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Why Is My Card Payment Failing?

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Last editedSep 20212 min read

For consumers, a declined card payment can be both unexpected and worrying. For businesses, declined card payments translates to lost revenue. This leaves both parties wondering what causes these failed payments, and how to fix the issue? Here are a few of the most common reasons why a card might be declined – along with some tips to help prevent it.

Types of credit card payment failures

Most declines fall into two categories:

  • Soft declines – Card declined due to issues with transaction processing. The bank issuing funds approves the payment, but the transaction breaks down during the processing stages.

  • Hard declines – Card declined by the bank due to lack of funds or outdated card information. This must be fixed before the transaction can be approved by the bank.

Causes of a declined card

Whether they fall into the hard or soft decline categories, here are a few of the most common reasons for a failed card payment.

1. Lack of funds

It’s the obvious answer to a declined payment but may come as a surprise if you haven’t been monitoring your accounts carefully. A card payment will be declined when the customer has reached their credit limit. Businesses that accept card payments can safeguard against this problem by offering buy-now-pay-later (BNPL) payment options like Klarna or other alternative payment methods.

2. Expired card details

Another common issue behind declined card payments is expired details. This is most likely to pop up when you sign up for recurring payments or subscription services. The customer enters their card details once and gives permission for the merchant to take future payments. However, if the card expires before future payments are taken, the payment will be declined. This can be combated with automated payment update reminders, or the use of tokenization to replace the card with a random series of numbers without an expiration date.

3. Fraud prevention process

There are more safeguards against online payment fraud than ever, including customer authentication. However, sometimes these processes yield a false report and will flag a legitimate customer or payment. Similarly, if you make an unusual purchase outside of your typical buying behaviour it can trigger a fraud alert. For example, bulk purchases and using an unfamiliar IP address can both cause the payment to be declined. Customers must provide additional security information for the transaction to continue.

4. International payments

Along with the fraud red flags mentioned above, international payments can also cause declined cards. Most businesses accept card payments from international customers, but this might involve additional routing links and third parties. If there are holds at any stage of the payment process, it causes a soft decline. It’s helpful to use an online payment gateway or platform that facilitates these international transactions and cuts out the red tape.

How to fix declined card issues

While it’s impossible to completely prevent all declined card payments, there are plenty of ways to fix the problems mentioned above.

  • Consumers can make sure that their payment details are current. Sign up for banking alerts that tell you when you have limited funds in your accounts or are near your credit limit.

  • Businesses can use automation to send these payment reminders to customers. Dunning is also a useful tactic to prevent declined payments, automatically alerting customers when card details are expired or invalid.

The bottom line

As you can see, when looking at how to fix declined card issues there are many factors at play. From expired credentials to fraud prevention, you’ll need to pinpoint what the problem is before you can fix it. At the same time, merchants can use customer data to analyse failed payments and streamline the process for their clients. Put a failed payment recovery plan in place as quickly as possible to minimise disruption while maximising conversion rates and revenue.

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.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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