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How to Reduce False Credit Card Declines

Credit card declines are sales that fell just short of the finish line. Shoppers wanted to buy your products but they couldn’t check out because their payment was denied – often for reasons outside of their control.

Almost 2 out of 10 online shoppers have had their credit card declined, and many legitimate purchases are flagged for fear of fraud. Credit card declines cost retailers billions each year, but before you seek a solution you first need to know the cause of the problem.


Why credit cards are declined

Credit card declines happen for a variety of reasons – some of which are unavoidable. While declines for fraud purposes are justifiable, fraud systems prevent 10 legitimate purchases for every real fraudulent one. When a credit card is declined it falls into one of two categories: soft or hard declines.


Soft declines

Soft declines are transactions that have been denied because of minor processing errors, inputting errors, or lack of available funds. It could happen if your finger slips while entering your credit card number or forgetting how much credit is available on your card. Some of the most common reasons for soft declines are:


  • Incorrect payment information
  • Insufficient funds
  • Credit limit exceeded


It’s easy to accidentally make a mistake when entering information into a checkout form, meaning soft declines are bound to happen. But they’re not always serious and can be dealt with immediately. Hard declines, on the other hand, are generally harder to recover.


Hard Declines

Hard declines present a much bigger problem because transactions are purposefully blocked by issuing banks, meaning shoppers can’t try again. This can be a mistake by the card processor or a big red flag for fraud. Wondering what constitutes a hard decline? Here are a few causes.


  • Invalid credit card number
  • Expired card
  • Address verification and card security code failed
  • Voice authorization required
  • Transaction not allowed


It doesn’t matter what type of decline occurs, you may have lost your chance to make a sale. This could be good if you’re denying a fraudster or bad if you’re accidentally declining a legitimate purchase. In an interview with PYMNTS, Mr. Freedman from Riskified summed up the solution to declines perfectly: think of customers as innocent unless proven guilty, meaning give them the benefit of the doubt.

Here are a few solutions to regain lost sales due to credit card declines and grow your bottom line.


Provide more than just a simple ‘decline’ message

You can’t prevent every credit card from getting declined, but you can help shoppers push on and finish their purchase. Sometimes people will need no motivation to retry their cards while others will be frustrated if their card is incorrectly declined. Instead of only alerting a shopper their card has been declined, try proposing other ways to check out.

Including more content to a regular decline message, like suggesting shoppers use another credit card or a card-free alternative payment method, can reduce the likelihood of shoppers abandoning their order altogether.

Even if a shopper doesn’t retry their purchase immediately, you can still reach them with a follow-up email. Sometimes all a shopper needs is another reminder, but if you want to really improve your chances of regaining a sale stimulate urgency because 78% of shoppers say that’s the best way to make them return to a retailer’s site.


Don’t rely only on credit cards

You will be heavily impacted by credit card declines if they’re your only accepted payment because your shoppers will have no other way to check out if their transaction is blocked. Top retailers know it’s important to give shoppers other ways to pay so they offer almost 9 different payment methods.

Card-free alternative payment methods are growing in popularity because they improve the online experience, allowing shoppers to check out without a credit card and streamlining the checkout process. Give shoppers the ability to pay without a card and increase your chances of a sale.


Encourage shoppers to become members

Many people have accidentally mistyped their name, credit card number, expiry date, or CVV when trying to pay. How easy is it to mistakenly click an O instead of a P or enter an extra 4 in a credit card number? These are common mistakes that can easily be corrected, but 24% of shoppers won’t even try again and will leave your store immediately.

Encouraging shoppers to sign up for memberships can help you limit credit card declines due to mistyped payment information. Although this requires shoppers to spend a little time setting up their account, storing information online makes checking out faster and more convenient for return visits.


Use address verification tools

If a payment processors’ address verification system (AVS) finds a flaw, the purchase will be frozen. Retailers can use tools like Google’s Geocoding to validate a shopper’s address, ensuring the error is fixed before being processed again.

Similar to when you search online and Google suggests the remainder of your search inquiry, Geocoding auto-completes your address. This not only helps ensure address information is consistent but also makes checking out a little more convenient.


In conclusion

Online, it’s inevitable some people will have their credit cards declined when they shop. But by going the extra step to let people have a frictionless payment experience, retailers can mitigate against the effects of credit card declines.

When a card is declined, it may be because the retailer, the shopper, or the payment processor made a mistake. But almost one-third of shoppers think retailers are to blame so you need to do all you can prevent this from happening.

Credit card declines limit your sales potential. One out of every ten shoppers will go to your competitor if their card is wrongly declined, so it’s important you address this issue and keep customers buying from you.


About the Author

Origins Ecommerce

We love sharing our expertise in online payments and helping our customers succeed. From the technical team to our customer service team, everyone at Origins Ecommerce is ready to support your success. Our goal is to reduce your expenses and risks while optimizing your revenue, by managing your online payments for you. The Origins Ecommerce payment solution is there to keep your payments in motion, so you don’t have to.
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