Why Do Online Payments Fail?

Tag: online transactions


Why Do Online Payments Fail?

Making online payments is a complex process. Transactions can fail to materialize many times and there may be several reasons behind them. In order to fully understand the reason behind such failures, it is imperative to look at the various components of the payment processing chain. Any one glitch at any stage may cause the payment to collapse. Not only do these payment processes involve money but also highly sensitive data related to a business and its clients. This is why it is important that such instances of payment failure are dealt with properly and in a timely fashion.

Types of Payment Failures

Payment failures can be broadly divided into two categories. The two types of failures are a) where the amount is not charged and b) where the amount is charged. In the first instance there is less to worry since no money was transferred, but it is still important to look into the reasons behind such failure. In the second case, there is bigger cause for concern since the money has left the person’s bank account but cannot be traced further without deeper analysis. Whatever the case may be, you are advised to undertake proper investigation in either of the circumstances as the incident may reveal some other issues in the processes.

Reasons for Payment Failure

Following are some of the most common reasons which may lead to payment failure.

Connectivity: Since payment processing uses internet, any issue with the connectivity may cause the payment process to stop midway. Even if there is only fluctuation in the speed of the network, the payment may fail. In other cases, the user may have unwittingly closed the browser before the process was completed. The payment process will fail in all such scenarios.

Downtime: Online payment process entails several intermediaries such as payment gateways, banks and credit card firms among others. If any of these constituents are undergoing downtime, the payment may fail. In most of the cases, the companies announce their downtime ahead of time, so that their clients may schedule their payments accordingly. However, in other cases, such downtime may be unscheduled. It is also important to adhere to any applicable time constraints. For example, certain transactions may be undertaken only during scheduled hours. If you attempt a transaction outside such limit, your payment is bound to fail.

Security Issues: Financial intermediaries may refuse to process the payment if they are not convinced about the authenticity of the transactions. Such refusal causes the payment process to fail. The reason may be as simple as the bank not finding the transaction to be as per the customer’s usual spending pattern. This generally happens when there is a charge from a foreign country. The customer’s bank may flag the transaction if it detects any security threat. In other cases, the payment gateway may decline the payment if it is above the threshold set by the merchants.

Wrong or Missing Data: Online payments have very stringent requirements when it comes to authenticating the data. The transactions are bound to decline if there is even a slight mismatch between the data and your credentials. If the customer enters the wrong password or OTP, the banks may choose to decline the payment. In order to ensure the security of financial payments, the financial institutions may also impose time limits within which the transaction is must be completed. It is important to adhere to such directions. Even if the data is entered correctly but an element is missing, the payment transaction will be declined.

Other Reasons: Apart from these broad categories, there are several other reasons why a payment may fail. Sometimes, the reason may be as simple as there not being sufficient balance in the customer’s account. If the transaction they are undertaking is beyond the limit of their debit or credit card, then the payment will be declined. Another reason may be that their chosen payment method may not be on the list of approved methods.

Payment failures may adversely impact an online business in a significant manner. Apart from causing financial loss, it may also lead to loss of reputation and trust among your clients. In order to provide the best services to your customers, you should look into each and every incident of payment failure to find out the underlying reason.

Five Tips to Secure Your Online Transactions

Five Tips to Secure Your Online Transactions

Digitalization in businesses has transformed the way consumers shop. With digital transactions taking over paper money, cyber-attacks are on the rise owing to the sloppy online shopping habits of buyers. As a result, the need to protect your personal information becomes critical and inevitable.

Although, online transactions come with a risk, there are certain tips that can help you secure them and keep cyber vulnerabilities at bay.

A Secure Connection

If you are initiating a payment online, look for a padlock icon beside the website address. HTTPS only guarantees a basic level of internet security, while HTTP is completely insecure. If the website address features HTTPS with the padlock icon beside it, the website is secure.

Authentic shopping sites redirect you to an encrypted version of the payment page. To validate this, look for logos such as VeriSign. Clicking on the logo will give you additional information regarding how secure the website is. Besides, always keep your internet browser updated. The best alternative is to shop through the official merchant apps that can be downloaded from Apple Store or Google Play.

