Reduce Churn & Improve Conversions With Mastercard Merchant Advice Codes
Credit card declines? No one's a fan. They create an uneasy atmosphere for the customer, dishearten the merchant, and frankly, leave everyone involved feeling frustrated.
As a merchant, you're bound by the authorization responses you receive. Disregarding them could mean higher fees, penalties, and even those dreaded chargebacks.
Thankfully, the card networks are stepping up to address this very issue. Merchant advice codes are designed to give merchants and acquirers a chance to retry authorization requests in a more informed manner, reducing the chance of declines.
So, you might be wondering: what exactly are these new merchant advice codes? How do they make the process of retrying a declined transaction a smoother, more successful process? Let’s take a look.
Recommended reading
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- Authorization Optimization: How to Raise Your Auth Rate
- How to Prevent False Declines on Credit Card Purchases
What are Merchant Advice Codes?
- Merchant Advice Codes
Merchant advice codes function as explicit communication channels from issuers to merchants. They clarify the reasons why a transaction was declined, and they offer guidance to merchants on actions that can be taken to ensure their customers remain satisfied and engaged.
[noun]/mur • chnt • uhd • vise • kowd/Consider the following scenario: you wish to run a credit card transaction. The initial step involves sending an authorization request. This request is directed to the cardholder's issuing bank. The bank, in return, sends a response indicating whether the authorization is approved or declined.
In the event of a decline response, it is accompanied by a decline code. This code offers additional insight into the reason for the decline. For instance, the card may have expired, it might have been reported as lost or stolen, or there could be insufficient funds to cover the transaction. Now, the authorization response may also be accompanied by a merchant advice code, which the issuer can use to communicate more clearly with the merchant.
These codes serve as valuable guides for merchants. It lets the bank provide direction on how to resolve the cause of an authorization decline, and continue delivering exemplary service to their subscription-based customers.
“Merchant advice code” is a term specific to Mastercard. These codes are called “decline category codes” or “recurring payment cancellation” codes on the Visa network.
How it Works: Merchant Advice Codes in Practice
In card-network speak, this update introduces new data values to the existing Mastercard merchant advice code field (DE48 SE84). This field communicates information about credit card declines post-transaction attempt.
To leverage these new advice codes, merchants and their acquirers need to familiarize themselves with the new data values and their implications. This knowledge forms the foundation of their decisions about retrying declined transactions and timing those retries.
Not all declines are created equal. Understanding the difference between “hard” and “soft” declines is fundamental to building effective retry logic.
A hard decline means the issuer will never approve the transaction. The card may be invalid, reported stolen, or permanently blocked, and retrying will not help and will trigger penalty fees. A soft decline means a temporary condition is preventing approval. There may be insufficient funds, a temporary hold, or an issuer system outage that may resolve on its own, so retrying later can recover the sale.
For a deeper dive into handling each type of decline, see our guide to credit card decline codes.
List of Mastercard Merchant Advice Codes
Mastercard issuers use merchant advice codes to respond to authorization requests, and as a communication tool with merchants regarding a cardholder's account. Depending on the specific situation, Mastercard will match authorization response to one of the following merchant advice codes:
| Mastercard Response Code | Message | Description |
| 01 | Updated information needed. | Refer to “Account Updater” to confirm the decline code. Only retry using 3D Secure 2.0 if the decline code is 83. |
| 02 | Try again later. | Cannot approve at this time. |
| 03 | Do not try again. | Payment blocked by network. |
| 04 | Token requirements are not fulfilled for this token type. | Token mismatch. Call network. |
| 21 | Payment canceled. | Payment canceled by network. |
| 24 | Retry after 1 hour (Mastercard use only) | A hold or other condition may temporarily make the funds unavailable. You may retry the transaction later. |
| 25 | Retry after 24 hour (Mastercard use only) | A hold or other condition may temporarily make the funds unavailable. You may retry the transaction later. |
| 26 | Retry after 2 days (Mastercard use only) | A hold or other condition may temporarily make the funds unavailable. You may retry the transaction later. |
| 27 | Retry after 4 days (Mastercard use only) | A hold or other condition may temporarily make the funds unavailable. You may retry the transaction later. |
| 28 | Retry after 6 days (Mastercard use only) | A hold or other condition may temporarily make the funds unavailable. You may retry the transaction later. |
| 29 | Retry after 8 days (Mastercard use only) | A hold or other condition may temporarily make the funds unavailable. You may retry the transaction later. |
| 30 | Retry after 10 days (Mastercard use only) | A hold or other condition may temporarily make the funds unavailable. You may retry the transaction later. |
List of Visa Decline Category Codes
While Mastercard uses merchant advice codes, Visa employs a parallel system called decline category codes (sometimes referred to as recurring payment cancellation codes). Introduced in 2020, Visa restructured its decline codes into four categories that define exactly how merchants should handle each type of decline.
