Payment Monitoring System: How to Track and Improve Your Payment Performance

At many companies, payment processing is an overlooked part of their day-to-day business operations. While you might carefully monitor the output of each factory line, it’s easy to forget about monitoring the rate of chargebacks from international card payments. 

As a business, you can’t afford to overlook your payment monitoring system. Hidden issues can lead to card declines, cart abandonment, fraudulent transactions, and lost revenue. With real-time transaction monitoring, you don’t have to wait for your merchant account statement to discover lost revenue. Instead, you can get immediate feedback and make timely updates to improve your company’s payment processing.

To learn how payment monitoring works and the key metrics you should track, read on.

TL;DR

• While payment transaction monitoring is often forgotten, it is a key tool for avoiding abandoned carts, declined cards, chargebacks, fraud, and lost revenue. 
• With a payment monitoring system, you can track the entire flow of the transaction from the moment of checkout to settlement.
• While payment monitoring is designed to track the flow of payments, transaction monitoring is a compliance requirement that focuses on catching crimes and fraudulent transactions.
• Real-time visibility is essential because even a few hours or days of processing errors can lead to thousands of dollars in lost revenue.
• If you experience errors or timeouts, it is often due to a processor or system issue.
• Device anomalies, duplicate attempts, and geolocation mismatches are a few examples of risk signals that can identify security issues early.
• Latency is an indicator of how long your payments take to process. Poor latency rates indicate 3DS problems, processor degradation, or similar issues that need to be resolved.
• A high rate of chargebacks can threaten your revenue stream and your account standing. By looking at the reason codes, channel, and similar factors involved, you can identify commonalities and resolve some of the underlying reasons why chargebacks occur.

Real-time monitoring can help you improve visibility, prevent fraud, optimize your payment flows, and improve your customer experience.

What Is Payment Monitoring?

A payment monitoring system is designed to track and monitor the flow of your transactions. It monitors your payment flow from the initial checkout process through capture and settlement. Once the transaction is complete, payment monitoring also tracks refunds and chargebacks.

Through payment monitoring, you can discover if you have availability issues with your payment gateway. You can monitor your speed, the rate of success, reconciliation issues, and fraud rejections. If you aren’t currently using real-time transaction monitoring, you may be experiencing more customer friction and lost revenue than you should be.

While payment monitoring and transaction monitoring sound like the same thing, there are subtle differences. Payment monitoring is designed to track your payment flow and notice problems with your payment processing system. In comparison, transaction monitoring is a compliance term and involves looking at each transaction for signs of fraud, terrorist financing, money laundering, and similar issues.

Why Businesses Need Real-Time Visibility Into Their Payment Performance

When it comes to payment transaction monitoring, you can’t afford to wait weeks to discover potential problems. If there is a problem with your payment system, it can instantly result in lost revenue and upset customers. For example, a sudden drop in your approval rate for a few hours can result in thousands of dollars in lost revenue if you’re a fairly large business. Similarly, your payment monitoring system can show if your fraud prevention rules have been misconfigured.

What Should You Be Monitoring?

Real-time transaction monitoring doesn’t involve looking at a single up or down indicator or a set score. Instead, there are multiple metrics you should review to determine if there are problems in your payment processing setup. The following metrics are just a few of the most important ones to monitor.

Approval Rates

Your approval rate is a clear indicator of your revenue health. A sudden drop in your payment acceptance rate may indicate 3DS problems, changes to your routing, processor-related issues, problematic checkout changes, and other challenges. 

Some variation in your approval rates is normal. For example, you may frequently have higher decline rates on Thursdays before many people get paid and lower decline rates on Fridays. The big issue is when your approval rates don’t follow their normal variation pattern.

Errors

While a card decline can occur due to a legitimate issue, errors are primarily because of problems with your processor or payment system. You should track your timeout rate and gateway error rate. Also, note error spikes that occur with different devices, checkout flow, or other factors. Ideally, you want a low error rate and a timeout rate as close to zero as possible.

If your error rate does increase, this may be due to a provider outage, network problems, DNS issues, or changes with your API integration. Whenever errors occur, alternative routing and other measures can help you resolve the immediate problem. Afterward, adjustments should be made to keep the same errors from being repeated in the future.

Latency

Your latency rate represents how long it takes for a payment step to complete. When someone says you have a high latency rate, what they mean is that a high percentage of your transactions take longer than the latency threshold you’ve implemented. 

