As an online business owner, you know first-hand how much time and effort are put into identifying the reasons for a low payment conversion rate – and finding the right tools to fix it. It’s not surprising since your business does not receive a significant part of the income precisely for this reason. For instance, if 20% of your payments result in failure, you lose the fifth part of your profit. Fortunately, there is a way to turn these numbers into a profit. In this article, we will identify a payment conversion rate and familiarize you with five ways to increase it.
What is a payment conversion rate?
Payment conversion is a metric that measures how many customers were able to complete a payment for goods and services on a merchant’s website or application. It is a crucial parameter for online businesses that directly influences their profitability. That is why payment conversion rate increase is an urgent question for many merchants seeking to capture more revenue from their company.
To calculate the payment conversion rate, you should divide the total number of customers who confirmed a purchase by the number of completed transactions and then multiply the result by 100 to get a percentage. For instance, if 2,000 customers approved a purchase on your website and 1,500 made a payment successfully, the payment conversion rate would be 75% (1,500 divided by 2,000 multiplied by 100).
Like any metric, payment conversion depends on many aspects and cannot be expected to grow on its own. That is why understanding the factors that affect conversion and having access to technologies aimed at increasing it is imperative.
Providing a user-friendly payment page, appropriate payment options, and a seamless customer experience are the main factors that ensure a high conversion rate. Let’s examine each of them closer and explore five tools that will help you increase your payment conversion rate.
5 ways to increase payment conversion rate
The first thing potential buyers see on your website or application when they want to confirm a purchase is a payment page. To increase the conversion rate, you need to capture your customers’ attention in the first few seconds. As soon as your clients go to the payment page, the first thing they consider is how convenient it is for them to use it. Therefore, your payment page must be easily understandable, intuitive and contain only the necessary fields.
The next thing to consider is whether there are payment methods that they prefer since customers will only pay for your product or service if it is convenient for them. That is why, to increase conversion, you should base the choice of payment methods for your customers on a thorough analysis of their preferences. The most efficient option for this would be to use advanced analytics. But you can start by answering these questions: do your customers prefer cards or alternative payment methods; does this list consist of global or local providers; would they like to simplify their checkout with one-click payments; and in what order do these payment methods rank in popularity of usage? The answers will help you determine which payment methods are most likely in demand.
Another critical element that affects the increase in conversion is customer trust. Many customers tend to leave the shopping cart if the payment is made not on the merchant’s website but on a non-branded third-party page. Likewise, customers who find redirects suspicious will leave the website without making a purchase. That is why having a checkout tailored to your brand and style is crucial. You may customize the page by adding your brand’s logo, changing checkout colors and styles, or even fully customizing the entire page from scratch according to your guidelines.
The majority of payments fail for no legitimate reason. Transactions that could be processed without problems are often declined as there are no rules or buying history in place, the purchase amount seems strange to the bank, the payment provider forbids payments from some countries, and so on. The most accurate word that describes the false decline problem is misunderstanding. Yet, a 451 Research study commissioned by Adyen shows that a false positive decline can result in up to 40% new customers loss, not to mention lost revenue.
To increase payment conversion and strengthen customer relations, building your brand’s reputation, you need to ensure that every transaction has the highest possible chance of success. But how are you supposed to do this when hundreds and thousands of transactions occur daily on your website or application? That is what payment routing will do for you. Based on advanced data analytics, smart routing technology automatically chooses the payment provider that is most likely to approve payment for each transaction and is the most appropriate according to specific parameters. The parameters include the lowest processing fee, country, currency, ticket size, first purchase or regular client, etc. Using smart routing, you can approve up to 20% more transactions and provide your clients with a better customer experience.
If the payment provider still declined the transaction, this payment attempt could nonetheless be successful. That is what cascading technology is for. When one provider declines a payment, it is automatically cascaded to another one and as many as needed within a single payment attempt. In this way, a transaction may go through 5-10-15 or more payment providers before it is processed successfully, but it will be unnoticed by the client. They will enter their payment details only once and get a successful result that will subsequently enhance their customer experience. Since declined payments are the primary reason customers abandon the cart and do not return to the merchant’s website again, smart cascading is a savior for businesses with low conversion rates.
Decline Reason Management
In case when there are objective reasons for the decline, such as a stolen card, an exceeded limit, or an expired date, is there a way to help the client and not lose him in the future? There definitely is. When clients receive an unclear decline message or a decline code from the bank, they feel confused, being unable to fix the issue and pay for your goods or services. Therefore, the inability to give an apparent reason for a failed transaction is one of the quickest ways to lose a customer. In turn, what you can do in this case is to provide an understandable message that tells the customer what stands behind the decline. That is what decline reason management can help you with. With this technology, you can group the declined transactions by risk categories and replace the initial unclear decline message with a simpler and more understandable one. For instance, if the initial message was “51 Insufficient Funds”, you can replace it with “The funds are unavailable. Please try another card”. It will give your customer a clear explanation of why their transaction has been declined, allowing them to fix it and complete payment in another way.
Now that five ways to increase payment conversion rates are on the table, it’s time to figure out how to implement them. There are two main options: either develop your own payment software from scratch or find a ready-made payment solution that already has these payment technologies implemented. If you are looking for a reliable payment partner to take care of your payments from the ground up, Akurateco is here for you.
The perfect solution
Created by industry experts with 15+ years of hands-on experience in online payments, Akurateco is a white-label payment orchestration platform that stands out. We offer 230+ integrated global banks and payment providers and advanced payment technologies, such as smart routing and cascading, decline reason management, automated invoicing, risk management, and tokenization, that will help you increase your payment conversion rate up to 20% and save on processing costs.