Credit card declines: inconvenience or significant trouble?
We've all been there - gleefully clicking "Buy Now" on what seems like the best deal, whether it's booking that long-awaited flight, upgrading to the latest high-end smartphone, or ordering a customized New York Times front page puzzle, and suddenly: your card has been declined.This all-too-common issue, known as a card decline, occurs when a credit or debit card transaction is rejected during checkout. While it may seem like a minor inconvenience to the shopper, for businesses, card declines can signal significant trouble.
Research shows that over 10% of checkouts fail due to payment declines, significantly impacting e-commerce and subscription services, resulting in millions of dollars lost annually. Furthermore, the operational costs associated with managing declined transactions and providing customer support add another layer of expense. Businesses also grapple with higher customer acquisition costs (CAC) as they endeavor to re-engage lost customers, making card declines a pressing issue that requires attention.
For large online retailers, a single percentage point increase in decline rates can translate to tens of millions of dollars in lost sales annually. In 2023, U.S. eCommerce firms are projected to lose $157 billion due to false declines alone. Major players in the e-commerce space report that decline-related friction can significantly reduce customer lifetime value (CLV), with companies like Postmates experiencing a 1.72% uplift from implementing card account updater services, leading to $60 million in recovered revenue.
Resulting in substantial lost sales
When customers encounter declined transactions during online purchases, the experience often leads to significant frustration and impacts their future behavior and perception of the business. According to a study by the Baymard Institute, nearly 70% of online shopping carts are abandoned due to various issues, including credit card declines. Approximately 26% of shoppers who experience a payment issue, such as a card decline, end up purchasing the same product from a competitor.  Additionally, credit card debt surged to over $1 trillion in Q2 2023, reflecting increased transaction volumes but also a higher risk of declines and delinquencies. This issue not only leads to immediate revenue loss but also tarnishes brand perception, as frequent declines can make customers question a business’s reliability, potentially spreading negative reviews and eroding trust. Furthermore, the 2023 McKinsey Global Payments Report highlights that such experiences significantly decrease customer loyalty, with dissatisfied customers more likely to seek alternatives, thereby increasing churn rates and reducing customer lifetime value.
Strategies to mitigate card declines
Effectively managing card declines is crucial for maintaining revenue and customer satisfaction. Here are advanced strategies to reduce declines and improve transaction success rates:
- Enhanced Fraud Prevention and Security Layers: Implement robust fraud prevention tools and add multiple security layers, such as 3D Secure (3DS2), which uses security questions or biometric authentication. This reduces fraudulent transactions and minimizes false declines, improving authorization rates by up to 10%.
- Accepting Digital Wallets: Digital wallets like Apple Pay and Google Pay use tokenization and two-factor authentication, reducing fraud risk and improving authorization rates. They expedite the checkout process, enhancing customer satisfaction.
- Accurate Industry Indicators and Customer Information Ensure all transaction data matches business activities and customer details. Using accurate Merchant Category Codes (MCCs) and complete billing information, including ZIP codes and CVCs, strengthens authentication and reduces declines due to mismatched information.
How to tackle credit card declines with Bounce’s solution
At Bounce, we are committed to excellence with our advanced AI that recovers failed payments in real-time, requires minimal resources, and operates on a commission basis, ensuring businesses only pay for successful recoveries. Our solution includes:
- AI-Based Payment Recovery: Our system analyzes transaction data in real-time to recover failed payments, boasting a recovery rate of over 30% for declined transactions.
- Real-Time Transaction Analysis: Continuous monitoring of transaction patterns allows us to quickly identify and address issues that might lead to declines.
- Seamless Integration: Our technology integrates smoothly with existing payment systems, requiring no additional budget or extra work after implementation.
And contributes to these KPIs:
- Increases top line by 5%: By recovering a substantial portion of failed transactions, we help businesses boost their overall revenue.
