Credit Card Declines

Whether you sell physical goods, online courses, or SaaS, credit card declines can take a serious chunk of your income. Discover different types of card declines, and provide simple suggestions on how you can lower this number on your website.


Credit Card decline rates: what's normal?

Nearly 40% of credit card declines happen due to the cardholder's lack of funds. Fraud preventative measures are among other popular reasons for credit card declines.

However, approximately one-third of all CNP (Card-not-present)  declines are due to merchants' pitfalls in handling payments. The good news is, you can lower these numbers by having some proven strategies in place.

What are the average online credit card approval rates for the CNP transactions?

Credit card approval rates can vary from merchant to merchant and from industry to industry. However, online businesses in good standing should aim for 75% approval / 25% decline ratio.

Here's how you can calculate your decline transaction rate:


The difference between hard decline and soft decline

Let's break a credit card decline process down. There are two types of credit card declines - hard declines and soft declines.

Soft credit card declines are temporary issues that can happen in a transaction, however, they can be handled faster and these transactions can be approved later with the same information that was already received from the original one. The hard declines, on the other hand, occur when a transaction even with a retry cannot be approved later unless some data from the original transaction is changed.

Unlike with soft decline, merchants can't proceed with hard credit card declines. To resolve a complex decline issue, your client should either contact their bank directly or use a different payment method.

 Every time hard credit card decline or soft decline occurs, your payment gateway or payment processor will issue either an error code or an error message. Let's cover some of the most popular codes and messages you can come across as a merchant.


The main reasons for credit card declines

Unfortunately, error codes and messages are not always easy to decode. They can be quite vague and differ from the payment gateway to payment gateway. There are, however, error messages that are clear enough to understand. Here are the most common listed below:

Insufficient funds:

Insufficient funds are one of the most common reasons for failed CNP transactions. In fact, over 40% of all online transactions are denied due to lack of funds.

Best practice: As a merchant, there's not much you can do about insufficient funds error. You can, however, reduce the number of abandoned transactions by offering alternative payment methods on your website.

The information entered doesn't match cardholder's personal details:

Merchants often take an extra step to verify the customer's identity by asking personal information like address, ZIP code, card expiration date, etc. If the information entered does not match what's in the system, hard credit card decline occurs, and the transaction fails.

Best practice: Even though you can't prevent this type of hard declines from happening, you can make sure that customers get informed on what happened before they attempt to make a purchase again.

We recommend reaching out to your clients explaining to them what happened and guiding them through the next steps.

Do Not Honor:

This notification means that the customer’s card issuing bank is not accepting the payment, so the transaction can not be done.

Best practice: Since this is a generic decline, the best option, in this case, is to ask your customers to contact their bank and get more information or to try a different card.

The bank is suspicious of the transaction:

Issuing banks reserve the right to fail the transaction if it is out of character with cardholder's normal spending behavior.

Best practice: Fraud suspicion is something that can only be cleared by a cardholder. To unblock the transaction, the cardholder has to call their issuing bank and request to release funds. There are also a few practices merchants can use to prevent fraudulent transactions happening on their website. CVV confirmation, address verification, 3D secure can help you prevent fraudulent transactions from occurring.