Breadcrumb

What to do if a customer’s credit card is declined

Written by

The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedMar 20233 min read

What happens when a customer fills their shopping cart and heads to checkout, only to have their credit card declined at the last instance? Unfortunately, many will leave your website and not return. According to GoCardless-commissioned Forrester research, 11-15% of failed payments lead to churn. Yet the situation can often be turned around with quick action and alternative payment methods. Here’s what to do if a customer’s credit card is declined.

Reasons that a customer credit card is declined

Cards fail for many reasons, from simple typos to banking errors. Credit card declines are separated into two categories, soft and hard.

Soft declines: These are usually due to technical issues like breaks in connectivity, insufficient account funds, or other temporary issues. With a soft decline, it’s worth retrying the transaction at least once to see if the issue has been resolved.
Hard declines: These are caused by security issues when a transaction is flagged for suspicious for any reason. The bank won’t authorize the transaction if they suspect the card is lost or stolen, for example. In this case, it’s not advisable to retry the card.

How do you know whether to retry the payment? When a card payment is declined, an error message and corresponding decline code pops up to let you know whether it’s a soft or hard decline. Each payment gateway has its own set of codes, so you’ll need to refer to their online instructions.

Here’s a list of some of the most common error messages:

Insufficient funds – there’s not enough money in the customer’s account
Invalid card number – the card number is incorrect
Invalid address – the billing address doesn’t match what’s on file
Limit exceeded – the customer’s reached their daily or account limit
Do not honor – the bank is blocking the transaction due to suspicious activity

What are false declines?

Sometimes a simple, fixable error has been made. For example, if you see the error message “invalid card number,” you should simply ask the customer to type it in again. However, codes like “do not honor” can be more complicated. Payment systems and banks have sophisticated anti-fraud checks in place, which helps safeguard against suspicious transactions. The trouble is, sometimes a transaction is incorrectly identified as suspicious. The customer might simply be making a purchase from a different location or purchasing a big-ticket item.

Declined transactions are often due to system failure and technical issues as well. All these reasons cause valid transactions to be flagged as invalid, known as “false declines.” This is not only frustrating to customers using a perfectly legitimate card, but it also leads to lost revenue for your business.

What to do if a customer’s credit card is declined

Credit cards are generally regarded as reliable payments, but things can sometimes go wrong. So, what can you do when your customer’s card is declined?

The first step is to look at the error code. If it’s a soft decline, try the payment again. If it’s a hard decline, ask your customer to get in touch with their card issuer or bank.

Dunning management is a useful tool for recurring card payments, automatically retrying failed transactions later. This gives customers time to top up their account and sort out any technical issues.

Another option is to immediately offer an alternative payment method at checkout. Be sure that your payment gateway also includes options like bank transfers, digital wallets, and mobile payments. This reduces the chance that your customer will simply leave the site and never come back.

How to offer more reliable payments to customers

Of course, the best way to handle payment declines is with prevention. If your checkout flow is too lengthy and complicated, it increases the chance for mistakes. When a customer is asked to type in their card and address details in multiple fields, they’re more likely to make a simple data entry error. Make sure your checkout page is streamlined and easy to read, with as few steps involved as possible.

In addition to offering alternative payment methods, you can also use the latest payments intelligence to optimize your checkout. For example, GoCardless offers a direct debit solution with a built-in intelligent retries feature. Our Success+ feature automatically recovers 70% of failed payments by retrying them at the most optimal time. We also offer Verified Mandates, which uses the power of open banking technology to automatically verify each payment at checkout. This protects your business from fraud while providing a secure, seamless customer experience.

We can help

GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.