- Improves Authentication Rates by 7%: Enhanced fraud detection and verification processes improve the success rate of legitimate transactions.
- Reduces Customer Acquisition Cost (CAC): Efficiently managing declines helps retain customers and reduces the need for costly reacquisition efforts.
Incorporating innovative tools like ours transforms this challenge into an opportunity. With industry-leading AI-driven payment recovery and real-time transaction analysis, we don’t just mitigate the impact of card declines; we revolutionize the entire checkout experience. By integrating such sophisticated technology, businesses can optimize revenue streams and enhance customer experience and retention, knowing they are less likely to be declined for no good reason, ultimately positioning themselves as leaders in the marketplace.
We've all been there - gleefully clicking "Buy Now" on what seems like the best deal, whether it's booking that long-awaited flight, upgrading to the latest high-end smartphone, or ordering a customized New York Times front page puzzle, and suddenly: your card has been declined.This all-too-common issue, known as a card decline, occurs when a credit or debit card transaction is rejected during checkout. While it may seem like a minor inconvenience to the shopper, for businesses, card declines can signal significant trouble.
Research shows that over 10% of checkouts fail due to payment declines, significantly impacting e-commerce and subscription services, resulting in millions of dollars lost annually. Furthermore, the operational costs associated with managing declined transactions and providing customer support add another layer of expense. Businesses also grapple with higher customer acquisition costs (CAC) as they endeavor to re-engage lost customers, making card declines a pressing issue that requires attention.
For large online retailers, a single percentage point increase in decline rates can translate to tens of millions of dollars in lost sales annually. In 2023, U.S. eCommerce firms are projected to lose $157 billion due to false declines alone. Major players in the e-commerce space report that decline-related friction can significantly reduce customer lifetime value (CLV), with companies like Postmates experiencing a 1.72% uplift from implementing card account updater services, leading to $60 million in recovered revenue.
Resulting in substantial lost sales
When customers encounter declined transactions during online purchases, the experience often leads to significant frustration and impacts their future behavior and perception of the business. According to a study by the Baymard Institute, nearly 70% of online shopping carts are abandoned due to various issues, including credit card declines. Approximately 26% of shoppers who experience a payment issue, such as a card decline, end up purchasing the same product from a competitor.  Additionally, credit card debt surged to over $1 trillion in Q2 2023, reflecting increased transaction volumes but also a higher risk of declines and delinquencies. This issue not only leads to immediate revenue loss but also tarnishes brand perception, as frequent declines can make customers question a business’s reliability, potentially spreading negative reviews and eroding trust. Furthermore, the 2023 McKinsey Global Payments Report highlights that such experiences significantly decrease customer loyalty, with dissatisfied customers more likely to seek alternatives, thereby increasing churn rates and reducing customer lifetime value.
Strategies to mitigate card declines
Effectively managing card declines is crucial for maintaining revenue and customer satisfaction. Here are advanced strategies to reduce declines and improve transaction success rates:
- Enhanced Fraud Prevention and Security Layers: Implement robust fraud prevention tools and add multiple security layers, such as 3D Secure (3DS2), which uses security questions or biometric authentication. This reduces fraudulent transactions and minimizes false declines, improving authorization rates by up to 10%.
- Accepting Digital Wallets: Digital wallets like Apple Pay and Google Pay use tokenization and two-factor authentication, reducing fraud risk and improving authorization rates. They expedite the checkout process, enhancing customer satisfaction.
- Accurate Industry Indicators and Customer Information Ensure all transaction data matches business activities and customer details. Using accurate Merchant Category Codes (MCCs) and complete billing information, including ZIP codes and CVCs, strengthens authentication and reduces declines due to mismatched information.
How to tackle credit card declines with Bounce’s solution
At Bounce, we are committed to excellence with our advanced AI that recovers failed payments in real-time, requires minimal resources, and operates on a commission basis, ensuring businesses only pay for successful recoveries. Our solution includes:
- AI-Based Payment Recovery: Our system analyzes transaction data in real-time to recover failed payments, boasting a recovery rate of over 30% for declined transactions.
