What each payment status means detailed
Payment processing, despite its user simplicity and widespread availability, is a technically complex process involving several independent parties. Behind the scenes we have banks, payment systems, and transaction processors providing the necessary infrastructure to make it all possible. Everything that happens on the screen in a few seconds actually encompasses a series of events that most users do not see and do not know about.
Since Monoup is a trustworthy source of information and expertise in payment systems for merchants, we couldn't overlook this important topic and today we delve into the details of the transaction statuses. Today, read about payment statuses and how to understand them.
Transaction statuses
A transaction goes through several stages before being processed, thus having its own lifecycle. Understanding how payment is technically processed at the level of banks and payment systems can help you delve deeper into potential problems that may arise along the way or explore possible risks. The process of making a card payment can be divided into three stages:
- Authorization;
- Processing;
- Finalization.
Each of these stages includes several sub-stages that follow one another or are only partially completed. Everything will depend on the path the transaction takes. In general, there are only two paths: success and failure. Essentially, payment can be successful, meaning the amount is debited from the payer's card and credited to the merchant's account; or unsuccessful — at one of the stages, a failure occurs, and funds do not reach the merchant's account.
Authorization, as the first stage of payment, serves for the preliminary identification of payment possibility by the card-issuing bank. It can have the following statuses:
- Transaction approved;
- Transaction declined;
- Additional details required.
If the transaction is declined, it does not proceed to processing status and literally goes straight to finalization. The final outcome will be a decline or error. In the case of a request for additional details, verification may be conducted, and payment will proceed or be declined if the information is insufficient. If the bank approves payment, which is possible only if there are sufficient funds in the account, no restrictions or blocks on the card, no problems with the merchant or risk factors, then transaction proceeds to the next processing stage.
The lifecycle of processing is always the same, and payment goes through all its stages. They can be described with the following statuses: "processing," "completed," "canceled." That is, there are two basic scenarios here: from processing to completion or cancellation. At this stage, much depends on the payment system and the merchant. Also, on the payer. During the process, various technical or other errors may occur that prevent the successful completion of payment. Among them can be manual errors of payer, incorrect data entry, unstable internet connection, and a range of other factors. Additionally, all technical issues of payment system and routing will be manifested here. What specific problems may arise on the path to successfully debiting the client's card can be seen at the final stage of the transaction's lifecycle. Since finalization can be successful or error. In the case of an error, the payment system can usually identify the cause of the error and communicate it to the merchant.
Most common payment errors
As we have already mentioned, processing is precisely the stage where problematic situations can occur that lead to an undesirable outcome of the payment, namely — an error. At the same time, some of factors influencing this are quite understandable and manageable. If you want the payments on your website to run like Swiss Watch, you should create the best environment for this. This means eliminating possibility of the most common payment errors that merchants usually face.
Among them:
- Insufficient funds on client's card. The number one problem, which statistically is the reason for decline of every second transaction. That is, 50% of the errors are caused by insufficient card balance. Of course, you cannot manage your users' funds and check if they have enough money for the next payment. But you can create the right payment process and remind them to check their balance before payment. Not 100% effective, but possibly 50%.
- Payment system failure. This happens quite often, especially in high-risk business, and can be accompanied by various situations. This includes routing errors and difficulties on the processing side. Predicting all errors can be incredibly difficult, but the most basic ones is certainly possible. Comprehensive cooperation with payment system and quick response will help you reduce the damage from such cases. For the adaptability of your own system, you should have a range of payment providers that back each other up and a well-configured cascading setup. In this case, no errors will scare you, and if they do occur, you will not be severely affected, as you will switch to another payment processor in time. Payment processing giants like Stripe ensure 99% uptime, but even that is not 100%. Therefore, you need to be prepared for minor downtimes.
- Blocking currency conversions on the client's card. A common problem in international processing and, by the way, an even more common for merchants who do not localize their payment experience. For example, if you choose to cooperate with payment system that supports only euros, and your user is from Brazil, it is quite possible that they will not be able to make payment. And the reason will not be that their card does not work abroad, but that many protect themselves from currency conversion. Thus, banks often restrict such payments because the client will be losing funds on the exchange rates. This is especially relevant in the case of double conversion: when the amount indicated on payment page is in BRL, and you want to debit euros in conversion to BRL. If we stay within the same example with Brazil. These are nuances? Indeed, yes. But the key to stable processing is precisely to consider such nuances.
- High-risk MCC code. Also, a common problem for many users, as banks automatically block MCC codes that they consider risky. Sometimes, client may not even know about this. They may simply receive an error at the payment stage. This happens with MCC code 7995, which belongs to iGaming merchants. Payments intended for gambling are automatically blocked by client's bank. In addition, there are a number of other similar services that banks review skeptically. The client can remove these restrictions through their bank manager.
- Weak acquiring bank. For high-risk processing, choosing an acquiring bank is already a difficult task, but sometimes it falls on not the best options. A technically weak bank that cannot maintain a high level of constant acquiring volumes can significantly affect payment approval ratio, and lifecycle of the transaction will not go beyond an error. And payment system for gambling is valued precisely for its stability, so it is important to be attentive and clarify such details.
- Poor UI/UX of your website. Very often, your website can help or hinder making a successful payment. To determine which side your UX is on, conduct a series of tests, preferably with local testers, and track the behavior of your users. This will allow you to identify weak areas and ensure that all forms are filled out without issues, there are no bugs on pages, one window does not interfere with another, and similar difficulties. Addressing this issue is a lengthy, if not constant, process. And it is also important to consider that changing elements on your website can affect payment process as well.
- Technical or infrastructure problems of your website. Frequent issues include crashes, automatic page reloads, problems with captcha, and other complexities. Can you ensure a full guarantee of the absence of such problems? If you constantly monitor payment processing function — definitely you can minimize them.
In conclusion, most of the above errors are not always noticeable from the first glance and do not always return a corresponding error code from payment provider, so you will understand the solution. As it usually happens in case with insufficient funds. But you can notice them if you pay enough time and attention to your payment structure. You cannot do it without proper testing and Monoup is your reliable partner in this area. We have extensive practical experience from different sides of payment processing and will help you identify the weak points of your business and work on them. Testing with local testers and a full analysis by our product manager will give the maximum result, and lifecycle of your payments will be completed with success in most cases. Text us for details!
