Secure payment processing is crucial for both your customers and your business. Your customers trust that the money they spend on your products will be safely and securely processed, and you must trust the systems put in place to ensure transactions can be completed.
In 2019, the total non-cash transaction volume was around a whopping $540 billion USD. By 2028, business-to-business (B2B) transactions are predicted to hit nearly $200 trillion USD. Secure, reliable technology that performs has always been important in the digital age, but with the added payment methods of mobile wallets and contactless payments, to name a few, along with technological adoption by cash, credit, or check heavy industries, means that it’s more crucial than ever to ensure your payment processing methods and technology are up to par.
There are a few ways to evaluate how your payment processing is doing but, primarily, you’ll want to use key performance indicators (KPIs) for reliability and efficiency. Here, we’ll go through the components of those KPIs to ensure your payment transactions are processed with ease and security.
Payments reliability KPIs
Simply put, payment reliability is how well a payment system can work to process transactions without any human intervention. It’s the trust you put into the payment system to ensure you’re converting and not losing business. With digital payments and ecommerce quickly becoming favorable methods for many consumers, you can’t rely on old brick-and-mortar carbon copy printers to get the transaction completed.
Payment reliability KPIs indicate the strength of your payment processing system to avoid issues during payment that may risk an abandoned cart altogether. The average abandoned cart rate is 70% as is—it’s important to ensure you track these KPIs so you don’t lose any business.
Uptime
Uptime is how well a payment processing system is performing. If it’s offline in any capacity, that will decrease sales. Sometimes this happens, and it’s important that it’s for a shorter period rather than taking a long time.
Track this KPI by noting how often and the time of a system failure. You’ll be able to monitor if any purchases were lost during this time and how much. If it’s consistent enough, consider a different provider that can handle the needs of your customer and ensure you’re not losing any unnecessary sales.
Payment failure rate
Failed payments happen when a transaction does not complete when a payment is attempted. According to a research study conducted by Acuity, most organizations are subject to a payment failure rate of 5% or less. However, almost a fifth (18%) report a failure rate of 5-10%.
Payment isn’t as easy as it sounds. A buyer triggers a complex system of checks and balances, security, and tech reliability rate where if one part of it is done or fails, the payment itself ultimately can’t go through.
Payment failures can occur from human error, such as a customer inputting incorrect payment details and it getting declined on the business’s end, and from technological ones, too, where if one system in the complex path of purchase to profit occurs, failure happens.
Check what your payment failure rate is and how often it’s happening. If it’s something that’s happening because customers are incorrectly putting in their credit card information or having insufficient funds, there’s little you can do to change that besides having something like a one-click checkout, like Shopify Checkout. Otherwise, if it’s somewhere else in the pathway, consider what your tech solution could be to improve it.
Purchase success rate
A purchase success rate is the percentage out of 100% of payments successfully processed and completed on your website. Often, quite like the human error of payment failure rates, purchase success rates can be out of your control. Other times, it can be the complexity of a payment process system (too many steps, for instance) and issues with the payment gateway itself.
Your purchase success rate is an important metric to monitor because your customers want a frictionless, fast transaction. Everyone and everything moves so fast at this point in ecommerce that tripping up at any step can leave someone without their order and your business without a sale.
Fraud rate
Fraud is something every business and customer deals with far too often. A fraud rate is the number of successful purchases that were later flagged as fraudulent. To calculate your own fraud rate, you can only take those successful and accepted purchases into account.
A way to help ease your business’s fraud rate is to have security systems in place to check and notify if a purchase being made is indeed a fraudulent transaction.
Acceptance rate
An acceptance rate KPI tells a business how many successfully authorized, or approved, transactions occurred and completed. This metric can take both the capture stage of the transaction and authorization of payment.
Generally, you want to have a high acceptance rate because that means the majority of the purchases made on your online store have sent money from a customer’s account or credit card to your business’s account. Situations and factors that can impact your acceptance rate include payment gateway issues (payment failures, uptime), a lack of effective fraud awareness to capture fraudulent purchases, and your own capture process of the translation. Low payment acceptance rates mean customers are not likely to keep coming back to make purchases.
Understanding what your payment acceptance rate is and why can help you develop a strategy to improve the payment experience for your customer, and therefore ensure revenue to your business.
Chargeback rate
Sometimes buyers will see duplicate purchases on their credit cards. Or perhaps something they ordered didn’t arrive. Again, fraud can be an issue here. There are a number of reasons a chargeback can occur on a purchase. If that happens, a buyer will often dispute the charge and need to have a refund.
This is a key metric to consider because there are fees sometimes associated with a chargeback. Not only are you losing money on the purchase by issuing a refund, but there’s a small added cost as well with a provider that may add up over time if you have a substantial chargeback rate.
Payments efficiency KPIs
Payment processing systems not only need to be reliable but they also need to be efficient. Speed, authorization, and capture rates are crucial components of an efficient payment processing system to ensure customers are getting through checkout as fast as they need, and your tech is able to handle it.
Processing speed
One of the most important metrics you’ll need for your payment processing KPIs is processing speed. It’s the time it takes to receive a response from the API to the payment gateway about a purchase. This is especially necessary for peak shopping periods, like Black Friday Cyber Monday, when there’s a high volume of purchases. Flash sales, too, or limited-edition drops need a steady processing speed so it doesn’t dampen the customer experience.
Authorization rate
Getting payments authorized by your buyers’ banks or credit card issuers is important. This metric captures the percentage of successful transactions that those institutions have approved. This process, which can seem fairly fast and under the radar, involves a few steps to ensure your customer has the funds for the transaction and those can go into your business’s account.
High authorization rates are great because that means your customers have been approved for the transaction. Causes for lowered authorization rates include fraud and security, the performance of the payment gateway, and how reliable or efficient the payment processing system is overall.
Capture rate
High capture rates tell you that most of the transactions happening on your online store are approved and successfully completed. Captures occur when the funds from a customer’s account have settled into a business’s account after authorization. Lowered capture rates tell you that checkout and payments aren’t happening smoothly or efficiently for a customer, which can lead to decreased revenue.
How Shopify can help
Shopify has an incredible range of tools and resources to understand and improve payment processing metrics. Shopify ensures your payments are processed safely, reliably, and securely—that neither your customer or your business suffer from lagging tech or fraud.
Detailed reports and analytics
Shopify provides comprehensive reports and analytics so merchants can track key payment processing metrics such as successful transactions, failed transactions, refund rates, and chargeback rates. These insights can help identify areas for improvement.
With ShopifyQL Notebooks, Shopify merchants can understand your individual authorization rate by adding the ShopifyQL Notebooks app.
Shopify Payments
Shopify's own payment gateway provides a seamless integration and reliable payment processing benefitting both merchants and customers. Payments offers features like automatic fraud analysis and chargeback recovery, which can help improve key metrics.
24/7 Support
Shopify's support team is available around the clock to assist with any issues related to payment processing—providing guidance on best practices for improving payment efficiency and reliability.
Educational resources
Shopify has a vast educational resources ecosystem, including blog posts, guides, and webinars, that can help merchants understand key payment processing metrics and how to improve them.
Integration with multiple payment gateways
Over 100 payment gateways worldwide can integrate with Shopify. This allows merchants to offer multiple payment options, improving the customer experience and potentially increasing successful transactions.
Shopify
For high-volume businesses, Shopify offers advanced features like customizable checkout, which can help improve payment efficiency.