- Real-Time Transaction Analysis: Continuous monitoring of transaction patterns allows us to quickly identify and address issues that might lead to declines.
- Seamless Integration: Our technology integrates smoothly with existing payment systems, requiring no additional budget or extra work after implementation.
And contributes to these KPIs:
- Increases top line by 5%: By recovering a substantial portion of failed transactions, we help businesses boost their overall revenue.
- Improves Authentication Rates by 7%: Enhanced fraud detection and verification processes improve the success rate of legitimate transactions.
- Reduces Customer Acquisition Cost (CAC): Efficiently managing declines helps retain customers and reduces the need for costly reacquisition efforts.
Incorporating innovative tools like ours transforms this challenge into an opportunity. With industry-leading AI-driven payment recovery and real-time transaction analysis, we don’t just mitigate the impact of card declines; we revolutionize the entire checkout experience. By integrating such sophisticated technology, businesses can optimize revenue streams and enhance customer experience and retention, knowing they are less likely to be declined for no good reason, ultimately positioning themselves as leaders in the marketplace.
Heading 1
Heading 2
Heading 3
Heading 4
Heading 5
Heading 6
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur.
Block quote
Ordered list
- Item 1
- Item 2
- Item 3
Unordered list
- Item A
- Item B
- Item C
Bold text
Emphasis
Superscript
Subscript
Further reading
Ever wondered why your online shoppers are ditching their carts at checkout? If you answered yes, you might be in the middle of a checkout conversion problem.
In other words, visitors come to your website to make a purchase, but leave before completing their purchase. This phenomenon is all too common in e-commerce, with abandoned cart rates having skyrocketed to 70% in 2023.
Fortunately, there are several effective tactics businesses can employ to tackle this problem head-on and reclaim your potential customers. In this blog, we'll delve into the top ways you can boost checkout conversion rates and up your revenue.
But first, why are people dropping out? Â
There are many reasons why people visit your online store, make their way through a purchase process and then at the last minute totally change their minds. Here's a list of the typical reasons why you’re not getting those wins.Â
- Complicated checkout process: A lengthy or convoluted checkout process with too many steps or form fields can discourage customers from completing their purchase.
- Account creation walls: Requiring users to register or create an account before checkout can be a barrier, especially for first-time visitors.
- Lack of preferred payment option: If your store doesn't offer the payment method preferred by a customer, they may abandon their cart rather than compromise on payment security or convenience.
- Lack of trust in website security: Concerns about the security of personal and financial information can cause customers to abandon their carts if they don't trust the website's security measures.
- Unable to save the items for later: Some customers might wish to save items for future purchase or comparison, leading them to abandon their carts temporarily.
- Website errors: Technical glitches or slow loading times can frustrate visitors and lead them to abandon their carts.
Top ways to improve your checkout conversions rateÂ
1. Simplify the checkout process
People appreciate a clear and intuitive buying process. However, many businesses fail to deliver on this. To increase conversion rates, aim to make the journey to checkout as simple as possible without unnecessary steps, forms, or pop-ups. To create a simplest checkout process: be mindful of general design and layout, and keep the journey as quick (and painless) as possible.Â
2. Offer guest checkout
As mentioned above, there should be minimal steps before checkout. A great technique to achieve this is by offering Guest Checkout options. This allows potential shoppers to bypass account creation and purchase items directly, thereby potentially preventing a 35% drop in transactions. Shoppers provide their information for their order, such as their name, shipping address, and payment details, without wasting their precious time creating an account on your website.
