Optimizing Payments Approvals and Sales Conversions
By Tyler Hodgins
Every retailer wants to maximize sales conversions. And every merchant is acutely aware of how low conversion rates can be – 4.1% for traditional commerce and a discouraging 1.6% for smartphone shoppers, according to Statista.
There are many reasons for ecommerce shoppers to abandon their carts – from the cost of shipping to wonky discount codes. But among the top-5 factors are those related to customer experience. For instance, 25% abandon their cart if they have to re-enter shipping details, and 30% bail out if they have to re-key credit-card information, Statista reports.
That’s why merchants that want to drive up conversions look for ways to optimize payments processing.
Buy Now, Pay Now
In the early days of ecommerce, the customer checked out with a credit card, the merchant connected the transaction to its payments gateway, and the payment was either declined or approved. There was little thought about strategies for increasing approval rates.
Today, clicking Buy Now launches a myriad of activities around tax, fraud and omnichannel fulfillment to make sure customers get the products they want, when they want them. And those activities include tactics for minimizing declines and maximizing conversions.
That makes good business sense. After all, before you even list an item for sale, you invest significant time, energy and resources in identifying, sourcing, stocking and marketing the product. Yet the vast majority of shoppers who visit your electronic storefront will leave without making a purchase. If a customer clicks Buy Now and is ready to give you money, you want to do everything in your power to convert that sale.
Merchants that approach payments strategically can optimize conversions and increase revenue. Achieving those goals begins with analyzing why declines are happening.
Start with your payments provider. Is it analyzing and providing insights into which types of declines you’re experiencing and why they’re happening? A small portion of declines occur for no reason at all. If you re-send such declines through another processing route, they might be overturned and approved. Most retailers don’t have the luxury of having multiple processing connections, so ask your payments provider about this.
Then look at your user experience. There may be ways to redesign your checkout to make sure customers are using the best tenders for optimal conversions. Or, if an initial tender is declined, present the customer with another payment option or a payment-installment plan.
The Right Questions, the Right Commerce
To optimize conversions, ask your payments processor these questions:
- What’s your system uptime? System availability is crucial, because you want to convert every Buy Now to a sale. You also need a process for when the system is down. Can you re-route to an alternative payments processor? Can you “hold” the transaction and re-send it when the system is back up?
- How do you handle “soft declines”? Declines can occur because a credit card is invalid, the account limit has been exceeded or there’s suspected fraud. A soft decline occurs for no valid reason and sometimes because there’s a glitch in the system. One solution is to hold the transaction and re-send it later so the sale isn’t lost. Your provider should have a strategy for dealing with soft declines.
- Do you offer alternative means of authentication? For example, the 3-D Secure protocol allows for a private session between a customer and the issuing bank for authentication. If the customer is deemed a higher risk, he or she is prompted for a one-time password (OTP). Improvements in the latest version of 3-D Secure enable a friction-free customer experience.
Merchants that don’t take actions to optimize conversions risk fewer sales and lower revenue. Even worse, if you don’t deliver a fast, convenient checkout experience, you could lose not only the sale but the entire customer relationship. With the right approach to payments processing, you can simultaneously improve customer satisfaction and drive new revenue.
Tyler Hodgins is a Senior Solution Consultant at Radial.