Understanding Credit Card Processing Decline Codes: A Comprehensive Guide

Using credit cards has become a common practice in modern-day transactions, thanks to their convenience. However, sometimes a transaction may be declined, leaving the customer confused and frustrated. This is where decline codes come in. A decline code is a numerical or alphanumeric message generated by a credit card processor to indicate why a transaction was not approved. These codes are essential in determining why a transaction is declined and how to resolve the issue to complete the transaction successfully. Understanding decline codes is crucial for both merchants and customers because they play a significant role in boosting customer satisfaction and business profitability. In this article, we will look at some of the most common credit card processing decline codes and how to handle them.

Understanding Credit Card Processing Decline Codes: Common Reasons for Transaction Failure

Credit card processing decline codes refer to specific numerical codes that are returned during the payment process for credit and debit card transactions. These codes are generated by the bank or payment processor to indicate the reason why the transaction was declined, helping merchants to understand why the payment failed and take necessary steps to rectify the issue as soon as possible.

Here are some of the common reasons why transactions fail and the corresponding decline codes that merchants should be aware of:

1. Insufficient Funds

When a customer’s account has insufficient funds, the transaction will be declined by the issuing bank. The corresponding decline code is usually “Decline: 51”.

2. Expired Card

Cards that have expired cannot be used for transactions. The corresponding decline code is usually “Decline: 54”.

3. Suspicious Transactions

If the bank suspects fraudulent activity on a transaction, they will decline the transaction. The corresponding decline code is usually “Decline: 05”.

4. Invalid Card Number

If the card number is incorrect or invalid, the transaction will be declined. The corresponding decline code is usually “Decline: 14”.

5. Invalid Expiration Date

If the expiration date entered for the card is incorrect, the transaction will be declined. The corresponding decline code is usually “Decline: 54”.

6. CVV Mismatch

If the CVV (Card Verification Value) code entered during the transaction does not match the one on the card, the transaction will be declined. The corresponding decline code is usually “Decline: 78”.

7. Cardholder Restrictions

Some cards may have specific restrictions set by the cardholder that prevent certain transactions from being processed. The corresponding decline code is usually “Decline: 62”.

8. Network Communication Error

If the payment processor cannot communicate with the issuing bank, the transaction will be declined. The corresponding decline code is usually “Decline: 91”.

9. Declined by Customer

In some cases, the transaction may be declined by the customer for various reasons. The corresponding decline code is usually “Decline: 05”.

10. Merchant Error

Merchant errors, such as entering incorrect transaction details or attempting to process a card that is not accepted by their payment processor, can also result in a declined transaction. The corresponding decline code may vary depending on the error.

Understanding the various credit card processing decline codes and the reasons behind them is critical for any online merchant. By being aware of these common issues, merchants can take the necessary steps to prevent failed transactions and ensure a smooth payment process for their customers.

The Main Reasons Why Credit Card Processing Declines

Credit card processing decline codes refer to the specific messages that indicate what went wrong with a transaction that was attempted with the use of a credit card. While declines can be frustrating to business owners and customers alike, they ultimately serve as a mechanism to prevent fraud and keep the processing system secure. Here are the main reasons why credit card processing declines occur:

1. Insufficient funds

When a customer’s credit card balance or available credit limit is not enough to cover the cost of the transaction, a decline occurs. While this can be frustrating for the customer, it is vital for preventing overdraft fees and other financial complications.

2. Incorrect information

One of the most common reasons why credit card processing declines happen is because of incorrect card information, such as the expiration date, the CVV code, or the billing zip code. Double-checking this information can help prevent these types of declines.

3. Suspicious activity

Credit card companies employ algorithms to detect suspicious activity, such as purchases made in foreign countries or unusually large transactions. When suspicious activity is detected, a decline will occur to prevent fraud.

4. Expired card

When a credit card has passed its expiration date, a decline will occur to prevent the use of outdated card information.

5. Transaction amount

In some cases, a credit card may have a limit on the amount that can be charged per transaction or per day. When this limit is exceeded, the transaction will be declined.

6. Merchant restrictions

Merchants may have restrictions on certain types of purchases or may not be authorized to accept certain types of credit cards. When a customer attempts to make a purchase that is restricted, a decline will occur.

7. Technical difficulties

Sometimes, technical issues can arise during the processing of a credit card transaction that leads to a decline. This can be caused by a wide variety of factors ranging from outdated processing equipment to network connectivity issues.

8. Fraud concerns

If a credit card has been reported lost or stolen, or if there are concerns about fraudulent activity on the card, the transaction may be declined to prevent any further unauthorized charges.

9. Over-reaching limits

In some cases, a credit card may have limits on the number of transactions that can be made in a certain time frame. When these limits are exceeded, the transaction will be declined to avoid overburdening the cardholder.

10. Account issues

Finally, there can be a range of different account issues that can cause credit card declines. For example, if there is a hold on the account, if the account is closed, or if there is a problem with the signature pad at the point of sale, the transaction may be declined.

Common Credit Card Processing Decline Codes

Credit card processing decline codes can be frustrating for customers and merchants alike. Yet it’s inevitable. You will not always get approval for every transaction, and the data the individual system generates explains why. Understanding the cause of decline codes can reduce chargebacks, enhance the customer experience, and improve revenue collection. Here are some of the common credit card processing decline codes to be aware of.

