The purpose of this article is to explain the most common reasons of payment card transaction declines. Due to some changes recently introduced by card associations into transaction processing, submitters can be fined if they re-submit transactions declined for some particular reasons (i.e., transactions whose decline codes raise suspicions). That is why we decided to cover some of the most common decline codes. While one of our previous articles covered declined credit card transaction recycling as a whole, in this post we are going to focus on particular types of declines, analyze specific payment card transaction decline codes, and explain what they mean.
Credit card transaction declines were traditionally divided into two large groups: soft declines and hard declines. Hard declines are the declines, which are final, and, usually, indicate that reattempting the card will never result in an approval (for example, “card lost\card stolen” response), while soft declines indicate that subsequent reattempt of the transaction might result in an approval (as in the case of, for example “insufficient funds\hold – pickup card” response).
While specific decline codes may vary from system to system, the meaning that they reflect, and the reasons behind declines are approximately the same across all the processors.
Let us now review some of the basic payment card transaction decline codes, briefly define their meaning and look at the best decline recovery strategies.
Common payment card transaction decline codes
Insufficient funds
At the time of transaction’s submission there were no sufficient funds on the account. The funds may be there the next day, at the end of the week (after payroll) or never. It is worth trying to re-submit the transaction when the funds are expected to be available.
Card stolen\card lost
The card was reported as lost or stolen. There is no point in trying to re-submit the transaction, however, running this card through account updater {link} might produce a new account number, that can be used to re-submit the transaction.
Invalid expiration date
Either expiration date specified in transaction request has already passed, or it does not match the actual date, specified on the card.
For recurring transactions, a special recurring indicator exists, which notifies issuers that the transaction is of recurring nature and the card may have expired since it was originally obtained from the cardholder. Some issuers will approve such transactions even with incorrect expiration date.
Alternatively, proper expiration dates can be guessed by attempting the transaction with other expiration dates, but this strategy can lead to negative consequences with card associations, which can suspect fraud and take measures.
Consequently, in case of non-recurring transactions with invalid expiration date the best strategy would be to either contact the cardholder to update the information, or to run the transaction through account updater.
Hold-Call
The response means that the issuing bank refused to authorize the transaction for some reason (for instance, the card is, possibly, involved in some fraudulent activity). In the retail world the salesperson attempting to charge the card is expected to hold the customer’s card and call a special number to report that this decline code was received. If the response is “hold – pickup card” the salesperson is also expected to retain the “suspicious” card. However, in the card-not-present world, when the card is not physically involved in the transaction, the merchant should just abstain from providing goods or services to the customer.
The customer should be asked either to pay with another card (alternatively, through ACH), or prompted to contact his issuing bank and clarify the reasons for decline. After the customer’s issuing bank confirms the approval of next transactions from the card, they can be attempted.
Account frozen
The most common reason for account freeze is that the cardholder has an outstanding debt, associated with the account involved in the transaction. The transaction can be reattempted at some point in future, under condition that the customer has already paid the debt. Some more information on account freezes can be found here.
No account
There is no active account associated with the card. Subsequent reattempt will never result in an approval.
Conclusion
Before attempting to re-submit a declined credit card transaction, it is worth checking credit card transaction decline code. Some payment card transaction decline codes indicate that it is pointless to ever re-submit the transactions, while other codes signify that transactions can be resubmitted, possibly, after some conditions are met.
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