If measuring the performance of your payment system isn’t a regular part of your business assessment process, it should be. Here’s why: Up to 40% of your online sales are currently being lost due to shortcomings on the part of your payment gateway and/or because of friction in the checkout process. If you’re not paying attention to this crucial aspect of your business, you’re letting money slip through your fingers—and customers slip through the cracks.
The only way to be sure your payment system is functioning optimally (and protecting your hard-won sales) is by using payment metrics. Payment metrics help measure various aspects of your payment process, giving you valuable data on two important things:
- Specific business policies that may need improvement. Using the data you gather, you can analyze problem areas and root causes, implement fixes, and review changes after the fact to see how well those changes worked.
- How well your payment gateway provider is performing. Primarily, you need to know if your payment provider is giving you the tools to deliver checkout excellence. If they don’t have a fix for the problem areas you’ve identified, then they’re only contributing to the loss of sales—a clear sign that you need to make a change.
But even if you’re ready to start using payment metrics, how do you know what, exactly, to measure? Key performance indicators (KPIs) that measure different aspects of your payment system—payment conversions, successful transactions, fraud, and more—will give you actionable data you can use to make targeted changes. Your conversion rate is perhaps the most critical payment metric. Below are a few payment conversion KPIs to get you heading in the right direction.
3 Key Payment Conversion KPIs
Here are three KPIs to measure payment conversions:
1. Payment Conversion Rate
This straightforward metric tells you how many transactions on the whole were declined. If 80 out of 100 transactions were successful, you have an 80% payment conversion rate. There are many reasons why transactions are declined—incorrect card information, insufficient funds, invalid card numbers, suspicion of fraud, etc.—so the more detail your provider can give about the reasons behind declined transactions, the better. For example, if an unusually high number of transactions are declined due to possible fraud, your payment provider should be working harder behind the scenes to prevent this from happening. The issues that come to the forefront are the ones you should focus on addressing.
2. Conversion Rate By Bank
If multiple declines are associated with a specific bank, the bank may have recently adjusted its fraud rules, which, in turn, is impacting your sales. You can resolve this situation, but you’ll need more information about the declined transactions in order to do so, including the bank name and bank identification number (BIN) on the shopper’s credit card. Your provider should be able to provide reporting that shows you your conversion rates by issuing bank and BIN so you can easily identify problems.
3. Conversion Rate By Payment Method And Card Type
Even though it’s hard to know for sure if payment methods are the reason for declined transactions, knowing the conversion rate by payment method and/or card type will still give you some helpful data. It’s a good practice to track the performance of newly added payment methods—the addition of eWallets, for instance—for comparison to your existing offerings to stay on top of customer preferences and payment trends. It’s also useful if you’re considering redesigning your checkout page to make your highest-performing payment types more prominent. In that case, the data you gather can be used to maximize your conversions.
Want more payment processing KPIs?
To get the most out of payment metrics, you should be measuring more than just payment conversions. Other areas of your payment process can be just as revealing when it comes to identifying opportunities for improvement.
If you’d like to get more information about payment metrics, as well as nine additional insightful payment processing KPIs related to fraud, transaction success rate, and more, download our Payment Processing KPI Library for free. It includes all the key metrics you need to continually improve your checkout experience and convert and protect more revenue. Do more to encourage transaction success for your business—download the KPI Library, and get started measuring today!