Understanding Your Credit Card Decline Codes
Customers may get embarrassed when they try to use a credit card and get a “transaction declined” message, but merchants know that there’s no reason to make assumptions about a customer when the payment terminal lets out its angry beep of denial—there are simply far too many possible reasons for declines to occur, and many of them are easily resolved.
Familiarity with these codes can help merchants recover transactions in progress and avoid future chargebacks. What do merchants need to know about credit card decline codes in order to recover as much revenue as possible?
Customers who typically use their cards without incident, a decline can feel like a harsh judgment, as they may associate declines with credit card fraudsters and reckless spenders who max out their cards. In fact, declines can happen for a wide range of reasons at various points in the transaction and settlement process. Most decline codes are sent early in the transaction process, when the merchant first attempts to obtain authorization to run the card.
A decline message doesn’t mean the transaction is a loss. Even if the customer doesn’t have an alternate payment method, many decline codes indicate errors or inconsistencies that can be corrected. If this can be done, the merchant can keep attempting the transaction until the reasons for the decline are addressed and the transaction goes through. However, merchants need to be careful about getting the proper authorization and re-running transactions correctly, or else they could end up liable for authorization-related chargebacks down the line.
What are Credit Card Decline Codes?
Many entities are involved in processing a credit card transaction. It starts with the merchant and the customer, but before any money actually changes hands, it will go through a payment processor, gateway, and the customer’s issuing bank. If any of these parties detects a problem with the transaction, they may reject it. If this happens, they will send back a decline code that specifies the reason why the transaction could not be processed.Unfortunately, decline codes are not uniform.
Different card networks, gateways, and processors may use different codes to refer to the same situations.
Merchants should refer to the information provided by the processors, gateways, and networks that they work with for specific code lists, but the following is a non-exhaustive list of some of the various credit card decline codes you might encounter:
- Insufficient Funds (at the time authorization was requested, the customer’s account did not have sufficient funds to cover the transaction)
- Limit Exceeded (the transaction amount is higher than the maximum withdrawal amount on the account)
- Do Not Honor / Transaction Not Allowed (the issuer will not process the transaction; the customer will need to contact them for further details)
- Expired Card (the card is past its expiration date)
- Invalid Card Number / No Account (the card number provided does not match what the issuer has on file)
- Card Issuer Declined CVV (the CVV number provided does not match what the issuer has on file)
- Voice Authorization Required / Call For Approval (the issuer wants the merchant to call them in order to obtain information needed to complete the transaction)
- Processor Declined – Possible Fraud, Lost or Stolen Card / Security Violation (the bank has information indicating that the card has been compromised in some way)
- Duplicate Transaction (the transaction details match an earlier transaction and the processor is flagging it to prevent an erroneous double charge)
- Cardholder Stopped Billing (the customer asked their bank to cancel or stop billing)
- Invalid Transaction / Card Type Not Enabled (this may indicate an incompatibility between card and merchant types—for example, attempting to use an FSA card at a restaurant)
- Set Up Error / Invalid Merchant ID (the merchant may not have configured their payment processor software correctly)
- Pick Up Card (the card has been reported lost or stolen, and the issuer is asking the merchant to keep the card, if possible, and call them)
Obviously, you wouldn’t want to keep trying to run a card that had been reported lost or stolen, but it’s not unheard of to mistype a CVV number or expiration date. You can try to correct errors and attempt a transaction a second time when you understand the difference between hard and soft declines.
What’s the Difference between a Hard Decline and a Soft Decline?
Simply put, a soft decline is a “temporary” decline that can turn into an approval if you fix the errors that are causing the bank or gateway to reject the transaction.
A hard decline is a definitive and final “do not process this transaction on this card” response.
Aggressive anti-fraud tools at the processor level can sometimes cause soft declines. Your processor will have rules and guidelines for retrying soft-declined transactions. Review the information they have provided you and be especially careful about allowing automated retries.
The best way to recover sales in the case of hard declines is to offer the customer alternate payment methods. You can also offer to hold an item in reserve if they need to contact their bank to resolve a security flag or get their limit increased.
Merchants should never attempt to “brute force” a transaction through without proper authorization, as these can result in chargebacks that they will be unable to fight. When you do work with a customer to get around a soft decline and obtain authorization for a transaction, make sure you carefully document the actions you took and retain it as evidence in case they ever decide to dispute it.
Nobody likes getting a decline code—not the customer, and certainly not the merchant—but they serve an important purpose by preventing problematic transactions from going through and alerting you to the issues that need to be resolved.
When merchants are conversant in the decline codes their processor returns, they can act quickly and decisively to recover sales by correcting transaction errors and offering alternative payment methods