Methods for Dealing With Declines in Credit Card Processing

This blog has spent a considerable amount of time talking specifically about credit card processing with card processing fee reduction tips, primers on credit card processing terms, and a look at debit versus credit cards. However, it has been some time since we discussed the concept of declined credit card transaction recycling.

While rare, transactions can get declined during the normal course of transaction processing (especially, in the context of recurring billing). Depending on the gateway provider, various tools can be used by the business to ensure that credit card processing approval rates are maximized. In the case of a lost or stolen credit card, where a new card with a new number is issued, the use of the old card’s token for recurring payments can result in a decline.

While this type of card decline can’t necessarily be prevented, there are some types that can be averted, such as:

  • Expired card accounts have not been updated
  • Timing of the authorization
  • Processing errors related to the authorization message

Your payment gateway should provide an error code, along with a directory of error codes to reference as supplemental information to error responses. The fact of the matter is that cards decline for a number of reasons that usually result in error categories, including communication errors, merchant errors, fraud prevention declines, soft declines, and hard declines.

Overall, when it comes to credit card transaction declines, they can be classified as soft or hard.

Hard declines are those where there is no chance of recovering the funds as in the case of closed accounts or stolen cards. Soft declines are more often the result of insufficient funds, which have a much more realistic chance of collections.

While you should know the basics of card declines, you will still require help to improve your authorizations and prevent declines from happening to protect your revenues. The good news is Visa and MasterCard offer a number of tools to help you do just that.

The right payment solutions provider can help businesses to understand the types of declines and different implications between them, as well as how to utilize the tools available to minimize the decline ratio. The goal is to help businesses to minimize chargebacks and maximize profits to the fullest.

To learn how BillingTree’s Payment solutions and services for credit card processing can help streamline your company’s billing practices and boost revenue cycles, contact us today.