Following a recommendation from the ERPB (Euro Retail Payments Board), the European Payment Council now supervises the correct use of SEPA direct debit r-transactions and releases an r-transaction report every semester.
The latest report is based on detailed r-transaction data collected from European banks during 2015 Q4. The analysis includes r-transaction rates, reasons for transaction failures and most importantly for merchants whether it is possible to “retry” the failed transactions.
The report does not specify the total value of all r-transactions. However, it does state that r-transactions account for approximately 3% of all domestic transactions (equivalent to 77 million failed transactions) and 3.5% of international transactions (equal to 4 million failed transactions). Thus, we can surmise that the total value of all these r-transactions represents a significant loss. The reasons for the failed transactions are depicted in the graph below.
AM04 = Insufficient funds
MS03 = Not Specified Reason Agent Generated
Source : European Payments Council, Reporting on R-transactions – period Q1 2016
Two of these r-transaction causes are of interest to us: AM04 et MS03. AM04 corresponds to insufficient funds on the debtor account. MS03 represents transactions that have failed for a non specified agent generated reason, which is more often than not also caused by insufficient funds on the debtor account. Certain banks classify failed transactions due to insufficient funds as MS03 due to privacy regulations.
The AM04 and MS03 errors are notable because combined they account for over 50% of failed transactions and are therefore a fundamental cause of lost revenue. However, it is possible to reattempt these type of r-transactions. If a transaction failed due to insufficient funds, it is worth re-attempting the charge at a later date when the account if likely to have sufficient funds.
The challenge now for companies is to win back these r-transactions in a secure, efficient and transparent manner for both merchants and customers.
To answer this challenge SlimPay has developed its “Automatic-Retry “ feature that allows merchants to easily reduce the number of failed transactions through an automated process that retries failed transactions, keeping customers on track for future transaction! Read more HERE!