Online stores are becoming a crucial and dominant part of most businesses. And when the underlying payment processing technology is reliable and efficient, they can drive customer loyalty, growth, reach, and outperform traditional sales channels.
However, that’s not the case most of the time. There are many points of failure during payment processing, either due to technical issues or any other friction during checkout, which can lead to cart abandonment. This not only affects current sales but also potentially hurts the scope of business in the future with the same customer, as 62% of customers avoid returning to a website where they experienced a payment failure during checkout.
And this is just one aspect, there are many other factors that contribute to pulling your store’s bottom line down and affecting overall profitability.
To help you avoid these costly “frictions,” we’ll walk through seven common payment processing pitfalls that can seriously damage your online store’s performance. Understanding these challenges – and knowing how to fix them – can protect your revenue, strengthen customer trust, and support the long-term growth of your business.
Top 7 Payment Processing Pitfalls
1. Over-Enforced Fraud Protection
We know that robust fraud prevention measures are indispensable for safeguarding both businesses and consumers. However, an overly aggressive approach can inadvertently hinder legitimate transactions, leading to customer dissatisfaction and potential revenue loss.
Overly aggressive fraud prevention mechanisms are now inflicting severe collateral damage: in the U.S. alone, false declines put an estimated $157 billion of 2023 e-commerce sales at risk—$81 billion of which was permanently lost when customers abandoned retrials. Globally, false declines now dwarf genuine fraud losses, costing merchants approximately $443 billion annually compared to $48 billion lost to actual fraud. Research shows one-quarter of online shoppers experienced at least one false decline in 2022, and only 22% of those who faced a “soft decline” would definitively attempt a retry, highlighting how stringent screening erodes customer trust and conversion.
Even regulatory safeguards like PSD2’s Strong Customer Authentication, while instrumental in cutting card-not-present fraud rates, have inadvertently driven up decline rates for merchants struggling to implement complex SCA flows, hurting both conversion and customer satisfaction.
Fortunately, next-gen AI and machine-learning frameworks can intelligently adapt risk thresholds in real time, significantly reducing false positives and preserving revenue by ensuring legitimate transactions sail through, all without sacrificing security. Additionally, implementing user-friendly authentication methods, such as biometric verification or one-time passcodes, can enhance security without compromising the customer experience.
2. Siloed Payment Infrastructure
In today’s $4.8 trillion global e-commerce market, relying on fragmented payment systems leads to lost revenue and customer frustration. Payment orchestration platforms—solutions that unify gateways, digital wallets, buy-now-pay-later options, and cross-border payment rails under a single API—are rapidly gaining traction. Valued at $1.45 billion in 2023, this market is projected to soar to $10.3 billion by 2033, growing at a 21.2% CAGR. Integrated payment solutions, where payment processing is seamlessly embedded into e-commerce platforms, have become critical to meeting modern consumer expectations. Without robust integration, businesses risk clunky checkout experiences, higher cart abandonment rates, and missed opportunities to adopt emerging payment technologies.
Today, more than half of merchants manage five or more separate payment integrations. Without orchestration, they face up to 50% higher operational costs and can experience a 5–10% drop in transaction success rates during peak periods. In Europe, digital wallets already account for 30% of online transactions, a figure expected to rise to 40% by 2027. Merchants who fail to embed options like Apple Pay, Google Pay, or Pay by Bank risk losing up to a third of their customers at checkout. Meanwhile, in B2B commerce, embedded finance is creating a $140 billion opportunity by integrating invoicing, lending, and reconciliation into a single API, accelerating receivables and improving cash flow.
Looking ahead to 2025, the rise of alternative payment methods (APMs)—including digital wallets, Buy Now Pay Later (BNPL) services, and cryptocurrencies—is fundamentally reshaping e-commerce. APMs are forecast to account for over 60% of global online transactions by 2026, while traditional card payments continue to decline. Consumers now expect one-click checkouts, seamless mobile experiences, and the flexibility to switch between payment methods according to their preferences.
Businesses that fail to deliver a streamlined, integrated payment experience risk not only revenue loss but also eroding customer trust and loyalty. Today’s integrated platforms often come equipped with built-in fraud detection, subscription management, invoicing, and advanced analytics, enabling merchants to optimize operations from a single hub. Forward-thinking companies are increasingly choosing providers that offer interoperability, scalability, and the agility to support emerging payment technologies, ensuring they stay ahead in an ever-evolving digital economy.
3. Poor Mobile Payment Optimization
In 2024, mobile devices accounted for 57% of global e-commerce revenues, over $2 trillion, marking a 21.1% year-over-year increase. Yet, the average checkout abandonment rate hovers around 74%, with friction points like slow page loads, excessive form fields, and lack of digital-wallet options turning away would-be buyers.