Know Where to Shop and Where Not to

While it’s mostly safe to shop from a private and encrypted home connection, open and public Wi-Fis are unsafe. It’s wise not to use public Wi-Fi for shopping. And, if at all you transact using public Wi-Fi, change your password immediately from a safe network.

Keep Track of Your Transactions

Keep a record of all the internet transactions you make, and examine the bank statements and credit card bills on a regular basis to verify your transactions. Doing it regularly can help you track wrong or unusual transactions easily. If you find anything suspicious, block your card and notify the bank immediately.

Use Your Accounts Wisely

Do not keep any birth dates or wedding dates as password for your bank accounts. When people resort to social media to showcase their lifestyle, it’s easy to extract their personal information from apps and websites. Try not to disclose such information in social media. Keep the social media details to a minimum to avoid being a victim of hacking and phishing.

While using passwords for bank accounts, use strong and hard-to-guess ones. A two-factor authentication would be ideal for a secure online payment. With that, you will receive a one-time pin to authenticate your transaction. If you use another computer to shop online or if you access your computer from a public network, change your password immediately. If you are using another computer, do not allow the browser to remember your passwords. Be extra observant by clearing the cache, cookies, and history after use. Once you complete a transaction, log out of the bank/merchant website. Also, do not store your account information anywhere on your computer.

Use Firewalls and Anti-Virus Programs

Safeguard your computer with a good antivirus program and update it regularly. This will ensure that you are safeguarded against new hacks and scams. Also, have the firewall turned on to prevent unauthorized access to your computer.

The aforementioned tips can help prevent the sneaky cyber thieves from acquiring access to your important financial and personal data. As a final tip, change your online passwords on a regular basis.

Why Do Refunds Take So Long?

Why Do Refunds Take So Long?

Online transactions have made life quite easy. We transfer funds, buy things and pay for them, receive payments, and all of this with the simple click of a button. Cash is rarely required anywhere. Online or cashless payments have become quite ordinary. The only time that online transactions frustrate us is when our money gets stuck! But like most out of the ordinary things, we must regard it as an exception.

Most online portals have simple refund policies. The process of raising a refund request is quite convenient; however, there are instances when the process is delayed due to some reason. In order to better understand this process, let us look at detailed insights.

When does the need for a refund arise?

  • When you make an online purchase and pay through your card but later decide to cancel or return the ordered item
  • When you are in the middle of making an online payment and you lose network connectivity

Why do payments fail?

  • Failure in communication – At some point in the payment making process, if there is a failure in communication after the customer has been charged, the customer can ask for a refund. This usually occurs in most cases due to network or connectivity issues and is a rather common occurrence.
  • Failure in a status update – Another reason for the failure of payments is the status of payment not getting updated. In such a case, even though the payment has been deducted, one or more of the banks involved fail to update the status. Since the payment gateway has no information, no information is available to the buyer or seller.

Why getting refunds takes time?

Firstly, the merchant usually needs a certain amount of time to determine whether the request for refund is legitimate or not. In cases where goods are returned, the merchant would like to make sure that the goods have not been damaged by the other party.

Secondly, the banks have a vested interest in keeping your money with them for as long as it is legally possible as they make interest off of that money. That is part of the reason why the bank charges your account immediately while delaying the refund to your account. In these cases, the merchant is able to provide the customer with an authorization code that can be used to hasten the refund process with the bank.

Thirdly, refunds take time because there are multiple online payment platforms involved. The process of authorization can be quite cumbersome. A slight delay at any stage further delays the entire process. To explain the refund process further, let’s take an example.

A customer raises the request for a refund. This request will be made to the payment gateway involved. The payment gateway then sends a request to the acquiring bank with which the merchant has an account. After the necessary approvals, the acquiring bank raises a request with the customer’s issuing bank. The entire process of authorization and re-authorization, despite the fact that no actual money is transacted, is a tedious one.

The bottom line

It is important to maintain your calm and understand how the process of refunds works. The movement of money in an online transaction, while faster, is sometimes hindered due to the complexity of the process. The entire process of online payments is monitored by the online payment gateway, the issuing bank, and the acquiring bank.

It is really up to the banks to approve and reflect the balance in their respective accounts. While no money is actually moving, the coordination between the two banks and the gateway determines the amount of time that the entire transaction takes.