Before this change, issuers often defaulted to generic codes like 05 (Do Not Honor) in the majority of cases, leaving merchants with almost no signal about whether to retry or not. The category system fixes this by grouping every decline code into one of four buckets, each with explicit retry rules.
| Category | Description | Relevant Codes | What to do |
| Category 1: Issuer Will Never Approve | The card is invalid, was never issued, has been permanently blocked, or authorization has been revoked. | 04: Pick up card 07: Pick up card, special conditions 14: Invalid card number 15: No such issuer 41: Lost card 43: Stolen card 46: Closed account R0: Stop payment order R1: Revocation of authorization order | Do not retry. Any retry attempt will incur fees immediately. Advise cardholder to contact their bank or provide alternate payment. |
| Category 2: Issuer Cannot Approve at This Time | A temporary condition is preventing approval, such as insufficient funds, exceeded credit limit, or a temporary hold on the account. | 51: Insufficient funds 61: Exceeds withdrawal limit 65: Activity limit exceeded 75: PIN entry attempts exceeded 91: Issuer unavailable 96: System malfunction | Retry permitted. Up to 15 attempts allowed within a 30-day period. Space retries strategically (payday timing often improves success). |
| Category 3: Issuer Cannot Approve Based on Details Provided | The transaction data contains errors or missing information that must be corrected before the issuer can approve. | 14: Invalid card number 54: Expired card 55: Incorrect PIN 82: Negative CAM, dCVV, iCVV, or CVV results | Correct and retry. Fix the data issue (invalid CVV, incorrect expiration date, address mismatch) before reattempting. Up to 15 attempts in 30 days after correction. |
| Category 4: Generic/Undefined Response | The issuer declined without providing a specific reason code. These should be rare under current rules. | N/A | Retry with caution. Limited retries allowed, but the underlying reason is unknown. Consider reaching out to the cardholder for clarification. |
Retry Limits & Penalty Fees
Both Visa and Mastercard impose strict limits on how many times you can retry a declined transaction. Exceeding these limits triggers penalty fees that can quickly erode your margins.
Visa Retry Rules
As I outlined in the table in the last section, different rules apply for decline codes that fall into Category 1:
- Category 1 declines: No retries permitted. Any retry attempt triggers an immediate fee of $0.10 per domestic retry (or $0.15 international).
- Category 2, 3, & 4 declines: Up to 15 retries allowed within the 30-day window with no fee. A $0.10 fee applies per each domestic retry beyond the 15-attempt limit ($0.15 for international retries)
These fees appear on merchant statements, usually with a description like “VI NEVER APPROVE REATTEMPT FEE” or “VS RAF Excessive Reattempts Domestic.”
Mastercard Retry Rules
Most Mastercard decline codes have a limit of 10 attempts within 24 hours, or 35 attempts within a rolling 30-day period before any fee is applied. Exceptions to this include the following merchant advice codes:
- MAC 03: No retries permitted.
- MAC 21: No retries permitted.
- MAC 02: Retries allowed, but honor the timing guidance.
- MAC 24-30: Retries allowed only after the specified waiting period.