A recent research finds that 65% of sites deliver mediocre or poor mobile checkout UX, although simple optimizations—responsive design, auto-filled fields, and one-tap payments—can boost conversions by up to 35%. Not only this, but integrating local mobile payment methods delivers striking gains—up to a 91% conversion uplift with Alipay in China and 47% with PayPal in Germany on mobile channels alone. Failing to optimize mobile payments risks missing out on peak sales windows. For example, on Thanksgiving Day last year, mobile spending hit a record $128.1 billion, a 12.8% increase year-over-year. To stay competitive, businesses must implement streamlined mobile payment flows—progressive web apps, dynamic payment skins, and under-two-second load times are no longer luxuries but necessities.
4. Invalid Card Information
Last year, more than 15% of subscription and recurring e-commerce transactions were declined on the first attempt, and roughly 23% of these failures were due to simple data-entry mistakes such as mistyped card numbers, expired dates, or CVV mismatches. Among merchants, decline code 14—“invalid card number”—remains one of the most frequent error codes, underscoring how a single wrong digit can halt a sale in its tracks. Even more alarming, data shows that 35% of customers abandon a merchant after just one card decline, turning potential revenue into a lost opportunity.
To head off these losses, leading retailers now deploy inline form validation, real-time BIN checks, and tokenization to catch entry errors before submission—measures proven to cut hard declines by up to 20%.
But if a payment still fails, a strategic dunning program can recover a surprising amount of revenue. In an analysis of over one million dunning emails, the very first message recovers 13.25% of failed payments, and follow-ups spread over 30 days push cumulative recovery above 30%. Even better, sending pre-dunning reminders—notifications issued 30 days before a card’s expiration—achieves a 14.37% recovery rate before any transaction fails. By combining proactive error detection, clear inline prompts, personalized messaging keyed to specific decline codes (for example, urging card updates for code 54 “expired card”), and a friendly yet urgent dunning cadence, merchants can dramatically reduce invalid-card losses and recapture revenue that would otherwise slip through the cracks.
5. Overlooking Hidden Payment Processing Fees
When it comes to payment processing, surface-level rates rarely tell the whole story. Many businesses assume they understand the cost structure after glancing at the advertised transaction fees, but hidden charges buried deep inside merchant statements often inflate true costs substantially.
Processing fees may seem straightforward—typically averaging between 2.24% and 2.40% of each sale—but the real cost often lurks far deeper in your merchant statement. Over 90% of small retailers report paying more in card processing fees than they initially budgeted, amounting to an average of $2,400 lost annually to hidden surcharges and ancillary charges buried in fine print.
Commonly concealed under generic descriptions like “service fee,” “account fee,” or “compliance charge,” these line items can include PCI-DSS compliance fees, batch processing fees, retrieval and chargeback fees, non-qualified transaction surcharges, and even early termination penalties. The blended rate can easily climb above 3.5%—and in some cases approach 6%—once these add-ons are factored in, particularly for high-risk industries or low-volume merchants.
These hidden charges can silently erode profit margins, especially for small to mid-sized e-commerce stores where every dollar counts. Certain providers also impose early termination fees, monthly minimum fees, or mark-up interchange rates, making it difficult for merchants to accurately forecast their payment expenses. Plus, industries deemed “high-risk” may face even steeper hidden surcharges on top of the already elevated base rates.
To avoid falling victim to these practices, merchants must rigorously audit their payment processor agreements and monthly statements, not just the headline rate. Look out for line-item charges that aren’t clearly explained and consider providers that offer flat-rate or interchange-plus pricing models for better transparency.
6. Customer Support Gaps in Checkout
Round-the-clock, fast, empathetic, and omnichannel customer support is no longer a “premium service” – it’s a core pillar of a successful payment experience. Recent studies show that 70% of customers now demand instant answers, and 91% want help in real time. AI chatbots and 24/7 live-chat widgets can boost conversion rates by up to 82%.
Retailers that combine live chat, email, social messaging, and phone support retain 89% of their customers, versus just 33% for those without a unified approach. Accessibility is also critical: by mid-2024, over 4,280 ADA Title III lawsuits named e-commerce sites for failing to meet WCAG standards. Merchants now add screen-reader labels, adjustable font sizes, and dedicated assistive-tech channels to avoid losing the 65% of shoppers who switch brands after a poor support experience.
To turn support into an advantage, embed “Need help?” prompts at checkout, use AI to surface the most relevant FAQs, and train your team on today’s payment options. These steps reduce friction, recover abandoned carts, and build lasting loyalty.
Ultimately, outstanding customer support isn’t just about fixing problems when they arise; it’s about making sure that technical obstacles don’t become business-killing moments. In a marketplace where one bad experience can permanently lose a customer, seamless and human-centric support during payment is a strategic differentiator.
