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Quantifying the Cost of Failed Payments
Beyond understanding the distribution of errors across your transactions, it's crucial to measure their financial impact on your business. This deeper analysis comes in two forms, each serving a specific purpose in optimizing your payment strategy.
Understand the typical financial value at stake for each error type by calculating the average transaction value affected.
Why it matters:
When you see that 3DS authentication failures average $300 per declined transaction while insufficient funds errors average $75, it immediately reveals which issues deserve priority attention. This insight becomes even more powerful when combined with the parameters we discussed earlier - imagine discovering that 3DS failures specifically impact high-value transactions from premium customers in certain geographies.
Track the final error that leads to order abandonment when customers attempt multiple payments.
Why it matters:
Consider a $500 order where a customer first encounters a 3DS authentication failure, retries and faces an insufficient funds error, and finally abandons after a "Do Not Honor" response. While all three errors occurred, the "Do Not Honor" response was what ultimately cost you the sale. This pattern recognition helps identify the true breaking points in your payment flow.
Using These Insights by combining both metrics, you should be able to :
Each of these metrics can be analyzed across all the parameters discussed earlier - card types, geographies, 3DS flows, customer segments, and more - providing a comprehensive view of how payment failures impact your revenue.
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