An Excessive Authorization Attempts Fee of $0.50 per declined authorization will apply after exceeding any of the thresholds listed here.
Penalties accrue regardless of whether a retried transaction eventually succeeds. You pay the fee even on recovered revenue. This makes proper retry logic more than a compliance issue: it directly protects your margin on every dollar you recover.
Never be caught off guard by any rule change or policy update.
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Special Considerations for Prepaid and Virtual Cards
Some merchant advice codes carry additional implications for merchants who accept prepaid cards or virtual card numbers (VCNs).
Non-reloadable prepaid cards and single-use VCNs cannot be “retried” in the traditional sense. Once the funds are depleted or the virtual number expires, no amount of waiting will result in approval. If you receive a decline on a prepaid or VCN transaction accompanied by MAC 03 (Do Not Retry), then you need the cardholder to provide an alternate payment method entirely.
Use this as an opportunity to reach out proactively. Let the customer know their payment method has been declined and request updated credentials. This is especially important for subscription services, where a single failed payment can trigger involuntary churn.
The Trouble With Declines in Subscription Models
Increases in declines have caused considerable disruption to the Mastercard network, often resulting in reduced approval rates. In the absence of strong regulations, merchants are confronted with higher rates of false declines, which undermine profits and accelerate customer attrition.
Several factors contribute to the problem of false declines, including:
Misidentification of Fraudulent Transactions
Credit card agencies employ systems to detect potential fraud. However, when these systems erroneously classify a legitimate transaction as fraudulent, a hard decline follows. This means the issuer has refused the payment, and retrying will not resolve the issue.
Payment Gateway Problems
Technological issues, such as data mapping errors or incorrect data formats, can lead to a card being declined. The transaction may be reattempted and approved later, if the issue in question can be resolved.
Card Balance Inconsistencies
A “soft” decline might take place if a card's available credit limit is inadequate for covering a transaction. This situation might arise if a customer's recent payment has not been processed, resulting in a soft false decline.Subscription-based businesses are especially impacted by these issues. The appeal of a subscription model lies in its simplicity: a customer subscribes, enjoys monthly services, and offers payment in return. Ensuring customer satisfaction guarantees ongoing subscriptions. Naturally, though, the frequency of false declines tends to get in the way.
False declines are responsible for nearly half of all customer churn for subscription-based businesses. In turn, this substantially raises the cost of customer acquisition.
How Merchant Advice Codes Can Solve This Issue
When a recurring transaction is declined, the cardholder isn't always readily available to provide an updated card or propose a different payment solution. More often than not, customers equate a break in service as a signal to sever ties and seek alternatives.
Merchant advice codes and recurring payment cancellation codes can be an invaluable tool to combat this. They will enable:
Approve more transactions without risking more chargebacks.
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Again, subscription-based merchants stand to reap the most substantial benefits. However, these codes offer valuable insights for any merchant operating in the card-not-present market.
Proper MAC Handling Prevents Chargebacks
Merchant advice codes don’t just help you recover declined transactions. They also play a direct role in preventing chargebacks.
When an issuer returns advice code 21 (Payment Canceled) or decline category code R1 (Revocation of Authorization), the cardholder has explicitly withdrawn permission for future charges. If you ignore this signal and continue billing, you’re setting yourself up for a chargeback with reason codes like “Transaction Not Authorized” or “Cancellation of Recurring Transaction.” You'll lose the dispute, pay fees, and take a hit to your chargeback ratio.
The same applies to MAC 03 (Do Not Retry). Repeated authorization attempts after a hard decline can trigger fraud alerts at the issuer level. If a cardholder sees multiple pending charges they didn’t authorize, they’re likely to file a dispute, even if the charges were never actually completed.
Honoring advice codes is a proactive chargeback prevention strategy. If a code instructs you to stop billing immediately, then stop billing immediately, because the authorization has been revoked. If a code instructs you not to retry, then do not retry. Reach out to the customer for an alternate payment method instead.
Compliance isn't just about avoiding retry fees. It's about respecting cardholder intent and keeping your chargeback ratio in check.
