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What to do if a customer’s credit card declines

Published December 2, 2021

If you’ve ever had a credit or debit card decline in a busy store, you can probably remember the feelings of embarrassment, shame or even anxiety that you felt. What happened next most likely depended on the reaction of the cashier. Were they discrete and sympathetic? Did they give you the option to retry your card? Or did they make the situation worse by being insensitive and uninformed about credit card declines?

No one wants to experience a credit or debit card decline – but they’re a fairly common problem that just about every cardholder will have to face once in their lives. This is why business owners should be prepared for them, and learn how to handle a decline with sensitivity and tact. The more customers you serve, the more often you’ll have to deal with a credit or debit card declining at your in-store or online POS system. The good news is that many types of credit card declines can be resolved easily by either the merchant or consumer.

What are the different types of credit card declines?

Credit card declines generally fall into one of two categories: soft declines and hard declines. Soft declines refer to transactions that can usually be retried or reversed, and account for the majority of credit card declines. There are a few types of soft declines, such as:

Insufficient Funds

This decline happens when a customer does not have enough money in their bank account to complete the transaction. This is one of the most common card declines, and likely the most embarrassing for a customer to experience.

Unusual Purchase

When a customer makes purchases that don’t seem to align with their past buying behavior, their banking institution may flag and block transactions in order to prevent fraud. This kind of decline can usually be addressed by a customer contacting their bank and confirming that the purchase is legitimate. Often the transaction can be retried without trouble within the next few minutes.

AVS or Billing Address Issue

For card-not-present transactions, online POS systems often require extra validation to prove that the user attempting a transaction is the legitimate owner of the credit or debit card used. Sometimes, if a customer attempts to make an online purchase from a location outside of the billing address, their banking institution will block the transaction. This is another issue that can be rectified by the customer consulting with a bank representative, either online or by phone.

Read more: Steps to take if your credit card is declined

Additional types of credit card declines, such as an expired card, will usually present themselves as a normal decline. These kinds of transactions are nothing to panic about, and can often be resolved by a quick conversation with your customer.

On the other hand, a hard decline is a permanent and irreversible type of credit or debit card decline. These are less common, but generally more serious as they often relate to security issues with the credit or card holder. A hard decline could be a result of a:

Stolen or fraudulent card

This happens when a bank flags that the person using the card may not be the legitimate card holder, or when the real cardholder reports their card as stolen. This type of credit card decline can happen with in-person or online card-not-present transactions. In this case, a transaction should not be retried and services should be denied to the cardholder.

Invalid card

More common in card-not-present transactions, and usually the result of a typo in an online form, invalid card declines concern incorrect card numbers, CVV verification numbers or other card details.

Processor decline

This type of decline comes without explanation on behalf of the bank, and can be frustrating for a customer to experience. This type of decline could be the result of a closed account, insufficient funds, or another type of issue between the customer and their financial institution.

False declines are also a common issue. When a customer’s card declines, it can be difficult to decode the error message on your POS system, and the error may not be valid at all. Sometimes, a card declines without a clear reason, and a cashier must troubleshoot the issue with the customer.

How do I avoid credit card declines?

Although many types of debit or credit card declines are unavoidable on the merchant side, you can still protect your business from fraudulent transactions that may result in costly declines or chargebacks.

Your POS system is the first line of defense in preventing these types of transactions from affecting your business. Whether your business works in-person or online (or both) a multilayered security system is essential for protecting yourself and your customers from both fraud and false declines. These systems evolve as threats to cardholder safety become more complex and widespread, making sure that you’re never left vulnerable to e-commerce fraud. Safety features like EMV chips can also add an extra layer of security to in-person transactions, while requiring address verification and CVV codes can make online transactions process smoother.

As of 2020, credit card fraud accounts for 30% of all identity theft reports, and it shows no sign of stopping any time soon. This means you can never be too careful when looking for a multilayered security system for your payment systems, for both your in-person stores and online platforms.

What do I do if a customer’s credit card declines?

Credit card declines can be frustrating and embarrassing for both businesses and customers. The most important thing to keep in mind is that many credit or debit card declines can be resolved with a customer and their financial institution. Business owners should never assume that a customer’s card decline means that they don’t intend to pay for the product or service offered. Always give your customer the benefit of the doubt, and take a collaborative approach to solving the issue as quickly and painlessly as possible.

For in-person transactions, you have the opportunity to make a customer feel at ease, even in a potentially embarrassing situation. In the case that a customer experiences a soft decline, you can quietly inform them of the issue and share the details of the error code. From there, the customer will have the opportunity to confront the problem in the manner that makes them most comfortable. You can tend to other transactions, and even make conversation, until the customer is ready to retry their payment card.

Although online transactions don’t allow for the same kind of personal interaction, you can still help your customer navigate a card-not-present decline and retain a sale. Error messages that explain the nature of the decline can help a customer understand their card issue while building trust in the security of your online payment gateway.

In some situations, a card decline cannot be resolved in-store or within a reasonable amount of time to complete the sale. You can still discretely inform your customer, thank them for coming into the store, and sending hopes that they’ll return.

Credit card declines: the big picture

Credit or debit card declines aren’t fun for anyone – especially your customers. But they don’t have to be the end of the world. By keeping your payment systems secure, and treating your customers with respect, you can navigate every kind of credit card decline with ease.

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