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Issuer Declines

Issuer Decline

7 Reasons Why Issuer Declines Happen & How to Respond

Few things are more frustrating for merchants than a declined credit card transaction.

You lose revenue from the canceled sale. But, you could be on the hook for additional fees and penalties if you try to process payment without authorization. So, what causes issuer declines…and how should you respond?

In this article, we’ll explain what issuer declines are and have a look at some of the consequences you may face if you ignore them. We’ll also examine the top seven reasons why issuer declines happen and how you can avoid them.

What is an Issuer Decline?

Issuer Decline

[noun]/* ish • yo͞o • wər • də • klīn/

An issuer decline code is a code supplied to a merchant by an issuing bank signifying rejection of a credit card transaction. It means the issuer has placed a stop or hold on a transaction. The specific decline code is meant to give a brief explanation as to why the issuer rejected the purchase.

There are several reasons why an issuer might decline a transaction. Suspected fraud is a common reason, as is insufficient funds in the cardholder’s account.

Transactions that raise one concern or another are considered problematic by the issuer, and would therefore be rejected. To explain the decision, the issuer will assign a decline code for each, summarizing the problem and allowing merchants to respond appropriately.

There are two key types of decline codes:

Soft Declines

These are usually temporary. They may result from an interruption in network connectivity, or insufficient funds in the customer’s account. You can usually retry the transaction after a few minutes to get authorization.

Hard Declines

These are caused by security issues that can’t be resolved by retrying the transaction. It means the issuer refuses to authorize the transaction. This could be due to invalid account information or suspected fraud.

Issuer Declines

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Consequences of Issuer Declines for Merchants

Declined credit card transactions can cause all sorts of trouble for you.

The average merchant only recovers one in three declined credit card transactions. Cardholders tend to blame you, the merchant, even though it’s not your fault or your decision to decline the transaction. This negatively impacts your relationship with the customer. It could even drive them to a competitor.

Another big problem is the threat posed by false declines. False declines by both merchants and issuers come to about $443 billion every year. This is several times greater than the actual cost of fraud. And, in higher-risk industries like fashion or travel, payment decline rates of 20% or even 30% can be commonplace.

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False declines force merchants to throw away legitimate transactions and alienate good customers. According to our research, four in ten consumers will refuse to purchase from merchants that falsely reject a single purchase. This means that every false decline incurs a loss of revenue during the transaction, plus the loss of further transactions with that cardholder in the future.

Fortunately, there are many things you can do to combat criminal fraud and prevent false declines simultaneously. The key is to know the most common reasons why issuers decline transactions, and to take appropriate steps to handle them.

Top 7 Reasons for Issuer Declines & How To Respond

Merchants might be able to respond to or override issuer declines in some cases. That doesn’t mean you should always do so, though.

If the cardholder can verify incorrect details, or the bank has erroneous information on file that the cardholder can rectify, you can fix the issue and override the decline. But, some declines stem from anti-fraud tools designed to catch suspicious activity. In these instances, it’s wise to err on the side of caution and reject the transaction.

See the full list of card decline codes

There are scores of issuer decline codes currently in use. However, we can group most of them into seven basic categories. These seven reasons are why most issuer declines happen:

#1 | Insufficient Funds

If the cardholder lacks the funds to pay for the transaction, there isn’t much you can do to change that. This is a common decline code, accounting for nearly half of all issuer declines by some estimates. The long and short of this? It happens.

The Fix:
Offering alternate payment options at checkout can help you recapture purchases that would otherwise be lost to these declines. “Buy now, pay later” arrangements and P2P apps like Venmo are both popular choices. Installment options, for example, can help recover sales and also improve sales for higher-ticket items.

#2 | CVV or AVS Error

The next most common type of declined transaction is information error, like CVV (Card Verification Value) or address mismatches. These typically happen when cardholders enter their payment details incorrectly at checkout.

The Fix:
You can never entirely prevent this, as accidents will happen. You can make it less likely by tokenizing payment details for loyal customers who have purchased from you before, though. Tokenization is a new technology that allows you to substitute critical personal information for randomized characters that can be safely stored and recovered at checkout.