Depending on your setup and goals, you may want to track your end-to-end payment latency or gateway round-trip latency. End-to-end payment latency tracks the amount of time it takes from a customer clicking pay to seeing a final outcome. Meanwhile, gateway round-trip latency looks at how long it takes for one API call to go from your system to the processor and back.

Poor latency rates can occur because of processor degradation, 3DS problems, and retry storms. They can also take place due to some kind of internal slowdown. Changing your retry policy and adjusting timeouts can help you troubleshoot high latency rates.

Risk Signals

A number of risk signals can be used to spot payment security vulnerabilities, fraud, and similar issues.

• Fraud Decision Outcomes: These show fraud decision outcomes, such as accept, reject, and review. They reveal sudden spikes in rejections.
• Device Fingerprint Anomalies: Real-time transaction monitoring can spot common signs of bot activity and help to reduce scripted fraud.
• Duplicate Attempts: This risk signal tracks when the same card, account, or device tries to process the same transaction in a short amount of time. A high rate of duplicate attempts can represent fraud. Alternatively, issues with your latency or user experience may be causing customers to click multiple times.
• Geolocation Mismatch: When the billing country or zip code doesn’t match the IP address or device location, it may indicate account takeover or fraud.
• Refund Abuse: If an individual customer has a high refund rate, it may be a sign of refund abuse or fraud.

Chargebacks

Chargebacks are when a customer uses their issuer to force the reversal of a transaction. If your chargeback rate is high enough, you may have to work with a high-risk merchant account provider or face higher reserve requirements. 

When a chargeback occurs, it is sorted by the reason code, marketing channel, issuer, payment method, and similar factors. This type of sorting helps you figure out why chargebacks are happening so that you can prevent them. By preventing fraudulent transactions, slow shipping times, inaccurate product descriptions, and customer service issues, you can often prevent chargebacks from taking place.

Key Payment Monitoring Metrics

To optimize your payment transaction monitoring, start by tracking the following important metrics.

How Payment Monitoring Helps Your Business

By using a payment monitoring system alongside your payment processing setup, you can improve your routing, visibility, fraud control, and overall customer experiences. Plus, you can identify payment processing issues before they spiral out of control.

• Enhanced Visibility: With payment transaction monitoring, you can gain better visibility and processing control. You can track your conversion rate, monitor provider-based transaction caps, and see your transaction volumes.
• Better Routing: Through payment monitoring, you can see which payment path is performing the best. This allows you to dynamically route traffic and shift transactions when partial outages occur.
• Improved Fraud Control: When you notice CVV mismatches spike or a sudden increase in 3DS failure rates, you can immediately tighten security measures in the affected area. This allows you to reduce your chargeback rate and prevent fraudulent transactions without negatively impacting your customer experience.
• Earlier Problem Discovery: Payment failures can go unnoticed at first. By monitoring the payment type, location, and other factors involved in each failure, you can spot and remedy problems before they escalate.
• Improved Customer Experience: By ensuring fast, efficient payment processes, you can enhance your customer experience. Better payment processing systems ensure fewer support tickets, better conversion rates, and improved customer retention.

How PayCompass Supports Strong Payment Monitoring

At PayCompass, we offer real-time visibility into your transactions. Our unified gateway offers high-tech security measures and convenient features, so you can monitor payments 24/7. 

By providing you with immediate insights into your payment flow, we help you discover common errors and signs of a problem before they escalate. Our advanced analytics mean you can easily track important metrics to optimize your routing. Combined, these tools allow you to reduce the incidence of fraud without impacting your overall customer experience. 

Final Thoughts

In today’s competitive world, real-time transaction monitoring isn’t just a nice option. For your company to succeed, you have to have immediate insights into how effective your payment processes are. From slow routing to recurring errors, payment monitoring ensures you can find and resolve problems before they spiral out of control.

By tracking the most important metrics, you can gain a nuts-and-bolts understanding of how your payment processing system works. Approval trends, chargeback rates, error codes, end-to-end latency, and other metrics can signal when there is a disruption in your payment flow. Once you know why a problem is occurring, you can find an effective way to prevent it from happening again in the future.

Through your payment monitoring system, you can develop more resilient, effective payment processing methods. To learn more about payment transaction monitoring, reach out to the experienced payment processing professionals at PayCompass.