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Businesses of all sizes are continually seeking new ways to measure success. With so many different data points to analyse, it’s easy to lose sight of the big picture and feel lost in the details.
However, one metric that is consistently useful for business leaders and CFOs is payment acceptance rate.
This enduring metric is a simple indicator of whether your business is meeting expectations or losing out on potential revenue. It cuts to the core of sales performance and is a vital tool for analysing the success of your payment infrastructure.
What is payment acceptance rate?
A business’ payment acceptance rate is the percentage of successful customer payments that are made out of the total number of customer payments attempted. For example, if one in every 10 attempted payments to your business is declined, your payment acceptance rate is 90 per cent.
Although certain payments cannot be completed for legitimate reasons, such as insufficient funds or an expired credit card, payments can also fail due to technical issues and inefficiencies in the way your payment system is set up.
A lower-than-average payment acceptance rate often indicates underlying problems in your payment infrastructure. Fortunately, small changes to your payment system, both on the front and back end, can greatly your improve payment acceptance rate.
Why is payment acceptance rate important?
Payment acceptance rate is a crucial metric for analysing your business performance. It’s a direct indicator of whether you’ve properly optimised the payment experience for your customers, or whether revenue is falling through the cracks.
It reveals avoidable payment processing issues that are limiting sales, creating a poor customer experience, and preventing repeat business.
For large businesses and corporations with a high volume of annual sales, increasing payment acceptance rate even by a single percentage point can mean millions in additional revenue.
Average payment acceptance rates vary based on the type of business, the industry, and the geographic location. If your business has a lower-than-average payment acceptance rate compared with competitors in your field, you must address it promptly to avoid losing potential revenue and customers.
How to improve your payment rate
1. Understand why payments are failing
The first step toward a higher payment acceptance rate is to better understand why payments are being declined. Take a close look at your decline data to determine how many of the declined transactions were unavoidable (e.g. insufficient funds) and how many might be preventable.
Are there certain decline codes that keep recurring? This indicates a potential issue in the payments journey, either on the customer-facing side or with the various entities involved on the back end.
2. Offer multiple ways to pay
One of the simplest ways to increase your payment acceptance rate is to allow your customers to pay the way they like. The more payment options they have to choose from, the more likely it is that they’ll choose one that works.
Be it a credit card, digital wallet, BNPL app, or regional payment scheme, if a customer is familiar with a certain payment method and knows the data associated with that method (e.g. postcode, PIN, expiration date, etc.), it’s far more likely the payment will proceed successfully.
Multiple payment methods also mean that should a first payment attempt end with a decline, the customer can select another payment method and try again.
Offer multiple ways to pay with Planet’s solutions
3. Streamline your checkout process
For e-commerce businesses, having a clear, speedy, and user-friendly checkout process is crucial for improving payment acceptance rates. A lengthy payment form and outdated website interface leave more opportunities for errors that lead to payment declines.
Your goal should be to make paying as fast and easy as possible for customers. Adhere to the following best practices for a speedy checkout:
- Avoid asking customers to provide anything other than the information required for payment.
- Integrate autocomplete features like automated address lookup to help speed up the process and ensure payment data is accurate.
- Allow users to create customer accounts and save their payment data for future use.
- Ensure the design of your checkout page is visually clean, straightforward, and responsive to any screen size.
- Use clear wording throughout the checkout process, particularly at the final stage, urging customers not to close their browser until the payment is completed.
4. Use strong security measures
When the goal is to create a quick payment process, adding security features may feel counterintuitive. However, integrating strong payment security measures will enhance customers’ trust in your checkout process and, in some cases, stop fraudsters before they even begin.
For example, requiring multi-factor authentication (MFA) for customer accounts will prevent unauthorised access and ensure only legitimate cardholders can complete transactions. This simultaneously prevents fraud and reduces the chances of declines with very minimal additional friction to the customer experience.
5. Work with a global payments provider
Avoid payment declines due to issues with cross-border payments by working with a payment service provider that specialises in international commerce.
A global payments provider will be able to offer both advice and practical support for accepting payments from all customers, regardless of their country of origin. This is crucial for ecommerce businesses that have, or desire to have, an international customer base.
It’s also vital for brick-and-mortar retail and hospitality businesses that cater to customers from across the globe.
Not only will a global payment service provider provide useful tools, such as Dynamic Currency Conversion (DCC) and Multi-Currency Pricing (MCP), but they’ll also be able to offer guidance on regional payment schemes and customs.
6. Continually monitor your payment data
Improving your payment acceptance rate is an ongoing task. Even an average or above-average payment acceptance rate now could fall to an unacceptable level next quarter, indicating a crucial issue that needs to be addressed.
Also, as consumer trends change and new payment methods grow in popularity, a once fully optimised payment experience can quickly become outdated. All of this is why it’s essential to routinely monitor your payment acceptance rates so that you can remain ahead of the competition.
What factors affect payment acceptance?
