Payment Processing

Credit Card Declines: Common reasons and Types

Payment gateways, processors, or banks that issue the money decline certain transactions when they cannot process a credit card payment for some reason. It’s a typical issue for organizations that deal with recurring payments. This could be due to multiple factors. The percentage of credit and debit card declines is much higher than business owners realize. So, this results in failed payments.

The card declines irritate customers the most, but the business owners also become frustrated. They not only lose a transaction, but they also have a dissatisfied consumer who may not return to their business for future purchases, even though card declines are most often the fault of the customer or the card merchant, not the business owner.

Types of Card Declines:

The two main types of card declines are: Soft and Hard declines

Soft declines

The bank that issued the funds authorizes a payment, but the transaction fails somewhere else. These declines are usually brief and are caused by technical or financial problems. An abrupt loss of network access or inadequate funds in your customer’s account could be the cause. Soft declines may typically be handled by retrying the transaction, which will generally resolve immediately. However, retrying the transaction more than 2-3 times is not recommended.

Hard declines

On the other hand, hard declines occur when the issuing bank refuses to process a payment for various reasons, including invalid account information, possible scam, or a lost or stolen card. Hard declines typically need the payment card information to be updated regardless of the number of retries attempted.

When a customer’s credit card is declined at the final stage of buying a product, an error message with an error code pops up. This decline code assists the client in determining whether the card failure was soft or hard. Knowing that helps the customer in deciding the best course of action. These codes aren’t standard among payment processors.

Understanding the various reasons behind a credit card decline:

The customers receive an error message explaining why their transaction failed. However, business owners may not always have access to read or analyze this message. The message remains confidential between the card issuer and the consumer. Customers may not want businesses to know why their credit card was denied for various reasons. Here are some of the common reasons for a credit card decline.

The user met the credit limit

Exceeding the credit limit is a guaranteed way to get your card denied. The credit limit is the amount of credit the card issuer grants you. Make sure you know your credit limit and keep track of your balance to avoid exceeding it.

Large purchases

The credit card issuer may flag your account if you make a significant transaction with your credit card. Any card behavior outside of your everyday purchasing habits may trigger fraud protection and cause your issuer to freeze your account, resulting in a credit card decline.

Expired Card

Using an expired card always results in a failed transaction. The card network will not be able to process a card that has passed the expiry date indicated on the front. The customer will need to pay using a different payment method or give the updated expiry date.

Missed payments

Even if you’re only a few days past your due date, having a history of missed payments results in declining further transactions. Missed payments not only prevent you from using your card, but they can also harm your credit score.

False payment information

It’s easy to enter a digit of your credit card number, expiration date, or security code incorrectly when making a purchase, especially online or through a mobile app. All these could be the reasons for a denied transaction. Double-checking the card details after entering it is essential. You may, however, see your account frozen if you have too many of these types of errors. If this is the case, you should contact your issuer to resolve any misunderstandings.

Although it is hard to completely eliminate credit card declines, you may take efforts to assist your customer in resolving the issue and making the payment so that you do not lose a transaction. While activating aggressive fraud detection technologies can help get rid of fraudulent transactions, limiting down your fraud checks can help lower the odds of a false decline and prevent you from losing a sale unnecessarily. Finding the balance between security and convenience can help in dealing with these card declines.

Not a Rapidcents Merchant?

If you are looking for the best merchant processor for safeguarding your online business, you should go with Rapidcents. The fraud prevention tool from Rapidcents will make everything secure and including the credit card transactions. In the end, the merchants will be able to deliver smooth service to the customers. So, become a Rapidcents merchant today.

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