Comment by js2 | Hacker News Reader

Comment by js2 | Hacker News Reader

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> (An example which is just a boggling fact about the world: what’s your finger-to-a-wind guesstimate about what percentage of credit card payments fail with error code I Don’t Know Sometimes Things Fail In Credit Card Land? Hint: it’s higher than you think. Those failed payments cost conversions at the margin. When Stripe fights that number down by a basis point, that creates value across our entire portfolio, forever.)

I have no idea what the percentage is but I recently had a decline I think may have been from Stripe itself.

A few months back I’d dropped my car off at the shop and tried to Lyft home. I’m a very infrequent Lyft/Uber user. Lyft refused to accept my payment. Tried with two different cards (Chase, AmEx) both directly, via Apple Pay and via PayPal. Couldn’t hail a car.

So then I try with Uber. Same thing! Payment rejected, no car for you.

I wrote to both Lyft and Uber customer support. Never heard back from Uber. Lyft claimed my card was denied (“It appears that the card is not working due to a decline from your bank. Because the information we receive about bank declines is very limited, you’ll need to reach out to your bank directly for more information as to why the transaction was denied.”) I contact both my card companies - they tell me there are no blocks on my card nor anything that would cause the payment to be rejected.

The only thing I could find Lyft/Uber had in common was they both used Stripe.

(But that doesn’t explain not being able to pay via Apple Pay/PayPal unless those somehow route through Stripe.)

Never did figure out what it was (“Jay, I had checked and verified that the last four of the card that you have provided is already added on this account. There shouldn't be any issues in requesting for a ride. If you had any issues with your Lyft request. Please kindly send a screen shot so that we will be able to see and rectify the issue.”) and haven’t had cause to use Lyft/Uber since.

This incident is the only time I can recall payments being rejected like that. I think Chase once temporarily blocked an Internet payment, sent me a notification immediately, I indicated the charge was legitimate, tried again and it went through.

Oh well. (I ended up getting a ride home in the shop’s customer service van.)

Not sure about their Paypal integration but worth noting that with ApplePay, they're likely still using stripe as the processor (ApplePay generates an authorized payment token which is then passed to Stripe for processing). So if there was a Stripe problem, ApplePay being busted too makes sense.

I'm fairly certain that, unless they changed in the last couple years, Uber is using Braintree as their payments provider.

I think they use both according to some Googling I did at the tome. A common payment provider seems like the most likely explanation to me so unless Uber also uses Braintree that would rule it out. It's possible something about this purchase was triggering fraud detection on two completely independent systems, which would be dismaying since this was a legitimate charge.

I'd guess half a percent? Can't imagine it being much higher?

It's huge. Like "you'd never believe it if you couldn't see it with your own eyes" huge.

As a data point, one business I work with offers subscriptions, and sometimes the majority of its entire churn is caused by unexplained failed card charges from Stripe. For comparison, where Direct Debit schemes are available in Europe and used by that business, they essentially never exhibit unexplained charge failures.

To put that in terms of somewhat realistic numbers, say you have a 97% retention rate on a typical monthly subscription for some SAAS offering. After 12 months, just from attrition, you have lost more than 30% of the subscribers you had at the start of the year. This is why improving retention for subscription business models is such a big deal. Now suppose you have a 92% retention rate, because you're losing an additional 5% of subscribers each month due to failed charges. After a year, you have lost over 63% of the subscribers you started with. That's a devastating difference.

Now suppose you are also attracting new subscribers at a respectable 10% per month. In the first case, you have net 7% growth per month, meaning your business will be around 125% bigger at the end of the year. That's more than double its previous size -- yay for hockey stick growth charts! But in the second case, with just 2% net growth per month, your business is only 27% bigger at the end of the year. The 5% losses due to unclassified failed card charges have basically cost you as much as your entire business made last year in terms of lost growth.

Stripe do seem to be aware of the problem, because they have rolled out a number of systems over the years for retrying failed transactions and the like. Unfortunately, these systems have often been rather complicated, incompletely documented, and most importantly almost entirely untestable before deployment, which seriously undermines their value.

In our experience, shifting subscribers to other payment methods can be an effective solution if it's an option, but of course in places like the US card payments still dominate. If that's where your customers are, you could probably save a lot of lost business by handling those failure flows better. Just be aware that with Stripe in particular, you may have to read between the lines in the documentation, put your first integration into production largely untested, and then rely on monitoring your logs to pick up and deal with problems if you've done anything wrong.

That would have been close to my estimate prior to joining.

The actual number is more than an order of magnitude higher, across the industry, for fifty years. Insert "this is fine" gif here.

If anyone thinks "Oh wow that isn't fine" I'd encourage you to join the team working on it.

Bank declines are 10-20% of total card volume, depending on industry.

Most of those are going to be straightforward insufficient funds or fraud though, I'd assume?

Sadly, your assumption is incorrect. Some of the time, as a merchant, you do get a specific indication of problems like insufficient funds or an expired card. The problem we're talking about here is all the other failures, where you just get some entirely unhelpful generic code that translates roughly to "declined, for reasons we're not going to tell you". From personal experience, this second group can often represent the much larger share of total failures.

When a generic code comes back, you don't get your money, but in a not insignificant number of cases, you do get an upset customer contacting you to ask why their payment didn't go through when their card should be fine and they've been using it with you for a year now and they just used it this morning at their local store with no problems. You can understand their frustration.

The reality is that most people don't realise how horribly unreliable the card payment infrastructure we rely on actually is. They can and will blame the merchant who declined their card if they don't know of any reason that it shouldn't have worked. Even if they don't blame the merchant explicitly, having their card declined causes a lot of people some embarrassment, and that is not a reaction you want associated with your store or service if neither you nor your customer has done anything wrong.

Disclaimer: I'm not familiar with these specific numbers.

Anecdotally I've had my own cards denied because I've reported my card missing and had to get new numbers. This is fairly common from what I've seen, many people I know have had issues because of this (late fees, etc.). Just another case I thought I'd add, as we sufficient funds and it wasn't fraud.

If you report your card missing then it's no longer a valid number.

Except for recurring payments, at least with AmEx.

I’ve had Apple Pay payments get rejected due to internet issues — make sure you’ve a solid LTE signal, not on dodgy wifi, and perhaps flip back to airplane mode temporarily next time it happens.

Thanks, was on LTE. Had no trouble interacting with either app, adding payment method, using the Internet, etc. It was just the payment being rejected. I think this had to be a common payment provider issue, and who knows what fraud detection flags I was triggering for whatever reason.

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