Commerce firms can often see a payment fail. The opportunity lies in what they can do next.
The PYMNTS Intelligence report “How These Industries Are Turning Payments Failures Into Recovers,” the October edition of The Orchestration Advantage Series done in collaboration with Spreedly, found that commerce companies use intelligent retry logic on 41% of declined payments, less than half the 84% rate reported by finance and infrastructure firms. The gap exists even though roughly three-quarters of businesses in both sectors monitor payment performance in real time.
That creates an opening for commerce firms to get more value from payment data they already collect. A decline identified immediately can potentially be retried or routed differently, but doing so depends on the underlying payment infrastructure and the control a company has over it.
The difference shows up in checkout performance. Over the past year, about one-third of commerce companies reported gains in checkout completion from payment orchestration or optimization. Finance and infrastructure firms reported such gains more often, while fewer than 3 in 10 companies across the full survey did so.
The report was based on a March survey of 110 companies in the United States with at least $10 million in annual revenue. Sector-level findings were based on relatively small samples and are best viewed as directional.
Token Control Expands the Options After a Decline
One factor separating payment visibility from payment recovery is control over payment tokens.
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Tokens are encrypted substitutes for customers’ card numbers that allow merchants to charge cards without retaining the underlying card details. When a processor controls these tokens, moving a transaction to another processor can require a migration or require the customer to enter payment information again.
Companies with little control over their tokens automatically routed payments only 7% of the time, according to the report. Among companies with at least partial control, the rate rose to half. Commerce firms reported full token control in just 3% of cases.
Commerce companies consequently had two pieces of the payment process moving at different speeds. Many had the monitoring needed to identify a decline, while fewer had the infrastructure needed to respond with the same frequency as finance and infrastructure companies.
Full orchestration was not universal outside finance and infrastructure. A complete stack in the study included automated routing, frequent updates to routing logic, failover and redundancy, token control, and the ability to add payment methods without a major overhaul. The report revealed that 63% of finance and infrastructure companies reported having all five capabilities, ahead of the other sectors studied.
Building those capabilities can take time. According to the report, 93% of surveyed companies said onboarding a new payment provider takes at least a month, and none reported doing it in less than two weeks. Adding a new payment rail can also require reintegration.
Commerce firms nevertheless signaled plans to keep investing. The report showed that 82% said they were investing in payment orchestration or plan to do so within a year, although only about one-fifth were building at the time they were surveyed.
For commerce companies, intelligent retries provide one measure of what those investments can accomplish. Real-time monitoring tells a merchant where a payment failed. Greater routing and token control offer more ways to complete the transaction without requiring the customer to start the checkout process again.
At PYMNTS Intelligence, we work with businesses to uncover insights that fuel intelligent, data-driven discussions on changing customer expectations, a more connected economy and the strategic shifts necessary to achieve outcomes. With rigorous research methodologies and unwavering commitment to objective quality, we offer trusted data to grow your business. As our partner, you’ll have access to our diverse team of PhDs, researchers, data analysts, number crunchers, subject matter veterans and editorial experts.
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