#3 | Lost or Stolen Card

Approximately one in ten issuer declines resulted from a lost or stolen card. It should be pretty clear that the declined card will never be accepted, as the cardholder has already been sent a new card. If you try to force the transaction without authorization, you are liable for any resulting fraud activity.

The Fix:
There might be a few exceptions to this rule, such as recurring payments that were processed before the card was lost or stolen, for example. However, it’s best to always reject transactions made with cards that have been reported as lost or stolen. Full-stop.

#4 | Unusual Activity

Anything that seems outside of a cardholder’s established purchasing habits can lead to an issuer decline. Everything the cardholder buys is recorded and monitored, and any unusual transactions may be noted and acted upon. Examples can include international transactions, sudden shopping sprees, erratic spending over a certain period, or shopping in suspicious neighborhoods or regions.

The Fix:
If the decline code for unusual activity is received, you should ask the cardholder to call their issuing bank and clarify any confusion. If the network approves, you may try the card again.

#5 | Expired Card

This one should be pretty self-explanatory. This is a common occurrence and can be easily explained by the cardholder. They simply forgot to renew their card or failed to notice that the expiration date had been reached.

The Fix:
The cardholder may simply have forgotten to switch out a new card for their old one. If they have the new card handy, you can try to run the new card. If not, you may be able to recapture the sale by offering additional payment options or asking for a different card, just like with the insufficient funds decline code.

#6 | Temporary Hold

This one is a bit tricky. This is caused by someone placing a certain amount of money on a temporary hold on the cardholder’s account, thereby causing the seller to reach their credit limit without realizing it. Hotels, car rental companies, and entertainment vendors commonly use temporary holds.

The Fix:
If the cardholder is over their credit limit, they will not be able to complete the transaction. The only options are for the cardholder to contact their bank and ask them to extend their credit line, or for you to ask for another card or offer additional payment methods.

#7 | Fraud

Lastly, we come to the most serious reason for issuer declined transactions: fraud. Anytime an issuer denies a transaction due to suspected fraudulent activity, they will detail this in their decline codes. They will usually also include instructions for you as to how you should proceed (more on this in a minute).

The Fix:
The only appropriate response required to combat fraudulent activity is to contact the bank associated with the card for clarification. You should flatly refuse to process any transactions with the card in question.

As mentioned above, if the issuer flags a transaction as fraud, they will include a code meant to tell you what you should do next. These include:

Code 7 - Pick up the card (special condition)

The card issuer has already flagged the account for fraud. The issuer requests that you confiscate the card in question, and not return it to the customer.

Code 41 - Lost card, pick up the card (fraud)

The card has been reported lost or stolen, and the issuer has flagged it for fraud. The issuer requests that you confiscate the card in question, and not return it to the customer.

Code 43 - Stolen card, pick up the card (fraud)

The owner has reported the card stolen, and the issuing bank has flagged it for fraud. The issuer requests that you confiscate the card in question, and not return it to the customer.

Code 215 - Lost or stolen card (fraud)

The card has been reported lost or stolen, and the issuer has flagged it for fraud. You are not required to confiscate the card, though.

Code 534 - Do not honor (high fraud)

The transaction failed on PayPal or Google Pay attempted authentication.

Code 596 - Suspected fraud

Card has been flagged as suspicious, and transactions will be denied.

Issuer Declines

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Preventing Fraud and False Declines

You can take internal steps to manage issuer and false declines in your operations. We recommend that you:

Make data-driven decisions

Make data-driven decisions

Don’t accept purchases without metrics. Look into machine learning and AI tools with your payment processor.

Adopt a multi-layer strategy

Adopt a multi-layer strategy

Use many fraud prevention tools at once, including those you can set yourself, like AVS and CVV verification.

Manually review purchases

Manually review purchases

You can prevent declines before purchase if you have the correct tools in place and understand decline codes.

Be a customer service pro

Be a customer service pro

Many declines can be resolved with excellent customer service, and those that can’t may help you remedy future problems.


For any of the above solutions to work, you must be prepared to conduct in-depth data analysis. You need to understand how to access and interpret that information, and have a solid strategy in place to put your strategy into practice. As always, the more information you have, the better armed you are against fraud and false declines.

Perhaps the wisest move is to partner with the right service provider to help you mitigate both problems as part of a broader strategy.

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