How to Reduce Credit Card Decline Rates

A customer can intend to keep paying and still disappear at the authorization step. The product remains useful, the account remains active, and the merchant has fulfilled its part of the relationship, yet the payment fails before revenue reaches the business.

That gap has become more consequential as consumers place more routine spending on stored cards and recurring billing. Mastercard reports that 44% of U.S. consumers spent more on subscriptions in 2025, with average annual spending rising from $1,416 in 2024 to $1,887 in 2025. The same research found that average monthly churn among subscription businesses had reached 20%, placing greater pressure on merchants to distinguish deliberate cancellations from customers lost through payment problems.

Declines also create costs beyond the value of an individual transaction. Mastercard and Checkout.com estimate that false declines cost merchants worldwide $443 billion annually. Their data also found that merchants using network tokens recorded higher approval rates than those relying on conventional card credentials, although results varied by merchant and transaction mix.

A decline rate therefore reflects more than customers’ available credit. It can reveal weaknesses in payment data, transaction routing, credential management, billing practices, and the way authorization responses are handled. Some declines protect merchants and issuers from genuine fraud or uncollectible transactions. Others interrupt legitimate purchases that could have been approved with better information or a better-timed attempt.

Reducing declines starts with separating those categories and treating authorization performance as a measurable business function. Merchants need to know which transactions are failing, what issuers are communicating through response codes, how failure patterns differ by customer segment, and what share of lost payments can reasonably be recovered. With that foundation, businesses can improve approval rates without creating unnecessary fraud exposure, excessive retries, or customer frustration.

Declines are relatively common and in many ways out of the merchant's control. There's not much your average merchant can do to prevent customers from forgetting what their current balance is, and for most merchants, a decline is no big deal. The customer can simply use another payment method to make their purchase.

For merchants who use recurring billing, however, declines are far more serious. As we mentioned earlier, customers who have a recurring transaction declined are highly unlikely to update their accounts with new payment information.

Subscription merchants should calculate and track their decline rate, since almost every one of those declines represents lost revenue.

Of course, tracking your decline rate won't do much good if there's no way to influence it. Fortunately, there are a few things merchants can do to prevent declined transactions and lower their rates.

Note that there are “hard” declines and “soft” declines. A hard decline means the transaction shouldn't be attempted again, and doing so even has the potential to land a merchant in hot water.

Soft declines, on the other hand, aren't necessarily final — you may be able to resubmit the charge and have it go through successfully. You don’t always want to automatically resubmit soft declines, but we’ll come back to that in a moment. First, here are our recommended methods of reducing decline rates.

Account updater programs

Visa and Mastercard allow merchants to enroll in programs that obtain updated card information from issuing banks and automatically update your payment gateway with new expiration dates and account numbers. The new payment credentials will not necessarily be provided in full to the merchant, but the automatic payments will be able to continue without interruption. Information may be delivered through batch files, APIs, real-time services, push updates, or network-token lifecycle management, depending on the network and provider. 

Recurring billing indicator

The use of indicators that identify recurring billing payments can prevent erroneous declines and expedite the resolution of problems with payment processors and issuing banks. Ensure this indicator is included with every recurring transaction you process.

Proactive customer outreach

Reaching out to customers for up-to-date payment credentials after a decline has occurred can be a hit-or-miss prospect. You can improve your chances of getting an update by reaching out before the decline occurs. You can do this by running a query in your CRM that identifies credit card expiration dates that are coming up in the near future, then contacting the cardholders to let them know that their subscriptions will lapse if they don’t update their credit card information.

Of course, you’ll still want to reach out to customers after their charges get declined, too. Make it fast, easy, and simple to update their information, remind them why they subscribed and what they’ll be missing out on, and throw in some incentives if you can — it’s always better to keep an existing customer than to have to go out and try to acquire a replacement!

Offer automated clearing house payments

These days, many customers prefer to use their checking accounts to make ACH payments online. Merchants have good reason to like ACH, too — the processing fees are lower, and ACH transactions don't face the same authorization hurdles as credit card payments. That said, ACH payments can be returned due to insufficient funds or other issues.

If you do decide to offer ACH payments, make sure your billing practices are bulletproof. You definitely don't want any duplicate transactions or mistakes in the transaction amount, since that can result in fees for your customer, who probably won't be very happy with your mistake. These fees also make it even more important to notify customers before each payment is processed.

Resubmit (carefully)

Many “soft” decline codes can be resubmitted, and may go through successfully. A decline due to insufficient funds, for example, may be a temporary thing if it’s just a matter of the cardholder not realizing they're near their limit. Network issues can cause declines, too. Just be cautious about this practice — card networks have specific rules about how soon and how often a retry can be submitted, depending on the authorization response code. When in doubt, consult with your payment gateway provider.

A Word of Caution for Subscription Merchants

One thing we would generally advise against is attempting to bypass normal authorization procedures to “force” a transaction to go through without authorization. These services can be effective at completing troublesome transactions and customers may not care or notice, but this method exposes you to the risk of chargebacks that you will be in no position to dispute.

Losing a customer for avoidable reasons is disappointing, but is it worth the danger of increasing your chargeback ratio and becoming categorized as a “high-risk” merchant? We don’t believe so.

Optimizing Subscription Businesses

Subscription-based business models offer many benefits and advantages for merchants, but they come with their own set of challenges that must be understood and handled properly if you want your enterprise to grow and thrive.

You also have to take into account the fact that customers can be fickle and forgetful when it comes to the subscriptions they’ve signed up for, and pursuing an excessively aggressive strategy can come back to bite you in the form of chargebacks. Clear and transparent communication with your customers should always be at the forefront of your business practices.

Preventing avoidable credit card declines is just one aspect of optimizing a subscription-based business. For more, take a look at our guide to subscription chargebacks and churn below.