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Dec 21, 2020

How COINQVEST Detects and Mitigates Payment Exceptions and Buyer Errors

Cryptocurrency payment processing is inherently different from traditional methods of online payment (such as credit card charges). To succeed, blockchain transactions must be correctly initiated by customers. Unfortunately humans are prone to mistakes and things can go wrong. This post explains how we detect and mitigate payment exceptions and user errors.

Payment gateways that operate with credit card charges have a fairly easy life. They bill a certain amount to a credit card in a synchronous process and and get that exact amount in return. Cryptocurrency payment processing on the other hand is asynchronous. Customers first acquire the required payment price for a product or service and are then responsible to correctly send that payment amount from their wallets themselves. What might seem like a trivial task for some can be overwhelming and complicated for others. The human factor opens the door to a whole world of complications that a good crypto payment processor needs to be able to address and provide solutions for.

One of our primary goals is to provide a smooth and painless payment experience for our merchants and their customers alike. We spent a lot of our time in 2020 observing and collecting metrics on mistakes customers make when initiating payments and identifying recurring patterns. Based on this data and our overall experience, we prioritized building flexible mitigation tools to minimize the need for manual intervention by our staff and merchants.

Underpaid Charges

The most common mistake customers make is to send less than what their merchant billed them. Some customers deliberately try to send a smaller amount to see if they might get lucky in saving a few bucks, others produce copy-and-paste errors, forget the last few decimals, or work with poor quality custodial wallets that deduct a fee for outgoing payments. In all these situations the outcome is the same, namely the merchant not receiving the full payment amount, which is needed to close the charge and ship items or services.

When COINQVEST detects an underpaid amount, it automatically displays mitigation information to the customer and sends notification emails to the merchant and customer with instructions on how to resolve the issue. By default, the customer is prompted to pay the remaining amount.

Underpaid Checkout

Most of the time customers are able to resolve their underpaid charge by following the instructions displayed on their screen (or in the notification email). They're prompted to pay the remaining amount and once that is, received the checkout completes.

In some cases, however, they are left in a situation where they can't complete the payment. They either don't have enough funds, or the remaining payment amount is below the minimum withdrawal amount on their custodial wallet (an exchange for example). COINQVEST provides an interface to deal with that type of situation. Merchants have the option to resolve this issue by either:

  • accepting the underpaid amount
  • requiring the customer to complete payment
  • issuing a refund

Accept Underpaid Checkout

Overpaid Charges

Another mistake we frequently see is customers overpaying for a charge. This usually happens on slow blockchains like Bitcoin or Ethereum. For example, customers send the transaction but it takes a long time for it to be confirmed. They think they did something wrong and send another transaction. When both the transactions eventually are confirmed, our system ends up with two full payments for the exact same charge. The solution for this type of situation is to refund one of the payments and keep the other one and we provide a UI to do this conveniently.

Refund Overpaid Checkout

Mixed Exceptions

We have seen wild situations where customers first underpay, then underpay again, and eventually send too much. We identify these type of exceptions and random combinations thereof and provide interfaces to mitigate them with minimal effort.

Other Exceptions

Last but not least, there are numerous other exceptions that can happen -- particularly when dealing with conversions. Market and exchange rates can expire, blockchain submission timeouts can occur, memos or destination tags that uniquely identify payments can be forgotten by customers, or funds can get stuck with our partners who provide on-ramping services to the Stellar Network. It is our job to minimize the effort needed to resolve such issues on merchant and customer side.

Other Exceptions

A lot of mitigation can be automated and we're continuously working to provide the best possible experience and exception handling in crypto payment processing. I guess it is worth pointing out that blockchain payments cannot be lost since they're written to an immutable public ledger. If a payment was sent to us incorrectly there are always ways to fix it.

Other Exceptions

We Love to Help!

If you have ideas or requests on how to improve our exception handling, please feel free to contact us. We're always looking for feedback.

mitigationpayment exceptions
Marcin Olszowy COINQVEST Co-Founder