Insufficient Funds

When a cardholder has insufficient funds in their account, a transaction will be denied due to the lack of available funds. Overdraft fees could be added to the customer’s account if the transaction was approved, causing further frustration. You might want to urge the client to deposit more fund or check whether an alternative option is possible to complete the buy.

Fraudulent Activity

Security is a top priority for banks and financial institutions. As a result, a payment will be denied if there is a suspicion of malicious activity or fraud. Credit card providers will not approve transactions that look suspicious because they don’t want to risk fraudulent charges. Proactively recognizing and responding to scams can keep the customers safe and secure.

Expired Card

Cards that have expired, or the dates are invalid, will almost always be rejected when a customer tries to buy something. This typically occurs when a customer forgets to renew their subscription, and it becomes obsolete. To avoid such issues, remind customers to keep their cards up to date and check for expiration dates while processing.

Cardholder Inactivity

When accounts have been inactive for an extended period, such as over six months, credit card companies may deny transactions. As a result, customers’ accounts might appear as “Inactive.” It’s crucial to read the specifics and contact the customer to verify the cardholder’s information once they have been identified as inactive.

Transaction Limit Exceeded

Credit cards have limits that limit spending per day or transaction. This normally isn’t an issue, but it could be when attempting to complete an illegal transaction. As a merchant, it’s essential to be transparent about the limit when dealing with clients and to check how customers want to make payment before beginning the transaction.

Decline Code Description
01 Card Expired
02 Not Authorized
03 Call Center Network Failure
04 Processor Decline
05 Cardholder Requested to Stop
96 System Malfunction

Understanding and proactively responding to these common credit card processing decline codes can help increase sales and reduce client and merchant annoyance. It’s necessary to evaluate your company’s policies and procedures regularly to ensure that you stay relevant and up-to-date with industry updates that could affect your business.

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Section 2: Pros and Cons of Credit Card Processing Decline Codes

1. Pros of Having Credit Card Processing Decline Codes

Credit card processing decline codes are essential in the payment industry. They serve as a significant tool for businesses and financial institutions to detect and prevent fraudulent transactions. With credit card processing decline codes, merchants can protect their businesses from fraudulent transactions and chargebacks, enabling them to minimize losses. In addition, merchants can quickly identify the reason for a failed transaction and take appropriate action to remedy the issue, such as contacting the card issuer or the customer.

2. Cons of Having Credit Card Processing Decline Codes

While credit card processing decline codes are useful, they can also be a source of frustration for merchants. A decline code can appear for several reasons, including insufficient funds, expired card, or an incorrect CVV code. Some of these issues can be resolved by the customer, while others require merchants to contact the issuer. As a result, the merchant may have to spend more time and resources resolving issues, which can impact their bottom line.

3. Improved Fraud Detection

One of the main advantages of credit card processing decline codes is that they improve fraud detection. Decline codes are generated when a transaction is flagged as suspicious, helping merchants to detect and prevent fraudulent transactions. This can save merchants both time and money by minimizing the number of chargebacks and fraudulent transactions.

4. Increased Customer Confidence

Credit card processing decline codes can also increase customer confidence. When a transaction is declined, it can be frustrating for the customer. However, the decline code can provide a specific reason why the transaction failed, which can give the customer confidence that the merchant is taking their security seriously.

5. Minimizes Chargebacks

Another advantage of having credit card processing decline codes is that they can help to minimize chargebacks. When a transaction is declined, the merchant can take appropriate action to resolve the issue, preventing the customer from disputing the transaction with their card issuer. By minimizing the number of chargebacks, merchants can avoid fees and protect their reputation.

6. Potential for Lost Sales

While credit card processing decline codes can be useful, they can also result in lost sales. When a transaction is declined, the customer may give up and decide not to complete the purchase. In some cases, the decline may be due to an error, which can further frustrate the customer.

7. Increase in Customer Service Calls

Credit card processing decline codes can also result in an increase in customer service calls. When a customer’s transaction is declined, they may need to contact their card issuer to resolve the issue. This can result in an increase in customer service calls to the merchant, which can take up valuable time and resources.

8. Delayed Payments

Credit card processing decline codes can also result in delayed payments for merchants. When a transaction is declined, the merchant may need to wait for the customer to resolve the issue with their card issuer before the transaction can be completed. This can result in delayed payments for the merchant, impacting their cash flow.

9. Over-Reliance on Automated Systems

Credit card processing decline codes are generated by automated systems, which means they may not always be accurate. In some cases, a transaction may be declined for reasons that aren’t related to fraud or insufficient funds. This can result in lost sales for the merchant and frustration for the customer, highlighting the importance of ensuring that automated systems are regularly checked and updated.

10. Increased Risk of Fraudulent Transactions

While credit card processing decline codes can help to prevent fraudulent transactions, they can also increase the risk of fraud. Hackers and fraudsters may use declined transactions to test whether stolen card details are valid. If a transaction is declined, they know that the card details are invalid, but if the transaction is successful, they can use the card details to make fraudulent purchases. As a result, it’s important for merchants to remain vigilant and ensure that their systems are secure.

Thanks for Reading!

I hope this article about credit card processing decline codes was helpful and informative for you. Remember, there are many reasons why a credit card may be declined, but with this guide, you can now understand some of the most common reasons. If you ever encounter a decline code, don’t panic. Take a deep breath, and follow the steps to resolve the issue. And if you have any other questions or concerns in the future, feel free to visit our website again for more information!

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