Among the array of decline codes businesses encounter, the "do not honour" decline code is a common – yet somewhat mysterious – roadblock.

This decline code can leave both businesses and customers confused and frustrated. Learning how to decode this refusal and address it effectively is imperative for businesses that want to refine their operations, retain customers and protect the integrity of their transactions.

We'll cover what businesses need to know about "do not honour" card refusals, their potential causes and effective strategies to handle them while minimising disruptions.

What's in this article?

• What does a "do not honour" refusal code mean?
  
• Reasons for a "do not honour" code during a transaction
  
• How businesses can handle "do not honour" decline codes
  

What does a "do not honour" refusal code mean?

"Do not honour" is a generic decline code that the issuing bank sends to the business during a transaction. It means that the bank is not willing to accept the transaction.

When processing a credit or debit card transaction, you may encounter a variety of refusal codes, each of which indicates a different problem or issue with the transaction. Unfortunately, the "do not honour" code doesn't offer any specifics, so the cardholder will need to contact their bank to find out the exact reason for the decline. In many cases, the cardholder can resolve the issue quickly, and you can continue to process the transaction.

Reasons for a "do not honour" code during a transaction

When a bank chooses not to accept a transaction, it issues a "do not honour" decline code. The code itself doesn't specify the reason for refusal, but depending on the situation, there are many potential reasons:

• Insufficient funds
  This is a common reason for the "do not honour" code. For example, consider a customer who is trying to buy a designer jacket at a boutique. If their debit card is declined with a "do not honour" code, it might be because their current account doesn't contain the funds to cover the cost of the jacket. The same situation can happen online. If a customer tries to purchase a new gaming console from an e-commerce site but doesn't have enough funds in their account, they would receive a "do not honour" code.

• Suspicious activity
  Banks use advanced systems to monitor potential fraud. For example, imagine that a cardholder is travelling abroad and makes a purchase at a local market. The bank, unaware of the cardholder's travel plans, may flag this as suspicious activity and decline the transaction, which results in a "do not honour" code. This can also happen online. If a customer – or a fraudulent actor – enters card details on a suspicious website, the bank may classify the transaction as a risk and decline it.

• Exceeding daily limit
  Most cards have a daily limit on transactions. For instance, a business owner who is trying to purchase supplies at a wholesaler could receive a "do not honour" code if they've already made numerous high-cost purchases that day and the most recent transaction exceeds their card's daily limit. Similarly, if a customer is paying multiple vendors for services on a freelancing platform and their total payments exceed the card's daily limit, they would also receive a "do not honour" code.

• Incorrect card details
  If the cardholder enters the card number, expiry date or card verification code (CVV) number incorrectly, the transaction will be declined. For example, imagine a scenario at a restaurant where the waiter mistypes part of the card information into the system. The bank would decline the transaction, resulting in a "do not honour" code. This can also occur online if a customer enters their card details incorrectly while trying to make a purchase.

• Other account issues
  Other account issues range from a closed account to a card that hasn't been activated yet. If a customer tries to use a recently closed credit card account at a supermarket, for example, the transaction would be declined with a "do not honour" code. Similarly, if a customer tries to use a new card to make an online purchase before activating the card, they would receive the same decline code.

In all of these situations, the best course of action is for the customer to contact their bank to understand the exact reason behind the "do not honour" code and take necessary steps to resolve the issue.

How businesses can handle "do not honour" decline codes

When a business encounters a "do not honour" decline code during a transaction, they must have strategies in place to handle these situations effectively and minimise disruptions to the customer experience. Here are some ways businesses can respond:

• Handling incorrect card information
  If a decline arises from incorrect card details, such as an incorrect card number or expiry date, businesses should guide their customers to correct the error. In these cases, providing the customer with immediate feedback can be very useful. For instance, Stripe's Checkout can notify the customer if the card that they're attempting to use has been declined, allowing them to correct any errors, try again or use an alternative payment method.

• Managing suspected fraudulent activity
  Card issuers may decline transactions if they suspect fraudulent activity, which can be challenging for businesses to handle. However, requiring customers to provide the CVV and postal code during checkout can significantly decrease the number of declines. Including additional information, such as the full billing address, can also improve decline rates, but this varies by card brand and country. If a business continues to experience a high number of declines, it could consider collecting this data. In addition, implementing 3D Secure for payment authentication can help decrease decline rates in countries that support the service.

• Investigating "do not honour" declines
  When it isn't clear what a particular "do not honour" decline refers to, analysing accompanying data can help identify why the card may have been declined. For example, if CVV or address verification system (AVS) checks failed when the customer tried to add the card, resolving these issues and then re-attempting the charge may result in successful authorisation. If a business notices that a card is issued in a different country from the one that corresponds to the client's IP address, this may suggest a legitimate decline due to potential unauthorised card use.

In all of these scenarios, the key is to provide the customer with as much assistance as possible. By ensuring that the customer is informed about the situation and helping them navigate the necessary steps, you can maintain a positive customer experience, even in the face of a transaction decline.