3. Optimize for mobile
Most folks these days shop on their mobile phones - 76% of adults (US), to be exact. If you're running an ecommerce store, you'd best make sure that you adjust mobile navigation so that your online store is fully optimized for the mobile experience. Key actions you can take include ensuring a highly responsive design, providing an optimal mobile view, and integrating payment options like Apple Pay, Google Pay, and PayPal, allowing users to complete their purchases with a single touch or click.
4. Display clear shipping fees
If you have global customers shopping from your online store, they probably want to see shipping costs before they click the pay button. Shipping costs can significantly affect prices, and purchasing an item without shipping costs can appear quite different at checkout. To avoid misleading customers, it's best to display clear shipping costs and available payment methods clearly on the checkout page. Doing this helps shoppers make better-informed decisions, ensures transparent pricing, and even boosts trust.
5. Communicate trust
Customers want to feel safe and secure when making purchases online. This includes having a reputable-looking website and displaying various badges for payment security, data protection, and purchase policies. Creating a trustworthy relationship with your customers boosts conversion rates. In fact, statistics show that 35% of potential buyers abandon a site without a security badge. These trust signals reassure customers that their information is safe and their purchase is protected.
6. Offer multiple payment options
Different customers have various preferences when it comes to payment methods. The Baymard Institute found that 6% of cart abandonments occur due to a lack of preferred payment methods. With more options, paying becomes more convenient, increasing the likelihood of completing a purchase. By offering multiple payment options, you make it easier for customers to pay in a way that suits their preferences and needs.
7. Use abandoned cart emails
Implementing an abandoned cart marketing strategy is crucial. A great way to do this is by re-engaging customers through "abandoned cart emails." Setting up emails gently reminds customers about their abandoned carts, highlights the items left behind, and utilizes personalized tactics tailored to reflect their buyer interests. Additionally, offering exclusive discounts or special offers can entice customers to return and seal the deal.
8. Reduce card decline rates
Having your customer click on the "pay" button can still turn out to be a lost conversion. Countless good deals are lost due to card declines - in fact, an average of 10% of checkout purchases get thrown out right at this very last conversion stage. This problem often goes unnoticed by merchants, but it can lead to millions of dollars lost for your business, not to mention the wasted marketing costs. With Bounce, your ecommerce business can identify false card declines and recover over 30% of them in real time, ensuring you capture valuable revenue opportunities and minimize losses effectively.
Optimize checkout for success
Whether it’s confusing web design, or false card declines, improving your checkout process is vital for ecommerce success. With many factors leading to cart abandonment, streamlining the online checkout is crucial for retaining customers, building loyalty, and boosting revenue. By prioritizing checkout optimization, businesses can seamlessly guide customers through the buying journey and resolve common pain points that maximize value from your shoppers.
Checkout fail. It's a familiar pain for marketers.
After investing thousands of dollars in targeting and re-targeting, the excitement of a potential customer placing an order turns into frustration when they fail to convert into a paying customer.
And in many of those cases, it’s due to payment decline.
The hidden cost of checkout churn
Did you know? More than 10% of checkout purchases get thrown out of the funnel right at the conversion stage due to credit card declines. The user enters his credit card number, hits “purchase”, and receives a failed transaction notice.
Those failed transactions can translate into millions of $ lost for your business, not including the lost marketing costs.
Here's another nugget: 30% of failed checkouts can actually be recovered into a closed deal.
With Bounce’s AI-based payment solution, companies can save up to millions of dollars annually, gaining a higher return on their marketing efforts and lifting their top line by 5%!
The cumulative year-over-year impact of recovering lost checkouts is enormous.
It also goes way beyond immediate top-line revenue.
The fuller picture: understanding company growth impact
Let's explore how failed checkouts influence your business's growth and performance:
- Top-line Impact: Lost deals directly dent total revenue, affecting company growth.
- Customer Acquisition Cost (CAC): Each lost deal not only hampers revenue but also resets the clock on acquiring new customers and increasing your average CAC.
- Retargeting Costs: A failed checkout experience is likely to prompt increased spending on retargeting campaigns to re-engage users and target new potential ones.
