You’ve added detailed descriptions and photos to each of your product listings. Customers leave glowing reviews for your customer service and merchandise. You’ve even optimized the entire checkout process. But sometimes, despite doing everything right, you may find that you’re losing 2%-5% of total sales on something you feel like you can’t do much about: credit cards declined by the processor.
While these declines are inconvenient and frustrating, they don’t always have to result in lost sales, customers and revenue. Here’s why credit card declined sales are happening and how you can recover them.
Reasons for Credit Card Declined Transactions
The scenario is more common than you think: You’re trying to charge a customer’s card for a transaction, and it ends up being declined somewhere in the processing network, typically by the cardholder’s bank.
It’s important to note that these “Card Declined” errors don’t result from a mistyped credit card or CVV number. In most cases, the card number is correct, but the bank is denying the charge.
While there are plenty of reasons a credit card may be declined by the processing bank, here are five of the most common:
- Card details have expired.
- The bank suspects fraudulent activity, so they refuse the charge.
- The customer has insufficient funds.
- There has been a high volume of card activity during a short period of time.
- The customer has exceeded a preset limit on online or international orders.
In many cases, the customer will first try re-entering credit card data or will try a different payment method altogether to see if the payment goes through. But if the problem persists, the customer may abandon their cart altogether — believing it to be a merchant issue — and try the same purchase from another seller.
Tips for Recovering Declined Credit Card Payments
Merchants don’t want to lose any more revenue to failed payments than they have to. These five tips can help merchants make more sales — even if the purchase doesn’t go through the first time.
1. Recharge the Customer
Some declines are due to insufficient funds — considered a “hard” decline — and the payment won’t go through no matter how many times you try. But if the failure was due to a “soft” decline reason, like issues with payment processors, networks or gateways, then merchants may have success when they recharge a customer.
2. Offer Alternate Payment Methods
One of the easiest ways to cover declined credit card sales is to immediately offer customers an alternate way to pay. This may be as simple as re-presenting the customer with the checkout form, or you may consider offering a new checkout option altogether, like PayPal or bank transfer.
3. Keep It Personal
Legitimate customers are bound to be embarrassed if their credit card is declined. And while a generic email notifying customers of the issue might be efficient, it’s not very personal — or effective. An estimated 85% of software-generated emails like these go unread. When customer loyalty is on the line, take the time to make a personalized phone call to customers. They’ll feel like you really care, and they’ll be more likely to become a repeat customer. For merchants that do need to send emails, they should ensure they use their own voice, send the right emails at the right time, and communicate an increasing sense of urgency throughout the email sequence.
4. Open a Backup Merchant Account
Some merchants open a separate merchant account with a different provider and route declined payments to that account. If the payment is declined by the primary processor, it’s possible this backup account will approve it.
5. Understand Why the Payment Failed
Payment processors don’t always share ample details about why a credit card payment failed. While Stripe generally offers a thorough explanation about the reason for the failed payment, PayPal tends to give less robust details, which may leave a merchant wondering what went wrong.
Today’s merchants can’t afford to leave money on the table when a credit card transaction is declined — whether those declines are coming from the credit card processor or the e-commerce merchant’s fraud prevention system. It’s important for e-commerce merchants to understand the order approval process, where problems can arise, and how they can safely approve more orders.
ClearSale’s ebook “Online Merchants: Stop Leaving Money on the Table” walks you through everything you need to know about the order approval process — including how to improve it. If, after reading it, you want to learn more about improving your order approval rates, just contact one of our experts. We’d be happy to tell you more.
FAQs
Contact Customer Service
The card provider may need to manually activate the card. Often, your card is declined for your protection to prevent fraudulent purchases. In this case, your card provider may just need to verify your identity and authenticate your purchase.
How do I recover my declined credit card? ›
Contact Customer Service
The card provider may need to manually activate the card. Often, your card is declined for your protection to prevent fraudulent purchases. In this case, your card provider may just need to verify your identity and authenticate your purchase.
