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:
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.
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.
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.
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.