4 ms·

I'd guess half a percent? Can't imagine it being much higher?

by ikeboy 8y ago

patio11 8y ago
That would have been close to my estimate prior to joining. The actual number is more than an order of magnitude higher, across the industry, for fifty years. Insert "this is fine" gif here. If anyone thinks "Oh wow that isn't fine" I'd encourage you to join the team working on it.
epa 8y ago
Bank declines are 10-20% of total card volume, depending on industry.
- ikeboy 8y ago
  Most of those are going to be straightforward insufficient funds or fraud though, I'd assume?
  - penagwin 8y ago
    Disclaimer: I'm not familiar with these specific numbers. Anecdotally I've had my own cards denied because I've reported my card missing and had to get new numbers. This is fairly common from what I've seen, many people I know have had issues because of this (late fees, etc.). Just another case I thought I'd add, as we sufficient funds and it wasn't fraud.
    - ikeboy 8y ago
      If you report your card missing then it's no longer a valid number.
      - js2 8y ago
        Except for recurring payments, at least with AmEx.
  - Silhouette 8y ago
    Sadly, your assumption is incorrect. Some of the time, as a merchant, you do get a specific indication of problems like insufficient funds or an expired card. The problem we're talking about here is all the other failures, where you just get some entirely unhelpful generic code that translates roughly to "declined, for reasons we're not going to tell you". From personal experience, this second group can often represent the much larger share of total failures. When a generic code comes back, you don't get your money, but in a not insignificant number of cases, you do get an upset customer contacting you to ask why their payment didn't go through when their card should be fine and they've been using it with you for a year now and they just used it this morning at their local store with no problems. You can understand their frustration. The reality is that most people don't realise how horribly unreliable the card payment infrastructure we rely on actually is. They can and will blame the merchant who declined their card if they don't know of any reason that it shouldn't have worked. Even if they don't blame the merchant explicitly, having their card declined causes a lot of people some embarrassment, and that is not a reaction you want associated with your store or service if neither you nor your customer has done anything wrong.
Silhouette 8y ago
It's huge. Like "you'd never believe it if you couldn't see it with your own eyes" huge. As a data point, one business I work with offers subscriptions, and sometimes the majority of its entire churn is caused by unexplained failed card charges from Stripe. For comparison, where Direct Debit schemes are available in Europe and used by that business, they essentially never exhibit unexplained charge failures. To put that in terms of somewhat realistic numbers, say you have a 97% retention rate on a typical monthly subscription for some SAAS offering. After 12 months, just from attrition, you have lost more than 30% of the subscribers you had at the start of the year. This is why improving retention for subscription business models is such a big deal. Now suppose you have a 92% retention rate, because you're losing an additional 5% of subscribers each month due to failed charges. After a year, you have lost over 63% of the subscribers you started with. That's a devastating difference. Now suppose you are also attracting new subscribers at a respectable 10% per month. In the first case, you have net 7% growth per month, meaning your business will be around 125% bigger at the end of the year. That's more than double its previous size -- yay for hockey stick growth charts! But in the second case, with just 2% net growth per month, your business is only 27% bigger at the end of the year. The 5% losses due to unclassified failed card charges have basically cost you as much as your entire business made last year in terms of lost growth. Stripe do seem to be aware of the problem, because they have rolled out a number of systems over the years for retrying failed transactions and the like. Unfortunately, these systems have often been rather complicated, incompletely documented, and most importantly almost entirely untestable before deployment, which seriously undermines their value. In our experience, shifting subscribers to other payment methods can be an effective solution if it's an option, but of course in places like the US card payments still dominate. If that's where your customers are, you could probably save a lot of lost business by handling those failure flows better. Just be aware that with Stripe in particular, you may have to read between the lines in the documentation, put your first integration into production largely untested, and then rely on monitoring your logs to pick up and deal with problems if you've done anything wrong.

I'd guess half a percent? Can't imagine it being much higher?

by ikeboy 8y ago

I'd guess half a percent? Can't imagine it being much higher?

That would have been close to my estimate prior to joining. The actual number is more than an order of magnitude higher, across the industry, for fifty years. Insert "this is fine" gif here. If anyone thinks "Oh wow that isn't fine" I'd encourage you to join the team working on it.

epa 8y ago

Bank declines are 10-20% of total card volume, depending on industry.

ikeboy 8y ago
Most of those are going to be straightforward insufficient funds or fraud though, I'd assume?
- penagwin 8y ago
  Disclaimer: I'm not familiar with these specific numbers. Anecdotally I've had my own cards denied because I've reported my card missing and had to get new numbers. This is fairly common from what I've seen, many people I know have had issues because of this (late fees, etc.). Just another case I thought I'd add, as we sufficient funds and it wasn't fraud.
  - ikeboy 8y ago
    If you report your card missing then it's no longer a valid number.
    - js2 8y ago
      Except for recurring payments, at least with AmEx.
- Silhouette 8y ago
  Sadly, your assumption is incorrect. Some of the time, as a merchant, you do get a specific indication of problems like insufficient funds or an expired card. The problem we're talking about here is all the other failures, where you just get some entirely unhelpful generic code that translates roughly to "declined, for reasons we're not going to tell you". From personal experience, this second group can often represent the much larger share of total failures. When a generic code comes back, you don't get your money, but in a not insignificant number of cases, you do get an upset customer contacting you to ask why their payment didn't go through when their card should be fine and they've been using it with you for a year now and they just used it this morning at their local store with no problems. You can understand their frustration. The reality is that most people don't realise how horribly unreliable the card payment infrastructure we rely on actually is. They can and will blame the merchant who declined their card if they don't know of any reason that it shouldn't have worked. Even if they don't blame the merchant explicitly, having their card declined causes a lot of people some embarrassment, and that is not a reaction you want associated with your store or service if neither you nor your customer has done anything wrong.

Silhouette 8y ago

It's huge. Like "you'd never believe it if you couldn't see it with your own eyes" huge. As a data point, one business I work with offers subscriptions, and sometimes the majority of its entire churn is caused by unexplained failed card charges from Stripe. For comparison, where Direct Debit schemes are available in Europe and used by that business, they essentially never exhibit unexplained charge failures. To put that in terms of somewhat realistic numbers, say you have a 97% retention rate on a typical monthly subscription for some SAAS offering. After 12 months, just from attrition, you have lost more than 30% of the subscribers you had at the start of the year. This is why improving retention for subscription business models is such a big deal. Now suppose you have a 92% retention rate, because you're losing an additional 5% of subscribers each month due to failed charges. After a year, you have lost over 63% of the subscribers you started with. That's a devastating difference. Now suppose you are also attracting new subscribers at a respectable 10% per month. In the first case, you have net 7% growth per month, meaning your business will be around 125% bigger at the end of the year. That's more than double its previous size -- yay for hockey stick growth charts! But in the second case, with just 2% net growth per month, your business is only 27% bigger at the end of the year. The 5% losses due to unclassified failed card charges have basically cost you as much as your entire business made last year in terms of lost growth. Stripe do seem to be aware of the problem, because they have rolled out a number of systems over the years for retrying failed transactions and the like. Unfortunately, these systems have often been rather complicated, incompletely documented, and most importantly almost entirely untestable before deployment, which seriously undermines their value. In our experience, shifting subscribers to other payment methods can be an effective solution if it's an option, but of course in places like the US card payments still dominate. If that's where your customers are, you could probably save a lot of lost business by handling those failure flows better. Just be aware that with Stripe in particular, you may have to read between the lines in the documentation, put your first integration into production largely untested, and then rely on monitoring your logs to pick up and deal with problems if you've done anything wrong.