7. Not Complying with PCI-DSS Regulations
Since April 1, 2024, PCI DSS version 4.0 has significantly increased requirements for card data security, making non-compliance more costly than ever. In 2024, the global average cost of a data breach rose to $4.88 million, a 10% increase from the previous year. Organizations that aren’t fully PCI compliant face not only the consequences of a breach but also hefty monthly fines and damage to their brand.
The new standards require merchants to implement stronger security measures, including end-to-end encryption, multi-factor authentication for access to cardholder data, and more rigorous testing and vulnerability assessments. Yet, only 27.9% of organizations worldwide report full compliance, leaving most businesses vulnerable.
To make matters worse, PCI DSS v4.0.1, released in June 2024, introduced future requirements such as continuous monitoring of critical configurations. Merchants must meet these by March 31, 2025, or risk falling out of compliance, even if their basic controls are in place.
Outsourcing to a third-party gateway doesn’t shield you from responsibility. Merchants still share joint responsibility for any lapses in cardholder data protection, and ignorance is not an excuse. To avoid severe fines (ranging from $5,000 to $100,000 per month), loss of processing privileges, and lasting reputational damage, e-commerce leaders must integrate PCI readiness into their development processes—conducting quarterly self-assessments, using automated compliance tools, and building security into every payment flow.
Is There Anything Else?
Bonus #1 Improper Storage of Customer Payment Data
Improper storage of customer payment data represents a critical security vulnerability, exposing merchants to substantial financial and reputational damage. In 2024, the average cost of a data breach approached $4.9 million, underscoring the stakes involved.
To mitigate these risks, organizations should adopt tokenization, which substitutes sensitive card data with irreversible tokens, and rely exclusively on PCI DSS–compliant payment gateways that enforce encryption, secure key management, and rigorous access controls. By prioritizing industry-standard data protection measures, businesses not only fulfill regulatory obligations but also reinforce customer trust and safeguard long-term brand integrity.
Bonus #2: Sticking with Outdated Payment Gateways
Continuing to operate on legacy payment gateways undermines both transaction efficiency and security, ultimately impairing customer satisfaction and revenue. Modern consumers demand rapid, frictionless checkouts—delays as brief as one second can decrease conversion rates by over 7%.
Contemporary gateways support digital wallets, one-click payments, real-time fraud detection, and seamless API integrations with back-office systems—capabilities absent from most outdated platforms. Upgrading to a modern payment solution ensures compatibility with evolving fintech innovations, enhances transaction reliability, and streamlines internal workflows, thereby preserving competitiveness and optimizing operational performance.
Bonus #3 Poor Integration Capabilities
Failure to integrate payment processing with accounting and inventory management systems introduces manual errors, processing delays, and opaque financial reporting, all of which erode profitability. Studies indicate that disconnected business processes can cost organizations up to 25% of potential revenue.
Implementing an integrated solution automates the reconciliation of payments, provides real-time inventory visibility, and simplifies tax and compliance calculations. Such integration not only minimizes administrative overhead and error rates but also delivers actionable insights into cash flow and stock levels—essential information for strategic decision-making, scalable growth, and sustaining a high standard of operational excellence.
Conclusion
If your online store is facing challenges like cart abandonment, hidden fees, poor mobile optimization, or outdated payment systems, it’s time to take action. Host Merchant Solutions offers seamless, integrated payment processing solutions designed to eliminate these friction points and boost your bottom line.
With robust fraud protection, transparent pricing, and cutting-edge technology, Host Merchant Solutions helps streamline your payment flow, improve customer satisfaction, and increase conversion rates. Don’t let payment processing issues hold you back—take the next step toward smoother transactions and greater business growth with Host Merchant Solutions today!
Frequently Asked Questions
How can I minimize false declines without compromising fraud protection?
To reduce false declines, use AI-driven fraud systems that adjust in real time, customize rules, and use step-up authentication for borderline cases. Regularly review declined transactions to fine-tune settings and reduce false positives by up to 20%.
What is payment orchestration, and why should I consider it?
Payment orchestration platforms centralize control over gateways, digital wallets, and cross-border options, improving authorization rates and simplifying reconciliation. They help businesses reduce costs and improve success rates while future-proofing payment systems.
How can I optimize my mobile checkout to reduce abandonment?
To reduce abandonment, use one-tap payment methods, enable autofill, and minimize form fields. Speed optimizations and Progressive Web Apps (PWAs) can further streamline the experience and increase conversions by up to 20%.
What hidden fees should I watch for, and how can I avoid them?
Watch for hidden fees like gateway charges, PCI-DSS compliance costs, and chargeback fees. Always ask providers for a complete fee structure and consider using flat-subscription or interchange-plus models to avoid surprises.
How do I ensure PCI DSS compliance for my online store?
To ensure PCI DSS compliance, use end-to-end encryption, multi-factor authentication, and regular vulnerability assessments. Outsourcing to a gateway doesn’t eliminate your responsibility—verify compliance and conduct self-assessments to avoid fines.
