Reasons Why Issuer Declines Happen?

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Credit card declines are not only frustrating but costly for a merchant. An issuer declined message from a credit card issuing bank means you’ll lose revenue from the cancelled transaction, and you may also need to pay additional fees if you ignore the message. Not to mention that the failed transaction comes with a chargeback fee that also affects your chargeback ratio.

When a credit card is rejected, a merchant receives a unique code, and a short message such as “card issuer declined” or “transaction declined” shows that the credit card issuer has put a stop to the transaction. In some other instances, you may get a merchant override decline message. But what does merchant override decline mean, and why would a card issuer rejection happen? In this article, we’ll discuss what is a card issuer decline, the various reasons why it happens, and what you can do to prevent it.

What Is an Issuer Decline?

Reasons Why Issuer Declines Happen

If in your business you accept credit cards as one of the payment methods, you’ve likely experienced credit card issuer declines. When a credit card is declined, you’ll often receive a response code and a short message that details the reason for the rejection. It means that the card issuer has declined, is unwilling, or unable to authorize the transaction. In other instances, you may get a “merchant override decline” message meaning that although the transaction has been approved by the credit card issuer, the merchant bank has declined to authorize it.

Card Issuer Declines Can Be Classified Into Two Categories:

  • SOFT DECLINES – Soft declines occur when a card insurer places a temporary hold on the credit card transaction. This often happens if the customer’s account doesn’t have sufficient funds or due to network connectivity issues from your end or the card issuer’s end. A soft decline is often resolved by retrying the merchant declined transaction
  • HARD DECLINES – A hard decline occurs due to more serious issues such as fraud or using a stolen card.  In this case, the card issuer will be unwilling to authorize the transaction even after a retry.

There are many reasons why credit card declines happen, and knowing how to stop them can help save your customer’s face and also help you as a business avoid financial losses.

Main Reasons Why Issuer Declines Happen

Card Declined by Issuer Due to Insufficient Funds

One of the common reasons why a customer’s credit card may be declined is due to insufficient funds. During the authorization of a transaction, the card issuer will check if the customer has sufficient funds to pay for the transaction. In case the funds aren’t enough, then the issuer won’t authorize the transaction. Alternatively, the card issuer may reject the transaction if approving it may put the customer over their credit card limit. For instance, let’s say a customer’s credit limit is $3,000 and they have a $2,500 balance, if they try to purchase goods worth $1,000, then the transaction won’t be authorized.

There is nothing much you can do when it comes to insufficient funds issuer declines. However, you can always request your customers to pay with an alternative payment method such as cash or another card. You can also offer the customer an alternative payment option to help prevent the loss of revenue due to the lost sale. For instance, you can let such customers pay in instalments or provide “buy now pay later” arrangements. Mobile payment processing options or the use of apps such as PayPal are other alternatives that can work in such a scenario.

Card Issued Decline due to Incorrect Details

A card issuing bank may also decline a transaction due to incorrectly entered card details. For instance, if the customer has entered their credit card number, billing address, card code verification, or expiration date incorrectly, the transaction may be declined. In some cases, this decline response may come up due to non-existing credit card details.

If you are looking for the no issuer response meaning, A quick fix that often works in such a case is to double-check the card details and retry the credit card transaction. Another possible solution that can help reduce incorrect details card issuer declines is to tokenize the payment details of frequent customers. This way, instead of the customer keying their details every time they shop, you can use the already tokenized details.


Other Reasons for Issuer Declines

In addition to the discussed reasons above, card issuer declines may also occur due to a myriad of reasons, as explained below:

Other Reasons for Issuer Declines

NO SUCH ISSUER DECLINE
A no-issuer card response means that the card number is not supported or the card issuer doesn’t exist. Double-check the card issuer and the card number and enter the correct details. If you’re using Visa, the card number should always start with 4, while Mastercard card numbers start with 5.

SUSPECTED FRAUD
The card issuing bank can put you in merchant declined transaction scenario, if there is suspicious activity on the credit number provided. The issuer will most likely give you instructions on how to proceed after getting this message. Remember, you should never process a credit card transaction with a suspected fraud response unless instructed otherwise by the card issuing bank.

THE CARD WAS DECLINED
The card issuer may decline a transaction because the credit card used isn’t enabled to pay for online transactions. As a merchant, request the cardholder to contact their credit card company for them to authorize the card for online payments. Also, offer them alternate payment solutions.

A LOST OR STOLEN CARD
The card issuer may face a transaction denied due to card issuer rejection because the card owner reported it as lost or stolen. In such an instance, you should first validate the card owner’s identification and then refer them to their card issuing bank. Notably, never retry transactions with a response of a lost or stolen card as this can make you liable for fraud.

