Payment failure rate is the percentage of attempted payments on your site that do not go through, whether because the card issuer declines them, the shopper fails or abandons an authentication check, or something breaks between your checkout and the bank. It is calculated as failed payment attempts divided by total payment attempts, multiplied by 100.
How payment failure rate works
When a shopper pays by card, the details travel from your checkout through your payment gateway to the card network and on to the bank that issued the card. A payment can fail at several points:
- Soft declines. The bank refuses for a reason that might pass on a retry: insufficient funds, a temporary fraud hold, or a generic “do not honour” response.
- Hard declines. The card is reported lost or stolen, expired or closed, and retrying will not help.
- Authentication failures. Under Strong Customer Authentication (SCA) rules, which the FCA has enforced for UK online card payments since 2022, most transactions need two forms of verification. The bank applies these through 3-D Secure, often invisibly, but sometimes it challenges the shopper to approve the payment in a banking app or enter a code. If the app does not open, the code never arrives or the shopper gives up, the payment fails.
- Your own rules. Fraud filters, address checks and blocks on certain card types reject payments before the bank sees them.
- Technical faults. A provider outage, an expired API key or a script conflict on the checkout page.
As a worked example, if a shop records 1,000 payment attempts in a month and 940 succeed, its payment failure rate is 6%. Decide whether you count each attempt or each order, because a shopper who retries three times can otherwise inflate the figure.
Why it matters
These are the most expensive customers to lose. They found you, chose a product, filled in every field and pressed pay. Any ad spend that brought them is already gone.
Failed payments also distort reporting. In GA4 they appear as people who reached add_payment_info but never purchased, which looks identical to a change of mind. A shop can spend months redesigning a checkout to fix checkout abandonment when the real problem is a decline pattern visible in the payment provider’s dashboard.
There is a balance with fraud. Rules that are too loose bring chargebacks; rules that are too strict quietly reject good customers. Neither shows up unless someone reads the reports.
Common mistakes
- Never opening the decline reports in the payment provider’s dashboard.
- A bare “Payment failed” message that gives the shopper no reason and no next step.
- No alternative once a card fails, such as PayPal, a wallet or buy now, pay later.
- Requesting a 3-D Secure challenge on every payment, removing the frictionless route banks would otherwise allow.
- Address-check rules that reject shoppers who type their postcode with or without a space.
- For subscriptions, no automatic retries or card updates when a saved card expires.
How to act on it
Export one to three months of payment attempts from your provider and group the failures by reason, device, card type and issuing bank. A cluster tells you where to look: many authentication failures on mobile suggest a problem with the hand-off to banking apps, while many fraud-rule rejections suggest your filters need loosening.
Then improve what the shopper sees. Write error messages in plain words using good microcopy, such as “Your bank needs you to approve this payment in its app”, keep the basket intact after a failure, and offer another way to pay. Apple Pay and Google Pay usually handle authentication on the device, which removes a step. Test the whole flow on a phone with a real UK bank card.
Payment flow is part of checkout design, which I review in website redesign projects together with tracking and page speed.