The main reasons for failed transactions and strategies for dealing with them

The effectiveness of a payment infrastructure is determined not only by the number of successful transactions but also by the depth of understanding of the reasons for failures. A high decline rate is not always a technical problem – in many cases, it signals strategic gaps in the design of the payment process, the settings of anti-fraud systems, or communication with issuing banks.

To fully grasp what is a payment orchestration, it’s important to understand that it’s more than just transaction routing — it’s a comprehensive approach to coordinating all elements of the payment stack, from gateways and acquirers to fraud tools and payment methods. Tranzzo applies this principle at scale to maximize acceptance and efficiency.

The Tranzzo team's analytics are based on processing millions of transactions every month with a wide geographic and industry coverage. This allows us not only to identify common causes of failed payments but also to design solutions that systematically reduce decline and chargeback rates while maintaining the security of the payment environment.

⬇️ Further in the article, you will get acquainted with our exclusive decline classification, quantification, and business impact assessment analytics. We will also look at practical mechanics that ensure a steady increase in acceptance rates.

One month of efficient payment infrastructure – companies have earned money, and customers have received quality service.

• However, 13.9% of all transactions during this period failed.

This means that almost a third of potential payments are not converted into business income. The Tranzzo team has conducted an in-depth classification of the reasons for failed payments, and the most common ones include:

• Insufficient funds on the card – 34.9% of all failed transactions
• Blocked due to anti-fraud system – 21.2%
• Exceeding the amount limit (merchant or payment system limit) – 17.39%
• Timeout during 3D Secure verification – 9.58%
• Incorrect card details – 3.6%

Technical failures (e.g., configuration errors, session termination, and incorrect input fields) are less common but critical in terms of user trust. Together, they account for more than 5% of all failed attempts.

‘Our goal is not just to process payments, but to provide businesses with analytical tools that allow them to respond to losses on time,’ comments Tatiana Solovey, Chief Product Officer at Tranzzo. – ‘We see that even a few per cent of failed transactions can equal thousands of lost payments per month. This is not a technical problem - it's a business risk that requires a systematic response.’

Tranzzo integrates its own analytical modules directly into the client's payment infrastructure, which allows it to:

• Identify bottlenecks in the payment funnel
• Tailor UX to user behavioural patterns
• Minimise losses through dynamic transaction routing
• And automatically retry payments in the event of a technical failure

As a result, companies using these approaches increase payment conversion rates up to 92–95%, even during peak periods. For complex business models such as marketplaces, Tranzzo also provides full support for Marketplace Payment Gateway infrastructure — allowing platforms to route, split, and settle payments across multiple vendors transparently and securely.

A failed transaction is not just the loss of a single payment. It is the loss of a customer, a decrease in conversion, the risk of a negative experience, and reputational damage. Systematic fraud management requires a proactive rather than reactive approach. The Tranzzo team implements a comprehensive strategy to minimise losses, covering both technical and operational aspects.

• Deep classification of refusals

The first step is the correct classification of decline codes based on ISO standards with an additional layer of internal detail. For example, code 05 (Do not honour) accounts for up to 35% of all declines on average in the market, but only its division into subcategories (blocking by internal limits, suspected fraud, bank refusal without explanation) allows us to build point solutions.

• Dynamic transaction routing

In cases where a payment is rejected by one bank, the Tranzzo system automatically forwards the transaction to an alternative acquiring bank through smart routing. This mechanism can increase the acceptance rate by up to 6-12%, depending on the market and industry.

• Optimisation of antifraud filters

Too aggressive antifraud settings often lead to rejections of green transactions. We implement a multi-layered risk assessment model that allows us to balance protection and conversion. For example, segmentation by country and device type allowed one of our e-commerce clients to reduce the false positive rate by 23% without increasing the chargeback rate.

• Support for ecommerce split payments
  Modern online business models — such as platforms that manage payouts between multiple sellers — require the ability to split incoming funds instantly. Tranzzo supports ecommerce split payments, allowing businesses to automate complex fund distribution scenarios while remaining fully compliant and transparent.

The number of failed transactions is not just a metric, but an indicator of the efficiency of the entire payment ecosystem. Tranzzo's analysis of millions of transactions clearly demonstrates that most of the reasons for failures are systemic and can be optimised. In particular, more than 45% of failures fall into categories that can be significantly corrected through correct routing, flexible anti-fraud settings, adaptive retry mechanisms, and active work with issuing banks.

Minimising losses in the payment process requires not just a reaction to the decline, but the introduction of structured analytics, adaptive technologies, and deep integration at the level of the payment infrastructure. This is exactly the approach we implement at Tranzzo.

Our customers get not only a payment solution but a strategic partner capable of scaling acceptance rates, reducing declines, and ensuring uninterrupted monetisation of products in any business model – from e-commerce to subscriptions, services, and marketplaces.

✅ Contact us to increase the number of hasty payments!