INVALID AMOUNT OR INVALID TRANSACTION
The credit card company can also decline a transaction if the amount details are entered in the wrong format or field. Always double-check the payment details and ensure the amount doesn’t have incorrect symbols. In case the response persists, request the customer to use another payment method.

EXPIRED CARD
This response means that the card has expired and the customer can no longer use it. You can ask the customer to switch the card with a new one if they have already renewed the card. In case the customer hasn’t renewed their card yet, ask them to get a new one from their credit card company. You can also request them to pay with alternative payment methods to recapture the sale.

TEMPORARY HOLD
A card with a temporary hold is often over its credit limit and can’t be used to pay for a transaction. In this case, you can ask the cardholder to contact their bank and also let them know that they can pay using alternative payment methods. If you are looking for card issuer rejection meaning, Then you need to understand that a temporary hold decline response occurs due to a temporary lock on the credit card funds by another merchant. This occurs because there is a pending charge on the customer’s account due to a transaction that has not yet been paid. Most entertainment, hotels, and car rental merchants will put temporary holds on their customers’ accounts until outstanding credit card payments are settled.

Consequences of Issuer Declines for Merchants

Issuer Suspected Fraud

When a card issuer suspects fraud, it indicates they have seen perhaps suspicious activity on your card, which is why a transaction has been declined.

Merchants need to understand the reasons why credit card issuer declines happen so that they can help resolve them before they occur. For a customer, a declined payment may mean they won’t be able to pay for the item with their credit card unless they use another payment method. For a merchant, a payment decline negatively impacts them in multiple ways even when it isn’t their fault. For starters, when a credit card is rejected you have to deal with lost revenue from the lost sale.

  • Besides, most customers will blame the merchant for a credit card decline even if the fault may be the customers. This leaves the merchant with a disgruntled customer who may be unwilling to return. Further, a card issuer rejection also results in chargeback fees. The card issuer will also add the rejected credit card transaction to your chargeback ratio which results in a higher rate. A very high chargeback ratio will result in the merchant being classified as high risk which can make it harder for your business to get merchant account services.
  • We recommend that merchants attempt to handle denied transactions in light of the available information. When a credit card denial is unavoidable, it’s best to assist the consumer in completing the transaction. To let the customer realize that it wasn’t your fault, you can begin by explaining to them why their card was denied. Ask them if they would be willing to use a different payment method to complete the transaction after that.

Examples of alternative payment methods that you can have for customers include PayPal, digital wallets, cryptocurrency, instalments, cash, and ACH transfers. Lastly, help the cardholder get in touch with their credit card company as some of the rejection issues can be resolved with timely communication.

 

Final Thoughts

In conclusion, while issuer declines may appear unavoidable, businesses should take deliberate initiatives to reduce their occurrence. Merchants may improve the whole payment experience and create closer relationships with their consumers by remaining informed, communicating effectively with customers, and implementing preventative measures. Card issuer declines are frustrating to both the customer and the merchant. When a card issuer decline occurs, your customer will be unable to make the payment using their card and you’ll also lose a sale in the process.

The key is proactive management and a commitment to recognizing and addressing the fundamental reasons for card issuer declines. Hopefully, after reading this article, you now understand why card issuer declines happen and how you can minimize them. 

Short Overview: The Card Issuer Rejection!

Your payment was denied due to issuer decline (bank) due to a problem with the card or transaction, which is what all three terms fundamentally mean. It’s just different phrasing by the various groups involved. However, we will try to figure out the particular answer to each of these most frequently asked public queries.

What does card issuer rejection mean?

Card Issuer Rejection: The card issuer (bank or financial institution) has refused the transaction, usually owing to insufficient funds, failed payment, security concerns, or other difficulties.

What does merchant override decline mean?

Merchant Override Decline: The merchant possesses the possibility to override a declined transaction to get over the card authorization failed issue, although this shouldn’t be done because it may lead to possible fraudulent activity.

What does it mean when bank issuer decline card BECU?

Your BECU card may be refused for several reasons, such as inadequate funds, going over your credit limit, questionable behaviour, out-of-date card information, or restrictions based on your region. Despite this, getting in touch with BECU directly to discuss the issue and find a solution is a terrific idea.

Why is my debit card declining when I have money?

Having trouble with a debit card rejection? Review your daily spending restrictions, look for any unusual activity with your bank, check for inadequate funds, and find out if there are any damage or expiration issues with your card. Technical issues may also be the cause, so try again later or with a different card. In the end, The best thing to do is get in touch with your bank if you don’t know why your card was denied.