False Declines

August 6, 2021 | 11 min read

How to Prevent False Declines on Credit Card Purchases

False declines are legitimate transactions incorrectly rejected by either a merchant or by the bank. The problem is more common than you might think. In fact, as many as seven in ten transactions rejected by merchants may be false declines.

Imagine one of your customers submits a transaction. Your fraud detection tool taps this transaction as suspicious, or it raises a red flag during the manual review. You reject the purchase, assuming the transaction is a case of criminal fraud. Statistically speaking, though, there’s a better chance that it was really a false decline.

False Decline

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A false decline on a credit card or debit transaction refers to a legitimate card purchase that is rejected by mistake. This may be done by either the merchant or the issuing bank.

False declines (sometimes called false positives) are one of the biggest issues plaguing eCommerce merchants. Roughly 10% of all eCommerce dollars get rejected. It could be even worse for merchants operating in more susceptible verticals like high-end fashion or travel. Businesses in those industries can experience payment decline rates of 20%, or even 30%. This brings the total cost of false declines to $443 billion every year. Ironically, that’s substantially higher than the actual cost of credit card fraud.

Merchants are throwing away legitimate transactions with no real benefit for the business. Even worse, they also alienate good customers. Four in ten consumers say they will refuse to shop with a merchant that falsely rejects one of their purchases.

Every false decline means a direct loss of revenue now, plus a potential loss of even more revenue in the future. Fortunately, there is a solution to this problem.

In this post, we’ll take a closer look at false declines. We'll see how you can avoid them to help boost authorizations and overall sales. With this information, you’ll be able to increase revenue and build better relationships with shoppers.

Bank-Initiated False Declines

False declines have two possible sources: the bank or the merchant. These errors will cost merchants—just like you—hundreds of billions of dollars this year. Why is this the case, though?

Banks may opt to reject a transaction for a variety of reasons. These are three of the more commonly cited triggers for false declines on credit card transactions:

Ticket Value

Ticket Value

Credit card fraudsters want to get as much value out of their scheme as possible before its discovered and the card is deactivated. As a result, they typically target higher ticket-value items, like luxury goods.

Cross-Border Transactions

Cross-Border Transactions

International transactions carry more inherent risk than domestic transactions. This is especially true when currency conversion comes into play. Currency conversion can obscure some transaction details.

Outdated Infrastructure

Outdated Infrastructure

Industry policies and bank rulesets can’t always keep pace with innovation. As a result, procedures are often out-of-step with consumer behaviors. For example, today’s consumers are more likely to make purchases with a delivery address that differs from the billing address on file.

False Positives Will Fade Away

…with the help of the industry’s leading chargeback experts. Learn more now.


Merchant-Initiated False Declines

Bank-initiated false declines are only part of the problem. What about merchant-initiated false declines?

There are many scenarios in which you might unintentionally reject a legitimate purchase. Even the most advanced, dynamic fraud filters still rely on algorithmic decisioning based on common fraud indicators. These include:


Is the shopper’s geographic location near the billing address on file with the bank?

Delivery Address

Does the delivery address make sense based on the shopper’s location?

Shipping Option

Did the buyer request rush shipping to get the goods as soon as possible?

Dollar Value

Was the transaction value unusually high given the products ordered?

Multiple Orders

Did the buyer submit multiple orders using multiple payment cards?

Cardholder Information

Did the shopper provide accurate and complete information?


Did the buyer submit numerous similar (or identical) orders in quick succession?


Is the buyer’s address in a part of the world with a reputation for fraud?

Address Mismatch

Does the shipping address provide match the billing address?

This is not an exhaustive list of indicators. Fraud filters are complex, drawing on many inputs to try and identify fraud. At the end of the day, though, they’re still automated processes. They need human oversight.

What Can be Done About False Declines?

It’s clear that false declines are a massive problem for the eCommerce market, in particular. Fortunately, there are some steps you can take at the individual merchant level.

New advancements in artificial intelligence (AI) are going to play a role. Machine-learning technologies can allow you to introduce dynamic routing. This means you can route transactions to the bank so as to clarify details and improve the odds of authorization. For instance, routing a cross-border transaction through a processor located in the same country as the buyer.