5 Tips to See Higher Approval Rates
With these codes in place, you can get key insights that will let you take straightforward yet effective steps to streamline your billing process. That said, there are some basic practices you can adopt which will help you see better approval rates, independent of these changes.
Sending reminders ahead of recurring payments can be especially beneficial for businesses with irregular billing cycles. This proactive approach can help prevent potential issues by informing customers — and their financial institutions — of upcoming charges through their preferred communication method.
Moreover, merchants should consider utilizing account updater services offered by some card networks. These services automatically refresh expired payment card information, removing the need for cardholder intervention.
To further optimize their subscription services, you can adopt several best practices without making your checkout processes overly complex:
#1 | Decode Decline Triggers
Initiate by gaining a comprehensive understanding of fraud signals, as well as the factors causing false declines. The goal is to dissect why certain transactions are approved while others are declined.
#2 | Leverage Data
Avoid rejecting orders based on generic signs. Implement sophisticated, intelligent fraud filters that can comprehend context more accurately.
#3 | Implement a Layered Strategy
Relying on one or two indicators isn't enough. Deploy an array of complementary fraud detection tools to gain a thorough insight into each transaction.
#4 | Conduct Manual Reviews
Avoid blanket rejection of all purchases flagged by a fraud filter. Manually scrutinize all dubious transactions to ensure precise decision-making.
#5 | Keep Up With Technology
Lastly, don’t neglect the recent advancements in AI-enabled technology. As fraud rapidly evolves, your strategy to counter it needs to keep pace.
FAQs
What are merchant advice codes?
Merchant advice codes (for Mastercard transactions), or Recurring Payment Cancellation (for Visa transactions), function as explicit communication channels from issuers to merchants. They show the reasons why a transaction was declined, and they offer guidance to merchants on the actions that can be taken to ensure their customers remain satisfied and engaged.
What are commonly used merchant advice codes?
Mastercard issuers use merchant advice codes to respond to authorization requests and as a communication tool with merchants regarding a cardholder's account. Depending on the specific decline code, MasterCard will map Authorization Response Categories to one of these MACs: 01– updated information needed, 02– try again later, and 03– do not retry.
Do merchant advice codes help retain customers?
Merchant advice codes equip subscription-based merchants with an influential tool to curb churn and enhance customer retention. While these codes offer valuable insights for any merchant operating in a card-not-present scenario, subscription-based merchants stand to reap the most substantial benefits.
How many times can I retry a declined transaction?
Both Visa and Mastercard cap retries at 15 attempts per card within a rolling 30-day period. Mastercard also limits you to 10 attempts within any 24-hour window. Exceeding these limits triggers penalty fees, regardless of whether the retried transaction eventually succeeds. For hard declines (Visa Category 1 or Mastercard MAC 03), no retries are permitted at all.
What are the penalties for excessive retries?
Visa charges $0.10 per domestic retry (or $0.15 international) beyond the 15-attempt limit, and the same amount for any retry on a “never approve” Category 1 decline. Mastercard’s Transaction Processing Excellence (TPE) program charges $0.50 per declined authorization that exceeds thresholds. These fees can add up quickly for merchants running high-volume recurring billing.
Does Visa have merchant advice codes too?
Visa uses a similar but distinct system called decline category codes. Instead of individual codes like Mastercard's MACs, Visa groups all decline responses into four categories: Category 1 (Issuer Will Never Approve), Category 2 (Issuer Cannot Approve at This Time), Category 3 (Issuer Cannot Approve Based on Details Provided), and Category 4 (Generic Response). Each category has its own retry rules and fee implications.
What’s the difference between a hard and soft decline?
A “hard” decline means the issuer will never approve the transaction, no matter how many times you retry. Examples include closed accounts, stolen cards, and revoked authorizations. A “soft” decline indicates a temporary condition, such as insufficient funds or an issuer system outage, that may resolve over time. Soft declines can be retried within network limits; hard declines should never be retried.
