It's no surprise that over 33% of the world’s population shops online, propelling e-commerce into a $6 trillion industry, with projections to reach $8 trillion by 2027. The opportunities are vast, but so are the pitfalls. While potential customers are busy adding items to their online carts, many businesses are still losing substantial revenue.

Most marketers are familiar with the alarming online shopping cart abandonment rate of 70%. Still, fewer are aware that many customers abandon their carts due to declined transactions rather than complicated checkout processes, unexpected shipping costs, or slow delivery times. In fact, 10% of checkout deals are declined, directly affecting your top line revenue with an average potential loss of 5%. However, not all is lost. You’d be surprised how many of these are false card declines (i.e. when payment systems mistakenly reject valid transactions). In this must-read post, we’ll explore why this happens and how you can prevent it from impacting your business.

What are card declines and why do they happen?

Card declines happen when customers cannot complete a payment due to failures in the authorization process. These issues can arise from problems with the card network, payment-processing platform, or credit card issuer. Today, every step of the processing flow declines a transaction. - the issuer, the network, and the gateway. When a charge fails, the merchant is given an error code to the business (and hundreds of error codes). 

Understanding the reasons behind card declines is crucial for eCommerce success.

There are several common causes:

• Insufficient funds: The most straightforward reason for a card decline is that the customer’s account doesn’t have enough funds to cover the purchase. This is beyond the merchant's control but remains a significant cause of lost sales. 
• Incorrect card information: Simple errors in entering card details—such as an incorrect number, expiration date, or CVV code—can lead to declines. These mistakes often occur during hurried or distracted checkout processes.
• Expired cards: Customers sometimes forget to update their card information when their old cards expire. This leads to automatic declines when outdated card details are used.
• Suspicious activity: Banks and card issuers may decline transactions that appear unusual or potentially fraudulent. This can be particularly common for international transactions or unusually large purchases. While these measures are intended to protect customers, they can also result in legitimate transactions being wrongly declined.

• Technical glitches: System errors, either on the merchant's end or within the payment gateway, can cause transactions to fail. These issues might stem from server downtime, software bugs, or connectivity problems.
• Outdated customer information: Changes in a customer's address or phone number that aren’t updated in the bank’s records can lead to mismatches during the verification process, resulting in declines.

Why it’s important to track your card decline rate

Despite the attention given to cart abandonment ratios, the importance of tracking card decline rates often goes overlooked. Some might look into payment acceptance rates that indicate the proportion of revenue captured compared to potential untapped revenue. However, they still can’t fully grasp the impact of such a decline on their business. 

By staying vigilant and proactive in monitoring decline rates, you can ensure a smoother payment process for your customers while maximizing your business's financial performance.  

Here’s why it’s crucial you track your card declines:

• Revenue optimization: Monitoring decline rates helps identify and address issues in payment processes, optimizing flow to capture potential revenue loss.
  Just about every marketing KPI is affected by conversion fails including your top line Impact, cost of acquisition (CAC), reacquisition costs, LTV, and conversion-to-paid rate/monetization rate. 
• Customer experience: High decline rates frustrate customers, leading to abandoned purchases and eroded trust. Tracking enables proactive issue resolution, enhancing satisfaction and loyalty. 
• Fraud prevention: Sudden increases in decline rates may signal fraud. Tracking helps detect suspicious trends early, allowing for additional security measures.
• Operational efficiency: High decline rates strain resources, increasing support inquiries and manual interventions. Tracking enables streamlining of operations and resource allocation.
• Strategic decision-making: Decline data provides insights into payment behavior and preferences, informing decisions on methods, fraud prevention, and customer engagement for business growth.

Recovering more than 30% of your false card declines 

Though it seems like a clear win, it might come as a surprise that a customer's click on the "pay" button doesn't always guarantee a successful conversion. Within the realm of eCommerce, false card declines present a formidable obstacle for businesses, affecting acceptance rates and overall revenue, while also resulting in disappointed customers who may seek alternatives from competitors to complete their purchase.

Bounce empowers you to identify false card declines swiftly and efficiently, recovering more than 30% of them in real-time. This seamless process ensures that you not only maximize revenue potential but also minimize losses effectively.

While it's common to monitor metrics like cart abandonment rates, assessing your card decline ratio is often overlooked.

Interestingly, research shows that up to 50% of card declines are associated with valid transactions, representing significant revenue losses. These declines not only directly reduce your revenue but also adversely affect other critical KPIs such as Customer Acquisition Cost (CAC), Lifetime Value (LTV), retargeting costs, and retention rates.

Introducing Bounce’s hidden losses estimator! 

By utilizing our estimator, you can gain a comprehensive understanding of your current card decline losses and their broader implications on your KPIs. In just a few steps, you will obtain valuable insights that can help you mitigate these losses and optimize your business performance.

The importance of tracking your card decline rate

While businesses frequently monitor cart abandonment ratios, the critical nature of tracking card decline rates often goes unnoticed. Payment acceptance rates might offer a glimpse into the captured revenue versus potential untapped revenue, but they don't fully illustrate the profound impact card declines have on overall business health.

