the customer had actually decided to make the purchase. It is therefore a challenge that retailers must take into account when drawing up their payment strategy.
While a helpful store employee can then quickly suggest an alternative payment method, it is much more difficult to maintain the momentum in the event of a failed online transaction compared to a physical environment. Consumers drop out more quickly and the digital shopping cart is left behind.
Why do online payments fail?
As many as 57% of retailers with a turnover of more than ten million euros are affected by failed payments. In Belgium, too, half of retailers feel the negative consequences for their business, according to a survey among 1,503 retailers in five European countries (Belgium, Denmark, Ireland, the Netherlands and Sweden) commissioned by PayPal. Failed payments are therefore more common and have a greater impact than you might think at first.
However, low authorisation rates can have many causes, ranging from processing problems with the seller’s or customer’s bank to compatibility problems with customer’s payment methods. For example, if the customer does not have a credit card, but is that the only option offered. Or if someone wants to pay with a foreign payment card, but that card is not recognised. Other factors include technical backend problems, outdated card details and the ubiquitous threat of fraudulent transactions.
More payment options = completed transactions
How can retailers prevent transactions from bouncing? By offering efficient and customer-appropriate payment options, according to the respondents. In each country, consumers are most likely to have their preferred local payment method as well as globally trusted payment methods. Retailers should offer both types to increase the likelihood of consumers completing the transaction.
Approximately 34 % of the companies surveyed therefore plan to tackle their payment systems and thus increase the authorization rate in the next twelve months. With the aid of payment systems, you can help improve the authorization process in various ways:
- Offer customers a seamless and intuitive payment experience.
- Report declined cards immediately to minimize interruptions.
- Offer different payment options to meet the different preferences of consumers.
- Implement fraud protection measures that strike a balance between effectiveness and user experience.
Increase the success rates of your transactions
A failed payment is just as frustrating for the customer as it is for the retailer. For high authorization rates, it is therefore essential that retailers optimize their payment options. By choosing the right payments provider to streamline the authorization process, companies can increase the success rates of transactions and strengthen their digital payment infrastructure against operational failures.
With two decades of experience processing payments for global customers, PayPal has gained unique insights into how authorization processes can be continuously streamlined and improved. The payment provider uses these data insights to optimize processes for business customers, which can help businesses achieve high approval rates, increased revenue, and an improved customer experience.
To learn more about how to choose the right payments strategy to grow your business, read PayPal’s latest Payments Infrastructure report, based on research with businesses in Belgium, Netherlands, Ireland, Sweden and Denmark.
All data is taken from Payments Infrastructure Report by PayPal, 2024 as well as a study based on the results of a survey among 1,503 merchants with revenue above 10 million euros, in Belgium, Denmark, Ireland, Netherlands, Sweden (minimum of 300 merchants per country). The survey was conducted between 12 December 2023 and 27 December 2023 by Censuswide.