What does merchant override decline? ›
Simply put, a merchant override decline is when a merchant attempts to charge a payment, but their payment processor or bank rejects the request. Such declines may be due to an expired card, identity verification issues, or insufficient funds in the account.
How do you get the payment if a customer's credit card is declined? ›
Request a different form of payment
That may be another credit card, an ACH debit from the customer's bank account, a check, or even cash. You can also give the customer the opportunity to call their card issuer, work out any problems, and get your transaction pre-approved.
What happens when a credit card transaction is declined? ›
Your card may be declined for a number of reasons: the card has expired; you're over your credit limit; the card issuer sees suspicious activity that could be a sign of fraud; or a hotel, rental car company, or other business placed a block (or hold) on your card for its estimated total of your bill.
How to fix card declined? ›
Debit card declined? Five steps to fixing it
- Check for insufficient funds. Always check to see if you have sufficient funds in your account first, as this is one of the most common reasons for card decline.
- Verify your card details. ...
- Contact your bank. ...
- Check for suspicious activity. ...
- Try an alternative payment method.
What to do after your application is declined
- Determine why your application was denied. ...
- Request a copy of your credit report. ...
- Ask for a reconsideration. ...
- Find a more suitable card. ...
- Work on paying off debt. ...
- Use your current credit cards carefully. ...
- List all income when applying. ...
- Look for cards that match your credit profile.
Credit card declined code 05 indicates that the issuing bank has once again blocked the transaction—telling you to literally “not honor” the card as a form of payment.
Can a merchant reverse a transaction? ›
The term payment reversal applies to any transaction when payment funds are returned to a cardholder's bank. A payment reversal can be initiated by the cardholder, merchant, issuing bank, acquiring bank, or card network.
What is the response code 5? ›
The '05' error indicates your bank declining the customer's card for an unspecified reason. The customer's card issuer has declined the transaction as there is a problem with the card number. The customer should contact their card issuer and/or use an alternate card.
One easy method of informing a customer of a declined card is to avoid telling them that their card declined at all. Simply ask, “Is there another form of payment you might want to use today”? This makes it very apparent that their card declined without using the dreaded word.
How do I get a declined payment to go through? ›
You may be able to correct the issue of a declined credit card by trying the transaction again. The card may have been declined due to: Incorrect information: In some cases, the card may have been declined because you incorrectly entered information online, such as the card number, expiration date or CVC security code.
Can you still be charged if your card gets declined? ›
Don't worry, you are NEVER charged for declined orders. Your bank or credit card issuer still shows those charges as pending until they receive final confirmation that those orders were in fact declined, which usually happens in the evening.
Will a declined transaction ever go through? ›
If you use your debit card and it is declined but there is money in the bank account, what happens? If the card is declined, no money is taken out of the bank account. You could call the bank and ask why it was declined, or pay another way, or cancel the purchase.
What is a soft decline? ›
Soft declines are transaction rejections that occur due to temporary issues. Common causes include "Do Not Honor" responses, exceeded credit limits, or bank server downtimes.
How long does a declined transaction take to clear? ›
If your transaction was declined, most banks will still hold the charge as “pending.” Most pending charges disappear in around 5 days or less, though some institutions ask cardholders to allow up to 7 days to process charges.
How long does it take to get a credit card after being declined? ›
Some card issuers also have policies of declining applications from consumers who recently submitted applications. As a general rule of thumb, consider waiting around three to six months before reapplying.
How do I unblock my credit card? ›
To unblock your credit card online, you can visit your bank's mobile application or official website and apply for 'reissue' or 'reactivation' of your credit card. Alternatively, you can also connect with your bank's customer service executives telephonically or by visiting the bank's branch physically.
Can you reapply for a credit card you were denied for? ›
If you're denied for a credit card, you can take steps to address the more common reasons issuers consider you a risky applicant. For example, if your score is too low, you can reapply for a card that accepts lower credit scores you're more likely to be approved for.
How do I appeal a declined credit card? ›
What to do if your application is denied
- Get an explanation. ...
- Ask for reconsideration. ...
- Give it time. ...
- Check your credit report. ...
- Apply for another card. ...
- Reapply later.
