16. Understanding Success Rate

‘Success Rate’ is the most important parameter that every merchant is interested in. In every sales pitch, merchant asks question on this and every sales person jumps in with answer ‘we are the best in the industry’.

There are various ways a success rate is measured. The numerator always remains same (i.e. successful transactions) but denominator can be,

• Total transactions initiated by merchant
• Total transactions received by aggregator

Note: Above two should be same (if difference is high then it is a concern)

• Total transaction initiated by merchant — user cancelled cases
• Total transactions initiated by merchant — User cancelled cases — User mistake cases

Note: Some merchants may omit use related dropouts from calculation. Why hold payment service provider responsible if user is not interested in paying?. Things become complicated when you are not sure whether user dropped out because of she does not want to proceed further with payment or she is not able to proceed further (e.g. bank page is taking forever to load, so user pressed back button).

Success rate can be measured on various levels and combinations: Overall (across all payment modes), payment group (card, net-banking), card type (CC, DC), Card scheme (Visa, MasterCard, RuPay etc.), Issuing bank (HDFC, ICICI), net-banking banks (SBI, Canara etc.), Channel (website, mobile App) or combination of all (Visa debit cards of SBI on Android App)

How much success rate matter?

Example A: 100 users did transactions but 20 transactions failed. So what is the success rate?

Straight forward, Success rate = 80%…. right?

View 1: Vodafone ‘post-paid’ customer has to pay the bill before due date. So those 20 failed transaction customers paid the bill within a week. So what is the success rate now… 80% or 100%?

View 2: If you are Flipkart, then out of those 20 failed transaction customers 10 may not come back to buy or buy from other site. So success rate is 80% or 90%?

Example B: A customer tried to make payment and failed 4 times but finally succeeded. So what is the success rate here? 20% or 100%

Merchant didn’t lose ‘sale’ as customer paid anyway. Also, it is possible that first 4 times transaction failed as customer had entered wrong expiry date.

So what does success rate stand for your business: loss of revenue or just inconvenience. And also, whom do you hold responsible for the success rate (payment service provider, customer or yourself i.e. merchant)

Some cases that I have witnessed that gives insights on success rate.

Example A: Mutual Fund Vs. E-Commerce

Success rate is not as important for Mutual Fund merchant as to an E-commerce company. A MF merchant knows that customer will try again as wants to invest but e-commerce merchant fears that customer will defer the purchase

Learning: Value of success rate varies from business to business

Example B: Food Vs Travel

A food ordering merchant will witness better success rate than a travel portal. Because intent of purchase is higher for food order but a user might have opened 3 travel portals and checking discounts and finally buys in one place (drops in other two) or defer purchase

Learning: Watch out for user cancelled cases or intent of purchase

Example C: High End Fashion Vs. Generic E-commerce

A high end fashion apparel merchant might have better success rate than generic e-commerce. Because high end fashion apparel merchant has urban customer base with better data connectivity/Wi-fi but large e-commerce merchant’s users are spread across tier 2 & 3 towns where data strength is weak.

Learning: Demography and users environment counts

Example D: Confusions in checkout flow or offers

A major e-commerce merchant complained about bad success rate on SBI net-banking. Upon analysis, we realised that merchant was running offer on SBI Cards but users were confused as they were reaching till SBI net-banking page and cancelling transactions

Learning: Checkout flows should handle such promotions with better flow and messages

Example E: Compare Apple to Apple

A merchant referred to a summary report of an aggregator and complained that our success rate is 5% lower compared to our competition’s success rate. On detailed analysis, we realised the our competition was not including user aborted cases in success rate calculation so obviously success rate was looking better

Learning: Use same formula for all payment service providers (do your calculation than relying on others’ dashboards)

Example F: RuPay Vs. Visa or Allahabad Bank Vs. ICICI Bank

One of my merchants keep coming back with complain that success rate on RuPay transactions are not great compared to Visa or MasterCard. It is simple case that RuPay infrastructure is not as robust as Visa/MC infrastructure so in general, RuPay success rates will be lower.

Similar way, in net-banking the success rate of Allahabad Bank will be lower than ICICI bank.

Learning: Have right expectations from payment methods.

Example G: When Issuing bank is down

Success rate on a particular issuing bank dropped. I got call from merchant that performance based routing configured by us is not working but merchant failed to see that if issuing bank is down then it doesn’t matter which acquiring bank we use.

If ICICI issuer is down then it doesn’t matter whether you use Billdesk or IMSL. Similarly, if SBI net-banking is down then irrespective of aggregator you use the bank will not be available for transaction processing.

Learning: Sometimes waiting is the only option or proactively inform customer about bank’s downtime so that customer can either comeback later or try alternate option

Example H: Website Vs Mobile

Success rate on website varies from that on mobile. Reason may include, website may be for discovery but payment happens on mobile or vice a versa. Website transactions happen in WiFi compared to mobile transactions that sometime rely on 3G network.

Learning: Success rate will vary from channel to channel for various reasons

Example I: Count… Counts

Out of 2 transactions, if 1 fails then success rate will be 50%… too bad. But if you take 100 transactions and 10 fails then success rate will be 90%.

Learning: More the data pointers, more accurate will be calculations.

I have come across merchants who have asked questions such as ‘can you guarantee 90% success rate?’ or ‘can improve success rate of RuPay cards by 10%?’. Such questions doesn’t make sense but below is the answer.

Payment ecosystem involves various entities and actors. Whenever there are multiple moving parts then every part becomes potential failure point. Along with technology, bank and processor integrations, the intent of purchase, ease of payment, user base, user environment and checkout flows play vital roles in achieving better success rate.

The goal is to improve the success rate and both payment aggregators and merchant can take few steps to improve the conversion rate.

Next Topic: Improving Success Rate