Credit card declines can happen for a lot of different reasons—bad timing, compatibility issues, bad communication—even fraud. But the trick to both declines and rejections is knowing when to try again and when to let it go.
A credit card decline is when, for whatever reason, a credit card payment cannot be processed. It can be caused by the Payment Gateway, the processor, or the issuing bankIssuer Issuer (or Issuing bank) A bank that issued a card for a shopper to make cashless payments via an ecommerce website, inside a mobile app, or in a physical store. To be able to issue a card, an issuer must be a member of one or several card networks. Sometimes a shopper’s bank is referred to as an issuer even if there is no card issued. This is to distinguish between a shopper’s bank, which sends funds, and a merchant’s bank, which acquires funds..
The payment gateway and processor are both third parties that work together to complete a transaction. The payment gateway denies and approves transactions and securely transmits online payment data to the processor. The processor then transfers payment to the merchant’s bank account.
The issuing bank is the customer’s bank account from which the credit card pulls funds.
Now let’s talk about the different types of declines.
Hard Declines
A hard decline is when the issuing bank does not approve the payment. In other words, hard declines are permanent authorization failures and should not be retried. These failures may be caused by:
- Stolen Card
- Invalid Card
- Closed Account
When a hard decline occurs, the problem originates with the issuing bank or the processor.
The problem with hard declines is that retrying the card numberPrimary Account Number (PAN) Card number (PAN) Every payment card (be it a debit, credit, gift, or a similar card) has a unique number associated with it. This number is usually printed on the card and required to uniquely identify this card and to refer to it in every transaction. The whole card number is called Primary Account Number (PAN), and the first six or eight digits of it are also called the Bank Identification Number (BIN). Also, a card may contain a card security code, which, along with the card number, can be used in card-not-present transactions. doesn’t work, even if the decline happens on a renewal. With hard declines, the only guaranteed way to prevent losing the payment is to have the customer fix the problem. Which most likely means they’ll have to give you a new credit card.
Soft Declines
A soft decline occurs when the issuing bank approves the payment, but the transaction fails at some other point in the process. Some typical reasons for a soft decline are:
- Insufficient Funds
- Processor Declined
- Card Activity Limit Exceeded
- Expired Card
- The Purchase is Unusual
- The Billing Address and the IP Address Do Not Match
- The Card is Being Used Abroad
The good news about soft declines is that the transaction failure is temporary. So, you can retry the card in one or two days after the decline occurs and hope for valid authorization.
Of all declines, the majority fall into the soft decline category. This is great news because that means you have the opportunity to save these types of failed transactions.
But even though you have a good chance of saving a failed transaction, the process is still kind of a pain. So, here are some things you can do to avoid declines altogether.
How to Avoid Declines
The first step is to understand why transactions fail online. A full-service ecommerce partner will provide all the tools you need to keep your payment success rate high. However, it’s important to keep an eye on your store and track trends related to payment declines. Did you recently run a marketing campaign in a new region? Are you offering all of the popular payment methods for your audience? Is the checkout experience localized with the right language, currency, and taxes? The goal is to prevent the decline before it happens.
Declines are not the same as gateway rejections.
A processor decline indicates that the customer’s bank has refused the transaction request. Sometimes you can tell why it was declined by reading the response code, but only the customer’s bank can confirm the specific reason.
Decline ratios
An acceptable decline ratio is about 10% of your transactions, but this may fluctuate based on industry or business model.
Lowering your decline ratio
While declines are usually influenced by the customer’s bank, your decline ratio can be inflated by repeated attempts on the same payment method – either on your end or by the customer.
Authorization declines
When we talk about declines, we’re usually referring to authorization declines. These happen when you request authorization to charge a customer’s payment method, and the bank refuses to authorize the charge.
See the complete list of authorization decline codes.
Settlement declines
Settlement declines happen when the bank denies the transaction after a successful authorization. These are much more rare than authorization declines.
See the complete list of settlement decline codes.
Retrying declined transactions
When deciding whether to retry declined transactions, be aware that restrictions exist for which transactions may be retried. Mastercard prohibits retries on transactions that are declined with the following codes:
- 2009 hard decline
- 2012 hard decline
- 2019 hard decline
- 2022 hard decline
- 2047 hard decline
- 2053 hard decline
Additionally, some card associations have rules around retrying transactions originally passed with a recurring ecommerce indicator (ECI) flag. To comply with these rules, do not attempt manual or automated retries on transactions with this flag in the following cases:
- Soft declines: Do not retry the transaction more than 15 times in 30 days
- 2004 hard decline: Do not retry the transaction
- 2005 hard decline: Do not retry the transaction with the same payment information
- 2015 hard decline: Do not retry the transaction
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