Reduce Your Credit Card Decline Rate WITHOUT Seeing a Surge in Fraud Attempts
Every declined credit card transaction represents more than a lost sale. It’s a lost opportunity to build a positive relationship with a customer.
Card declines can really impact your customer experience, putting more barriers between you and your buyers. That’s why it’s important to keep track of each decline and take steps to try and prevent them.
Do you know your credit card decline rate? What does it say about your business, and what can you do to bring that number down? Let’s find out.
Recommended reading
- Authorization Holds: What are They & Why Are They Used?
- What Are Transaction IDs? How They Help Stop Fraud
- Credit Card Decline Codes: The Complete List for 2025
- Do You Know the Credit Card Authorization Codes?
- What are Card-on-File Transactions?
- Credit Card Transaction Process: How the 5 Step-Cycle Works
What is a Credit Card Decline Rate?
- Credit Card Decline Rate
A credit card decline rate represents the cumulative number of declined credit card transactions a merchant attempts, as a portion of the total number of transactions in a given period of time. Credit and debit cards may be declined for a lack of funds available in the cardholder’s account, incorrect payment information or PIN entries, outdated AVS information, or other complication.
[noun]/kre • dət • kard • də • klīn • rāt/
Let’s say you’re trying to conduct a transaction with a customer. Your payment processor will communicate electronically with the cardholder’s bank to determine if you have their permission to proceed. This happens with every single card transaction.
A customer’s credit card can be denied for several reasons. This information will then be relayed to you via a credit card decline code.
Your decline rate represents the total number of declines you process in a given period. This is important to know; keeping your decline rate as low as possible helps:
Decrease Disputes
Limit Customer Dissatisfaction
Increase Revenue
As we’ll see in the next section, your decline rate can be a key indicator that can help you resolve problems and capture more sales.
How Often Do Credit & Debit Cards Get Declined?
Visa and Mastercard data suggest that approximately 15% of recurring transactions are declined. Looking at specific card decline codes, code 05 (“Do Not Honor”) and 51 (“Insufficient Funds”) are attached to roughly 80% of all declined transactions.
It’s difficult to get any solid figures for average credit card decline rates. On one hand, data from Visa and Mastercard suggest that around 15% of recurring payment attempts are declined. It gets more complicated when we drill down to the reasons for declines, though.
The actual percentage of declined transactions varies widely across payment industries and verticals. It’s dependent on the specific card networks and processors involved in the reporting process. Some verticals report much higher decline rates than others, and some fail to report at all.
Below, we’ve outlined an approximate projection of the most commonly issued credit card decline codes, and the rate at which banks issue them:
As we see, about four out of every five credit card declines are due either to a generic decline (“Do Not Honor”) message, or to insufficient funds in the cardholder’s account. In the latter case, it’s usually because the transaction has tripped the bank’s fraud detection mechanisms, and may be a case of fraud. In the latter case, it’s simply because there are not enough funds in the customer’s bank account to cover the cost of the transaction.
Furthermore, FlexPay surveyed credit card approval rates across multiple US states back in 2019. Looking at the data, we see a mean approval rate of about 87%. This would imply that the national credit card decline rate hovers right around that 15% mark published by Visa and Mastercard.
There is bound to be some differentiation between credit and debit card approval rates. That said, the disparity is relatively negligible.
Why Credit Card Decline Rates Matter
Card declines result in wasted advertising and loyalty program spend, as well as lost transaction fees and revenue, among other consequences.
A lot of the decline codes you will receive are outside of your control. If the cardholder’s bank responds to your authorization request with a “Do Not Honor” or “Exceeds Approval Amount Limit” message, then you should comply without question.
Still, a lot of time, hard work, and money goes into every sale. A declined order translates to:
Lost transaction fees
Wasted advertising and
marketing costs
Resources for customer loyalty programs wasted
Lost revenue to declined orders
According to a survey from Profitwell, credit card declines were the leading cause of customer churn among subscription businesses accounting. They account for 20-40% of churn and cancellations.
You want to avoid declines wherever possible. Tracking your credit card decline rate, and the rate at which you receive specific codes, can help you diagnose problems and resolve them before they trigger more unnecessary declines.
For instance, if you see an uptick in your card decline rate tied to decline code “94 — Duplicate Transmission,” you may need to examine your authorization request process for potential errors. Or, if you get multiple rejected authorization requests with code “3 — Invalid Merchant,” you need to contact your bank right away.