You may also be able to re-attempt authorization after a decline. You should changing the circumstances (time and date, for example) of the payment submission to improve the odds of authorization, though. Development circles refer to this as "retry logic."

Machine learning can uncover the best schedule for resubmitting a transaction. It does this by leveraging data from similar submissions that received authorization to find the best solution.  This can be especially useful if you’re a subscription merchant. Your success depends on reducing churn, and any progress on that front will help.

Of course, deploying either of these AI-enabled solutions depends on your payment provider. You should look to partner with providers who can leverage these tools. This will help you manage billing, structure payment flows, and improve your authorization rates.

Steps to Prevent Payment Card False Declines

There are internal steps you can take to manage false declines in your operations, too. We recommend that you:

Understand Decline

Understand Decline

The first step is to develop a clear understanding of fraud indicators. You must analyze why some transactions get approved, while others are rejected.

Make Data-Driven Decisions

Make Data-Driven Decisions

Don’t reject orders based on generic indicators. Deploy smarter, more advanced fraud filters capable of understanding context more clearly.

Adopt a Multilayer Strategy

Adopt a Multilayer Strategy

One or two indicators won’t provide enough data. You need multiple, complimentary fraud detection tools to provide adequate insight into each purchase.

Manually Review Orders

Manually Review Orders

Don’t just automatically reject all purchases flagged by your fraud filter. You should review all questionable transactions to ensure accurate decisioning.

Reach Out to Customers

Reach Out to Customers

Trouble verifying a transaction that was flagged as suspicious? Try reaching out to the buyer directly to confirm the purchase.

Keep Pace With Technology

Keep Pace With Technology

Don’t overlook new advances in AI-enabled technology. Fraud is a fast-changing problem; your response needs to evolve just as quickly.

Of course, all these approaches to eliminating false declines on credit card transactions call for significant, in-depth data analysis. That means you need access to a broad range of transaction indicators. The more information you have, the better. In many cases, it helps to have data that extends beyond just what one merchant can see.

Balancing False Declines & Chargebacks

Managing false declines calls for a delicate balance. Let’s look at chargebacks as a point of comparison.

One of the main chargeback management problems facing merchants is a lack of data insight. Most merchants can’t identify chargeback sources effectively. As a result, they end up deploying fraud detection tools and strategies ineffectively. The result: more false declines, while preventable chargebacks go unaddressed.

Optimizing the balance between false declines and chargebacks is difficult—if not impossible—to accomplish on your own. Manual reviews are time-consuming and expensive, and there’s no guarantee of success.

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.

False positives may cost merchants $443 billion this year…but they don’t have to. Prevent chargebacks. Eliminate false positives. Learn more today about how much you could save with Chargebacks911.


What is a false decline?

A false decline on a credit card or debit transaction refers to a legitimate card purchase that is rejected by mistake. This may be done by either the merchant or the issuing bank.

How do you handle declined cards?

The key is ensuring that the decline is legitimate. You can verify this by setting your fraud filter to flag suspicious transactions, based on a variety of indicators, then performing manual reviews on flagged transactions.

What is a soft decline of the credit card?

A soft decline happens when a cardholder’s issuing bank authorizes a purchase, but the purchase is rejected because of merchant rule settings. The authorization is completed successfully, placing a hold on funds in the customer's account, but settlement has not yet occurred.

What percentage of credit card transactions are declined?

Roughly 10% of all eCommerce purchases get rejected. It could be even worse for merchants operating in more susceptible verticals like high-end fashion or travel. Those businesses can experience payment decline rates of 20%, or even 30%. This brings the total cost of false declines to $443 billion every year.

Why would the bank decline a transaction?

Banks may opt to reject a transaction for many reasons. Three common triggers for false declines on credit card transactions include high-ticket value, cross-border transactions, and outdated payments infrastructure.

What is a chargeback transaction?

A chargeback occurs when a cardholder disputes a transaction, saying it was invalid or unauthorized. Legitimate chargeback claims can occur when a transaction that should have been declined by the merchant’s fraud detection technologies gets processed as normal.

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