1. Incorrect card details
One of the most common factors affecting payment acceptance is customers inputting incorrect information. When a customer inputs information such as card number, expiration date, or CVV incorrectly, the payment gateway validation processes will flag and decline the transaction.
The more frequently this occurs, the lower the overall acceptance rate. Persistent inaccurate information can also trigger security protocols, which can lead to account holds and customer dissatisfaction. This will have knock-on effects such as lost revenue and decreased customer loyalty.
It is for this reason that it’s important to have as clear and concise a checkout process as possible. This includes encouraging cardholders to double-check their details, providing validation feedback in real-time, and offering helpful prompts to minimise the chances of rejection.
2. Failed address verification
If the billing address the customer provides does not match the address on file with the card provider, the payment gateway’s Address Verification System (AVS) will flag the transaction and the payment will be declined.
A confusing address collection system will lead to repeated AVS flags and payment declines, motivating customers to look elsewhere for their desired goods or services. One of the best ways to avoid this common issue is to offer automated address lookup by postcode.
This draws from postal directory data and auto-populates the customers’ official postal address as and when they begin typing it, leaving far less room for human error.
3. Network issues
Connectivity issues can be either at the customer’s end or due to the payment processor’s infrastructure. Regardless of the source, network issues can lead to transaction timeouts or failures, preventing customers from successfully completing their transactions.
In addition, network disruptions can lead to synchronisation errors between the retailer’s e-commerce platform and their payment gateway, leading to duplicate charges or unprocessed payments.
4. Fraud detection
Fraud detection systems are crucial in preventing unauthorised or fraudulent transactions. However, they can often flag legitimate transactions as suspicious, causing false declines.
Successful payment platforms are those that can find a balance between legitimate fraud prevention and a seamless customer experience. In addition to affecting payment acceptance rates, overly sensitive fraud prevention protocols, while well-intended, can frustrate customers who are attempting to make legitimate purchases.
5. Cross-border restrictions
International shoppers often run into issues and experience payment declines when paying for items abroad, or from an e-commerce retailer that’s based outside their home country.
In some cases, it’s the customer’s bank that’s preventing the payment, while in other cases it’s the merchant’s payment processing system that’s not equipped to process international payments. In order to avoid both scenarios, retailers can work with a global payment service provider that understands and supports multiple payment methods used by shoppers across the globe.
What is considered a good payment acceptance rate?
What’s considered a “good” payment acceptance rate depends on the type and size of the business, the industry, the geographical location, and the payment method. For example, credit card acceptance rates are often lower than digital wallet acceptance rates. Higher-risk businesses such as online gambling or adult entertainment services, often have lower payment acceptance rates, as more transactions are declined due to potential fraud.
An overall payment acceptance rate (across all payment methods) of 80% or above is often said to be “average” or “good.” However, as payment technology advances and banks continue to modernise for the digital era, a payment acceptance rate closer to 95% has become a better benchmark for success.
Payment acceptance rates in the 95% to 98% range demonstrate that the vast majority of attempted transactions are successfully processed, while also indicating that the system’s fraud prevention measures are working effectively. Rates higher than 98% may suggest that the system isn’t sufficiently weeding out fraudulent transactions.
Payment acceptance rate is a critical metric for businesses, and even a small increase can have a significant impact on your bottom line. With Planet, you can streamline your checkout process, offer multiple payment options, and eliminate issues like failed transactions or cross-border restrictions.
Our global payment infrastructure, combined with fraud prevention and real-time reporting, ensures more successful payments and a smoother customer experience.
Increase your payment acceptance rates today
FAQs
Does accepting digital wallet payments increase payment acceptance rates?
Yes. Businesses that allow customers to pay for goods and services using their preferred digital wallet often see a boost in their overall payment acceptance rates. This is due to the fact that digital wallets are seamlessly integrated within customers’ mobile phones or web browsers (requiring minimal manual data entry) and securely process payments using biometric verification and stored credentials. It’s a far more streamlined payment process that results in much higher payment acceptance rates than more traditional payment methods.
Do security checks like 3D Secure lower payment acceptance rates?
Although it’s easy to assume that modern payment security measures like 3D Secure complicate and slow down the payment process, leading to more declines and abandoned carts, these modern verification tools usually lead to an increase in successfully completed transactions when compared with older methods. Rather than relying on customers’ manually entered data for authentication, modern security measures like 3D Secure use simple, one-time passwords or fingerprint recognition to quickly verify cardholders and proceed with the transaction. It’s a relatively quick and frictionless process that boosts payment acceptance and customer trust at the same time.
How can international retailers increase payment acceptance rates?
Retailers with an international customer base can boost their payment acceptance rates in the following ways:
- Accepting a wide range of payment methods, including regional digital wallets.
- Integrating Dynamic Currency Conversion (DCC) to reduce confusion and enable customers to pay in their home currency per the prevailing exchange rate.
- Providing language transactions across their websites or mobile apps, or maintaining separate websites, so that customers can shop and pay in their local language.
- Partnering with a global payment service provider that understands the local payment landscapes in regions across the globe and can advise accordingly.
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