Learn why some payments fail and what you can do to decrease your decline rate.
Payments can fail for a variety of reasons and it's frustrating when they result in the loss of legitimate business. Many payments fail for good reason and do so to minimise the possibility of a fraudulent payment.
There are two possible reasons why a credit card payment might fail:
Each type of failure is handled differently. The reason for a payment's failure is provided within the payment's details in your account.
Payments declined by card issuers
When a charge is submitted to the issuer of your customer's card, they have automated systems and models that determine whether or not to authorise it. These systems analyse various signals, such as your customer's spending habits, account balance and card information, such as the expiry date, address information and CVC.
If your customer's card issuer declines a payment, this information will be reflected within the payment's details in your account. In some cases, card issuers also provide helpful explanations, such as the card number or expiry date being incorrect, or that the customer does not have enough funds available to make the payment. The card issuer may provide one of these more specific reasons through the use of a decline code.
Unfortunately, most declines are categorised by the card issuer as "generic" so it's not always possible to know exactly why a payment was declined. If all of the card information seems correct, it is best to have your customer contact their card issuer and ask for more information. For privacy and security, card issuers can only discuss the specifics of a declined payment with their cardholders – they cannot discuss this with the merchant.
Reducing card issuer declines
Card issuer declines arising from incorrect card information (for example, incorrect card number or expiry date) are best handled by guiding your customer to correct the error or even using another card or payment method. Card issuers' suspicions of fraudulent activity are more challenging to manage, but having customers provide the CVC and postcode during checkout can significantly decrease the number of declines that you're experiencing. The influence of other data that you collect, such as the full billing address, varies by card brand and country. If you are still experiencing a higher-than-expected number of declined payments, consider collecting this additional data. Additionally, using 3D Secure to authenticate payments may decrease decline rates in countries where it is supported.
When investigating generic or do-not-honour declines, the accompanying data can give a better picture of why the card may have been declined. For example, if CVC or AVS checks failed upon adding the card, resolving those issues and then re-attempting the charge may result in a successful authorisation. However, if you notice a card issued in a different country to that of the client IP address, this may indicate a legitimate decline due to potential unauthorised card use.
Some customers find that their card has restrictions on the type of purchases it can make. FSA/HSA cards are often limited to certain types of businesses (such as healthcare providers), so any other type of purchase would be declined. In addition, some card issuers might not allow purchases from certain countries or outside of their own. In either case, your customer must contact their card issuer to check for any restrictions that are in place.
If your customers are using cards issued in a country that is different to where your account is registered, they may experience an increased rate of declines. The quickest way to resolve this is for your customers to contact their issuing bank to authorise the charge. If you have customers concentrated in different locations around the world, you may also consider setting up your accounts in your larger markets, or in markets where you are experiencing higher decline rates, in order to process those charges locally.
Tracking your decline rate over time is a good way to flag proactive issues with fraud or potential integration bugs. Analysing unique declines and excluding failed retries as opposed to absolute numbers of declines is recommended, as this can give a clearer picture of your overall authorisation rates.
Your platform partners with Stripe for secure payments. Stripe's automated fraud prevention toolset blocks high-risk payments, such as those with mismatched CVC or postal code values.
A blocked payment is initially authorised by the card issuer and could be processed successfully. Instead, Stripe does not charge the card as the payment is likely to be fraudulent and could result in a dispute.
Depending on the type of card being used, some customers may see the card issuer's authorisation for the payment amount on their statement. This amount has not been charged and no funds have been taken. The authorisation is removed from their statement by the card issuer within a few days.
Be aware that card networks have rules in place for how many times you can re-attempt a single charge. We recommend that you do not retry charges more than four times. Creating additional retries may be seen by issuers as potential fraud and could result in legitimate charges being declined more frequently.