How to understand and reduce failed payments

There are a variety of reasons why your customers’ payments may have failed or been declined. Airwallex aims to protect your business from fraudulent payments, while minimising the loss of declined payments that are legitimate payments. Minimising fraudulent payments is important to avoid loss of revenue, time and fees with handling disputes and risk of suspension from payment schemes if your payments are deemed high risk.

We are continually looking for ways to improve our payment success rates with machine learning, experimentation, issuer and network outreach.

This article will help you:
> Understand the top payment decline reasons
> How to identify the reason on a specific payment
> Steps you can take to reduce payments being declined going forward

Why has my payment failed or been declined?

There are four key reasons why a payment could fail:

  1. Payment blocked by Airwallex risk engine given a high risk score
  2. Payment blocked due to your configured risk rules and lists
  3. Payment expired because the customer didn’t complete or fails 3DS authentication
  4. Payment declined by the customers’ issuing bank due to insufficient funds, high risk score or other reasons

A payment’s risk and likelihood to be accepted by issuing bank is also influenced by:
> The nature of your business (e.g. industry, location)
> The transaction details (e.g. timing, amount, frequency)
> Your customer (e.g. sufficient funds, location, device used)

International, cross-border card payments are likely to see lower success rates as issuing banks deem this as higher risk.

To understand what the decline or fail reasons are for a given payment, you can do so by:

  1. Within the WebApp: Under ‘Payments’ > ‘Payment Activity’ and select a specific payment
    Example 1 and 2: Payment failed because it was blocked by the Airwallex fraud and risk engine, or due to your configured risk rules and listsHC1.pngExample 3: Payment failed because the customer did not complete the 3DS authentication where 3DS was triggered, but the customer dropped offHC2.pngExample 4: Payment failed as it was declined by the issuer, with the response code of 54 Expired card or expiration date is missing
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  2. As a .xlsx report: Under ‘Payments’ > ‘Payment Activity’ you can export all the detailed payment information including response code, description, 3DS triggered, authenticated, CVC check and more

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Payments blocked by Airwallex risk engine or your configured risk rules

All Airwallex Online Payments accounts will have Airwallex’s automated fraud prevention and risk engine that blocks any payments that are evaluated as high-risk. This helps your business effectively prevent fraudulent transactions, disputes and chargebacks.

The risk score indicates the probability of the specific transaction being fraudulent. For example a payment with a risk score of 30 has a higher probability of being fraudulent than a payment with a risk score of 10.

The risk score on a given payment is assessed based on Airwallex’s machine learning model that builds on:
> Payments and checkout flow data
> Card networks and bank partnerships
> Historical Airwallex payments, device fingerprints and IP

See here for more information about Airwallex’s risk engine

Adjust your risk settings

While Airwallex strives to provide you with the information and tools needed to protect your business from fraud, you’re ultimately responsible for the payments you choose to accept, including those that are later disputed or found out to be fraudulent.

Under ‘Payments’ > ‘Risk’, you are able to configure your risk thresholds to either:
> Accept: Use the green slider to determine the transactions you would like to accept without 3DS
> Reject: Use the red slider to determine the risk score you would like to reject, without the use of 3DS
> Alert: Use the orange slider to determine which risk score you would like to request 3DS or a manual review

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Use alert or reject lists

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We offer you several ways to create rules and exemptions to the risk engine to manage your risk accordingly. Be aware that this may impact your fraud and chargeback rates; be also aware it can help to improve your authorisation rate in some specific cases.

> Reject List: Allows you to automatically reject transactions which have passed the risk engine. Note that you will not have an option to accept this transaction further.
> Alert List: Any transaction on the Alert List will follow the alert review criteria (either use 3D Secure, recommended, or trigger a manual review).