Keeping a close eye on your card decline metric is crucial. Here’s why:

• Revenue recovery: Up to 50% of card declines are valid transactions, representing significant revenue loss. Addressing these can directly boost your bottom line.
•  Impact on marketing KPIs: Just about every marketing KPI is affected by conversion fails, including top-line impact, cost of acquisition (CAC), retargeting costs, lifetime value (LTV), and conversion-to-paid rate/monetization rate. By reducing decline rates, you can positively influence these metrics.
• Fraud detection: Sudden spikes in decline rates can indicate potential fraud. Early detection allows you to implement security measures, protecting your business from substantial losses.‍
• Informed strategy: Data on card declines provides insights into payment behaviors, guiding strategic decisions on payment options, fraud prevention, and customer engagement, ultimately driving business growth.

How to use Bounce’s hidden losses estimator

It’s easy as 1,2,3! 

Visit this link and enter your email address to get started. We’ll then ask you a bit about your business and what you sell (apps, books, cosmetics, cleaning supplies, household goods, legal services, etc). Choose what best describes your business and then pick out your primary market location. Write down your annual revenue from online sales. Write down the percentage of the revenue that comes from international sales. If you sell internationally, tell us where you sell (up to 5 countries) and let us know whether you’re selling to consumers or businesses. We’ll guide you through just a few more questions to get you to the finish line! There you’ll learn how much money you’re losing to card declines and how much can be saved. Trust us- you won’t believe the numbers! 

Staying vigilant in monitoring card decline rates is not just about improving payment processes; it's about securing your business's financial health and ensuring long-term growth. Start tracking today to unlock these benefits and drive your business forward.

Try out our hidden losses estimator now!

"There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know."

(Donald Rumsfeld, the former U.S. Secretary of Defense)

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E-commerce is bleeding billions due to cart abandonment, posing a daunting challenge within the e-commerce ecosystem, with an abandonment rate of 70.19% (according to the Baymard Institute). Businesses lose $18 billion yearly from unfinished transactions alone. Certain industries are more severely impacted: 

• The travel sector, including cruise and ferry websites, faces the highest rates with up to 98% of carts being abandoned
•  The fashion industry experiences rates of approximately 87.79%, 
•  The mobile providers and airline industries contend with abandonment rates of 90%. 

Despite the prevalence of cart abandonment, awareness among stakeholders and e-tailers varies. Reports indicate that 74% of e-commerce managers recognize cart abandonment as a critical issue, yet only 40% actively track and analyze this data to understand its financial impact. Here's the kicker: Instead of relying on remarketing strategies, businesses should focus on addressing the psychological, UI, and especially money transfer issues that lead to abandoned carts in online shopping.

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Combating buyer's fatigue

Cart abandonment often boils down to decision fatigue; when shoppers are bombarded with too many choices, their mental bandwidth gets maxed out, leading to exhaustion and cart abandonment before purchase completion, which is why many strategies now focus on simplification:

• Simplify choices: Reduce the number of product options and streamline the decision-making process. Apple, for example, simplified its product lineup, boosting sales.
• Provide clear and full information: Ensure that product descriptions are clear and concise, providing all necessary information to make an informed decision without needing to browse through multiple pages. Amazon’s product pages exemplify this approach by highlighting key details and comparisons.
• Optimize navigation: Design an intuitive and straightforward navigation system to minimize the effort required to find and select products. Think about how easy it is to work with Google’s clean and user-friendly interface.

Easier checkout processes

A complicated checkout process significantly deters customers from completing purchases. Here's how you can simplify it: Streamline steps: Reduce the number of required fields and steps to complete a purchases; Guest checkout: Let customers checkout without creating an account ;Multiple payment options: Offer various payment gateways and ensure the site is mobile-optimized.

Payment decline and cart abandonment

However, there is the elephant in the room. Customers get really irritated when they encounter incorrect prices or face payment declines at checkout. This doesn’t just lead to cart abandonment; it also destroys the trust and credibility of the e-commerce site. For example, 42% of consumers will abandon their cart if their payment is declined due to suspected fraud. Studies show that customers are more likely to get upset and switch to a competitor after facing a payment decline. This perfect storm of lost sales and damaged reputation screams for exact pricing and a frictionless payment process.

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Revolutionizing revenue recovery with Bounce

Bounce identifies and approves false card declines, converting them into successful transactions using advanced machine learning algorithms. This approach not only recovers lost revenue but also enhances customer satisfaction by ensuring legitimate transactions are not mistakenly rejected. Bounce's ML algorithm works seamlessly in real-time to approve valid transactions, ensuring legitimate sales are not lost and a smooth user experience. This immediate, yet seamless, intervention helps:

• Increase top line revenue: Recover over 30% of falsely declined transactions, which adds 5% to your top-line revenue.
• Improve KPIs: Enhance key performance indicators (KPIs) such as conversion rates and customer satisfaction by reducing false card declines.
• Enhance customer trust: Provide a smoother, user friendly checkout experience, reducing frustration and improving satisfaction.

Compared to retargeting

Bounce’s solution tackles the root cause of lost sales, proving to be more cost-effective than retargeting campaigns. Retargeting can hike conversion rates by up to 128%, but it comes with extra marketing costs. Preventing false card declines directly recovers sales without additional ad spend, offering a higher ROI.

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Don’t let potential sales slip through the cracks

Ready to claw back your lost revenue from false declines? Schedule a demo with Bounce to see how our revolutionary solution can turn hidden losses into wins. Don’t let potential sales slip through the cracks—let Bounce elevate your conversion rate and customer satisfaction. For more information, visit Bounce.