Why do online payments fail, and how to fix them?
16 June, 2025
Synopsis:
Online payments may fail due to bank-related issues, payment gateway errors, user errors, and external factors.
If a payment fails but money is deducted, the refund is processed within five to seven working days.
Enter the correct card/UPI details and use a stable internet connection to ensure smooth transactions.
Online payments have become the backbone of modern transactions. Whether it’s shopping online, paying utility bills, or booking tickets, you can pay online and do everything within seconds. However, one of the major challenges you may face is payment failures while paying online. The payments do not go through even after the money is deducted from your bank account. Such situations may cause significant hassles that can’t be explained in words.
To safeguard you from such hassles, we have explained the most common online payment failure reasons below and provided actionable solutions to ensure smooth transactions. Continue reading.
Common reasons for online payment failures
If you are wondering why online payments fail, here are the most common reasons:
Bank-specific issues
Sometimes, online payments fail due to bank-related issues. It may decline transactions due to insufficient funds, incorrect Debit or Credit Card details, or security restrictions. Even if your account is in good standing, banks might flag certain transactions as suspicious, leading to an online payment failure message.
Payment gateway errors
The payment gateway failure reasons could include technical glitches, server overloads, or miscommunication between the gateway and the bank. These reasons can prevent the transaction from going through, even if your bank approves the payment.
User errors
Most of the time, online payment failures are due to user errors. Entering incorrect card details, using expired or blocked cards, or failing to authenticate the payment (e.g., not entering the correct OTP) are the most common payment failure reasons.
External factors
External factors, such as network issues, power outages, or even maintenance downtime by banks or payment gateways, can also lead to online payment failures.
Server or API failures
Some common reasons for online payment not accepted include API errors, server downtime, and incompatibility issues. When such problems occur, merchants must work closely with the payment gateway service provider to resolve them.
What happens when a payment fails?
When an online payment fails, one of the two scenarios occurs:
Payment failed, but money was deducted
This happens when the money is deducted from your bank account, but the transaction is not completed. In such cases, banks and payment gateways usually process the refund within five to seven business days. If not, you can contact the customer support team.
Payment declined instantly
Sometimes, transactions don’t even initiate, and you receive an online payment failure message immediately. It usually happens when you enter incorrect card details or OTP (One Time Password). It may also occur due to bank restrictions or security measures.
Troubleshooting payment failures
Whether you are a customer or a merchant, here are the steps to resolve declined online payments and ensure smooth transactions:
Steps for users:
Make sure you are entering all details correctly. These include card number, CVV, expiry date, and the OTP. Double-check the details before clicking on the “Submit” button.
Ensure you have sufficient funds in your bank account or Credit Card limit before initiating a payment.
Try UPI, NetBanking, or digital payment wallets if your card doesn't work.
Cross-check if you have activated online payments on your Debit/Credit Card. Also, check the payment limit.
Steps for merchants:
Optimise payment gateway settings to ensure smooth communication between banks and your system.
Keep track of failed payments and assist customers with troubleshooting payment failure issues.
General best practices
Use a stable internet connection to avoid transaction timeouts.
Retry after a few minutes if the server is temporarily overloaded.
Ensure your payment method is active and updated with the latest details.
How to prevent online payment failures?
Here’s how to fix payment gateway errors and ensure smooth transactions:
Enable SMS or email alerts for transactions
You can contact your bank to enable SMS and email notifications for all online transactions. Doing so may help you detect whether a transaction is successful and track unauthorised payments.
Regularly update payment method details
Entering an incorrect card number, CVV, or expiry date is one of the most common reasons for online payment not being accepted. You must regularly update your card and UPI details if you have saved payment methods on an app.
Use an alternate payment method
Switching to UPI, digital wallets, or another Credit/Debit Card can save the day if one payment method fails.
Also Read: Know about the Different Types of Payment Gateways
Conclusion
Online payment failures can be annoying and dangerous. You could lose out on the best offers while shopping or fail to book a travel ticket on time. By understanding common payment gateway failure reasons and steps to avoid them, you can take quick action and ensure seamless online transactions without interruptions.
For merchants looking to offer customers a smooth and secure checkout experience, the HDFC Bank Payment Gateway provide a robust, reliable, and customisable solution. It helps reduce transaction failures with real-time payment processing, supports multiple payment modes, and ensures better communication between your systems and the bank. With HDFC Bank, enjoy smooth and secure online bill payments in just a few clicks - for both users and merchants.
Disclaimer: *Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances.
