Last editedNov 20212 min read
From insufficient funds to suspected fraud, there are several reasons why a credit card might be declined. What does card declined by issuer mean, and what causes a card to be declined in this way? We’ll discuss the different causes of card declines below, as well as what you can do when this happens.
What is a card issued decline?
If you accept card payments in-person or online, you’ll experience card declines from time to time. When a card’s been declined, the merchant receives a code and brief explanation, such as “card declined by issuer.” This simply means that the credit or debit card issuer has put a stop to the transaction. It’s up to the merchant to decide what to do next – sometimes, all you need to do is ask your customer to re-enter their details. Other times, the customer will need to call their card issuer for help.
Why do card issuers decline payments?
There are numerous reasons why you might see a card declined by issuer message. Here are three of the most common:
Reason 1: Transaction declined by card issuer
At times it will be the type of transaction that sparks a red flag with the issuer. For instance, if the customer is trying to set up a series of payments to a subscription service provider, the card issuer might block the transaction. This is to protect the consumer from repeat, unauthorized payments.
Reason 2: Card declined by issuer due to insufficient funds
A very simple reason why a customer’s card is declined is due to insufficient funds. As part of the payment authorization process, the card issuer will check to see if there are adequate funds in the consumer’s account before approving the payment. If there isn’t enough money, the transaction will be declined.
Reason 3: Card issued decline due to incorrect details
Another part of the authorization process involves matching the customer’s card details to their account information. If the customer has entered an incorrect credit card number, expiration date, or card code verification (CCV), the transaction is declined.
Preventing lost sales due to card issued declines
It’s important for merchants to understand the causes of card declines, because in many cases a customer might not have an alternative form of payment. This translates to abandoned shopping carts and lost sales along with a corresponding reduction in profit.
Some transactions can’t be salvaged. For example, if the customer simply has insufficient funds in their account or has reached their credit limit, they will be unable to complete the purchase without an alternative form of payment.
How to manage declined transactions
While some transactions will be cancelled after a card decline, in other cases you can help your customer complete the sale. This starts with in-person sales by sharing any relevant information presented with a “card declined by issuer” message. The customer can call their issuer for additional information and complete authorization. In some cases, the credit card company simply needs verification that the customer wishes to complete the transaction.
Unfortunately, some error codes are vague, stating only “Transaction Error.” It’s always worth running the card through a second time to see if there’s a problem with the connection or mistyped details.
The above methods might work for in-person purchases, but how can you prevent card declines for card-not-present transactions? The best option is to offer your customers a wider selection of payment methods. That way, if their credit card is declined by the issuer, they have some backup options. Alternative payment methods include things like PayPal, cryptocurrency, digital wallets, and ACH transfers, among others. With a greater understanding of the root causes behind card declines, you’ll be better prepared to handle this common checkout issue.
We can help
GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.