Finally! You’ve gotten approved for a merchant account, picked a shopping cart, and integrated your payment gateway. Now you’re eagerly anticipating approved transactions. But what if your first few transactions are returned with a more disappointing message: DECLINED?
When an online credit card transaction is declined, you might assume there’s something wrong with the payment gateway or your integration, but usually this is not the case. Declined transactions are a normal part of processing online, especially for high risk merchants. There’s no need to panic–but it is a good idea to try to find the reason for your declines.
There are actually two types of transactions that aren’t approved: errors and declines. Errors are transactions that fail due to a problem with the transaction itself. For example, if the customer fails to submit an expiration date, a payment gateway might reject the transaction. Why? First, most banks will reject the transaction for the same reason. Second, and most importantly, transactions that are missing card information or customer information have a higher chance of being fraudulent. Most gateways will let you know in their return message if the problem is caused by missing information, so you can alert the customer. Transactions that fail due to a technical problem, such as loss of internet connectivity, are also errors.
True declines are transactions that are technically sound but get rejected due to fraudulent behavior, insufficient funds, or other logistical problems. The acquiring bank, the card issuing company (like VISA or MasterCard), or the issuing bank can all decline a transaction. The acquiring bank usually blocks a transaction only if they believe it is fraudulent. This protects you from needless chargebacks. The card companies may have a wide variety of reasons for declining transactions. The issuing bank will block transactions that don’t fit a customer’s usual activity profile, to protect them from fraud. Many (but not all) acquiring banks will return declined transactions with a helpful code that allows you to pinpoint the problem.
If you’re a high risk merchant, don’t be too alarmed if you see a few declines, even if the ratio is high on a certain day. First, take a look at all the transaction details. Often the merchant panel in your gateway will have all the information you need. If you have a very high number of declines, take a look at the most common reasons for the declines, and try to determine if there’s anything you can do to run more successful sales.