Payments that fail the 3DS authentication

3-Domain Secure™ (3D Secure or 3DS) authentication provides an additional layer of security by protecting you against fraud when you accept card payments online. It requires shoppers to complete a verification step with the card issuer when paying, thereby shifting the liability for fraudulent card payments from you to the issuer in case of disputes. Airwallex supports 3DS for all card schemes that you can use to accept payments, namely Mastercard (Mastercard Identity Check), Visa (Visa Secure), and UnionPay.

3DS is generally required by regulation for all payments in Europe (EEA) and may be triggered for other payments based on risk settings.

See here for more information about Airwallex’s 3DS feature.

Improve your checkout copy

In your checkout experience, let customers know they may be asked to complete 3DS verification during the checkout process. A cardholder who isn’t expecting a 3DS screen may be less likely to complete.

Adjust your 3DS trigger settings

In the same way you can adjust your risk settings under ‘Payments’ > ‘Risk’, you can adjust your ‘Accept’ and ‘Alert’ threshold to determine which risk score you would like to request 3DS or a manual review.

For example, if you’d like to trigger 3DS less, you would increase your ‘Accept’ threshold to accept payments with a higher risk score (and higher risk of being fraudulent).

Handle 3DS redirects

If you are using our Native API integration, you will need to build the flow to handle the 3DS redirects. 3DS transactions can be frictionless (without any need for challenge response) or challenged, which includes interaction with issuing banks & device data collection steps.

See here for a guide on how to handle the 3DS redirects.

Payments that are declined by your cardholder’s issuing bank

For payments that have been 3DS authenticated or skipped 3DS, they will go to the cardholder’s issuing bank to be authorised for payment. The issuing bank has automated evaluation models to decide whether to authorise the payment or not to protect the cardholder from fraud.

Review the response codes and merchant advice codes

You are able to see and review your response codes in two ways:

  1. Within the WebApp: Under ‘Payments’ > ‘Payment Activity’ where you can select the ‘Cog’ icon to customise columns and show response code next to each payment
  2. As a .xlsx report: Under ‘Payments’ > ‘Payment Activity’ you can export all the detailed payment information including response code, description, 3DS triggered, authenticated, CVC check and more

By understanding the top decline reasons and any patterns, you can implement specific improvements to help improve your payment success rates.

See here for the full list and description of Issuer response codes to troubleshoot your errors, and merchant advice codes for how you might retry a failed transaction.

However, it’s not always possible to know exactly why a payment was declined. Issuing banks tend to categorise many declines as generic “Do not honour”.

For privacy and security, issuing banks can only discuss the specifics of the declined payment with cardholders. If all the card information seems correct, your customer or cardholder can contact their issuing bank to ask for more information.

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Request and share more checkout information

The more data you collect and share for the payments, the better will Airwallex and the issuing bank be able to assess the risk of the payment and limit declines of legitimate payments. Collecting billing addresses, email addresses etc. can help to increase your payment success rate.

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Offer local payment methods and currencies

Digital wallets such as Google Pay and Apple Pay have higher payment success rates as it securely authenticates the payment using biometrics.

Some countries may also have local payment methods that have a higher adoption and success rate such as Bancontact in Belgium, or Kakao Pay in Korea as an e-Wallet. Success rates can also be improved by charging the customer in the right local currency (e.g. KRW for Korea instead of USD).

Note that when you do charge in a foreign currency, different to your customers’ local currency, they may incur foreign currency fees from their issuing bank.

See here for Airwallex’s full list of payment methods, transacting and settlement currencies available.

Ask for an alternative or updated payment method

If a card has failed or been declined with response codes such as ‘insufficient funds’, you can ask your customer for an updated or alternative payment method to help improve the overall success rate of your orders or invoices.

For recurring payments, use network tokenization or account updater to keep your card-on-file details updated

For businesses who store customer payment details and consent for future payments, Airwallex also provides Network Tokenization and Account Updater on most major card schemes (e.g. Visa, Mastercard).

This feature ensures the payment details stored are automatically updated when the card expires or is replaced to improve your payment success rate.

Reach out to your account manager or support@airwallex.com to have your account set up.

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