- LTV and Repeat Customers: A declined transaction at checkout leads to a bad user experience, and by that, you risk losing your customer permanently, impacting both the lifetime value (LTV) and the rate of repeat business.
- Conversion Rates: Checkout failures directly affect checkout conversion rates and the success of the overall marketing funnel, with fewer leads and visitors that turn into customers and repeat customers.‍
- Purchase Size: Customers facing declined transactions tend to abandon their purchase initiative entirely. Of the few that do retry, they will often revisit their cart and remove purchases, resulting in a lower overall purchase value.
Unlocking lost checkout revenue with Bounce
Bounce helps companies prevent revenue loss and all other negative impacts of declined payments.
Our payment recovery platform uses ML to analyze millions of data points, identifying which checkout declines are valid and which ones should not have been declined. Our solution recovers over 30% of payment declines, in real time.Â
Bounce seamlessly integrates into your existing checkout process, providing the user with a positive and smooth experience when identified as valid. We’re so sure of our data that the service is risk-free. Your customers enjoy a better checkout experience, and you enjoy a higher return on your marketing efforts.
Here’s how our checkout recovery helps our customers recover tens of thousands of dollars in lost checkout revenue.
.png)
Scale is a California based, tech-driven company. They build next-generation health, wellness education, and products that address some of the world's most common health issues. They sell their products online as a subscription base or as a one off purchase and have a checkout process in place.
They knew they had challenges around checkout and subscription conversion and were hoping to find a solution to mitigate that.
We partnered with Hannah Blum, Head of Marketing Strategy, and Chris (Christapor) Arzoumanian, Senior growth product marketing manager, two industry experts. Â
Diving into Scale’s processes
Scale offers various types of supplements, in 5 different brands, both one-time checkouts and subscription refills. When reviewing Scale’s system, we ran a comprehensive analysis of their payments, to see which failed payments could be saved. Through our ML system, we found that 20%-30% of their customers were being wrongly rejected at the time of subscription refill/ renewal (and could be saved), due to a variety of reasons totally out of Scale’s control. We got to work and implemented our solution.
Shortly after, by cutting out a portion of those card declines, we saw a stream of steady and increased revenue, overall raising their KPIs.Â
As more deals were seamlessly approved in real-time, a number of things took place. Customer satisfaction levels grew, retention rate improved, and even the ticket size per transaction increased, thanks to frictionless payment experiences.Â
“We grew our subscription retention rate by 2.4%.”
Bouncing up lost checkout deals
Renewals were just the beginning - while analyzing Scale Media’s checkout transactions, they realized how many of their customers were actually unable to complete their purchase - 10% (!) of their customers were being rejected at checkout, due to different reasons.Â
We applied our proprietary machine-learning algorithms on Scale’s data, using millions of data points, and identifying which declined checkout transactions should be recovered. With our real-time ML model and zero-risk policy, we were able to recover a full 30% of Scale’s declined checkout transactions. Bounce’s auto-recovered checkout deals lift Scale’s top line by almost 3%.
As Scale’s checkout experience improved, the average user purchase size and total number of purchases increased. Instead of losing potential users to failed checkout processes, Scale was now retaining its leads and customers at much higher rates.
“We work closely with bounce and see bounce’s team as partners. We constantly consult the team with any payment related decision”.
What it’s like to partner with Bounce
Every decision related to payments is a multifaceted process for any company. At Bounce, we thrive on collaboration to enhance your company's payment experiences. Our approach is to seamlessly integrate with your processes, providing valuable insights and guidance.Â
The successful collaboration with Scale's talented team has driven the desired results – improved metrics and happy customers. Together, we were able to showcase the power of a collaborative approach in transforming payment experiences.
"As for the decision to work with Bounce, it was a pretty straightforward one. We took zero-risk and saw an uplift of 3-5% on our checkout generated revenue"
‍