Most decline code responses are not your fault. But, most customers are unaware of all the decline codes and the various explanations banks may have for them. To the cardholder, getting declined can be a negative experience that they’ll associate with your business. So, stopping declines from happening whenever possible is a crucial practice.
What Should You Do About Credit Card Declines?
If you suspect you’re experiencing a soft decline, simply confirm you keyed in everything correctly or wait around for a minute and try again. If you suspect a hard decline, tell the cardholder to contact their issuer or use a different payment method.
As we mentioned above, there are many issues that could lead to a card decline. A decline might be the result of an issue on the cardholder's end. Or, it could be due to input errors on your part, like mis-entered details for a manual card entry, or duplicated transactions.
Other roadblocks could result from damaged cards or incorrectly entered customer credentials. Some could even occur during the communication process between banks.
In any case, it’s best to err on the side of caution. You can try requesting authorization again, but never try to force through a transaction without authorization approval. When in doubt, it’s best to ask for another form of verification and payment.
The bank may also ask you to take the card or destroy it in cases of suspected fraud. In these situations, you should probably just cancel the sale outright.
Common Reasons for Card Declines
Soft Card Decline — Retry Transaction
Mis-typed transaction details
Issuer system outages
Other Declines — Try another Card
Expired cards
Insufficient funds
Invalid account numbers
Only part of the transaction is approved
The transaction exceed the withdrawal limit
Other issuer errors
Hard Card Decline — Do Not Reattempt
Suspected fraud
Stolen Cards
Duplicate transaction
Even if you receive authorization, you should keep a record of every transaction. Submit them for automated fraud screening, and flag any that seem suspect for further investigation.
Odds are, if fraud was attempted, the fraudster may try to use the card again, or defraud another merchant later on. If the situation calls for it, you can inform the authorities and report it to the Federal Trade Commission.
Reducing Your Credit Card Decline Rate
Understanding why declines happen and which decline codes you’re encountering are good first steps. Afterwards, deploying complementary fraud detection solutions, manually reviewing orders, proactive communication with customers, and staying ahead of the technological curve can help you avoid declines.
You don’t have to accept a high credit card decline rate as a fact of accepting payment cards.
Aiming to limit declines can help you hone your customer service experience. It can also help you reduce churn, increase profits, and improve relationships with credit networks and banks.
Adopting a few best practices can help lower your overall credit card decline rate and protect your bottom line. These include:
Reduce Risk. Improve Relationships. Recover Revenue.
Ultimately, only you can diagnose how much you stand to lose due to avoidable authorization declines. How you use that data to better insulate your business from future losses, is also up to you— and extremely important.
That said: managing risk is not something you have to tackle alone. The key is to partner with the right service provider to help you mitigate both problems as part of a broader strategy.
Chargebacks911® offers the industry’s only data-driven, fully managed solution for chargebacks. We combine advanced, proprietary machine learning with human expertise, developing customized strategies to manage chargebacks and fraud. And it’s all backed by a 100% ROI guarantee. Click below and get started today.
FAQs
What is a soft decline?
A soft decline occurs when a transaction fails temporarily. System glitches or incorrectly entering billing information can result in soft declines. Once remedied, the transaction may be retried.
What percent of credit card transactions are declined?
Data projections from multiple sources suggest that the national average credit card decline rate hovers somewhere between 15-20% of credit card transactions.
The actual percentage of declined transactions varies according to the card networks and processors involved in the reporting process. Another complicating factor is the type of business or vertical in which the merchant operates. Some verticals report much higher decline rates than others, and some fail to report at all. As a result, hard data for credit card decline rate statistics across all verticals is difficult to come by.
How do credit cards get declined?
Credit card declines happen when an issuer responds to a request for authorization with a decline code. A merchant might receive a decline code for many different reasons; some result from merchant input errors, like mis-entered details or duplicated transactions. Others could result from damaged cards or incorrectly entered customer credentials. Some could occur during the communication process between banks.
Do merchants get charged for declined transactions?
Yes and no. Merchants do not pay interchange fees for declined transactions. However, merchants may be assessed authorization fees every time a cardholder swipes their card, even if the transaction is ultimately declined.
What is the difference between hard and soft decline?
A hard decline occurs when a transaction is permanently rejected. Suspected fraud, the use of an expired or stolen card, and a closed payment card account can result in a hard decline. On the other hand, a soft decline is a temporary decline, which can be rectified by confirming the transaction details or simply waiting a while before reprocessing the transaction.
