Having a credit card payment declined is frustrating for customers and businesses. Customers who are unable to complete a purchase might feel disappointed or embarrassed and waste time searching for another payment method. For business owners, a credit card decline can result in losing the sale, or—even worse—any future business from that customer, due to the negative experience.

Credit cards are ubiquitous in everyday life; in 2021, 196 million people in the US were cardholders. While it’s not possible to entirely avoid credit card declines, understanding why they happen can help businesses create a simpler payment process for their customers. Here’s what you need to know about credit card declines and how you can reduce them for your business.

What’s in this article?

• What is a credit card decline?
  
• Card authorization process
  
  • How card authorization works
    
  • Who decides if a card transaction is approved or declined?
    
• Types of credit card declines
  
• What businesses should do when a credit card is declined
  
• How businesses can reduce credit card declines
  

What is a credit card decline?

Credit card declines occur when customers are unable to complete a payment, due to one or more failures in the authorization process. This can happen because of problems with the vendor, payment-processing platform, or credit card issuer.

Card authorization process

How card authorization works

To better understand credit card declines, it’s helpful to learn more about how a credit card is authorized during a purchase.

When a customer pays with a credit card, the business’s point-of-sale (POS) software receives the card details and sends them to the issuing bank to get the transaction request approved. This is done through credit card networks, such as Visa and Mastercard. Once the issuing bank receives the request, they will verify that the card is valid and that the cardholder has sufficient funds left to cover the amount of the sale.

If everything looks good, the issuing bank will approve the transaction and send an authorization code to the business. If the transaction is rejected, the bank will send an error code and the credit card will be declined. Read our article for a more thorough explanation of how the card authorization process works for businesses.

Who decides if a card transaction is approved or declined?

The credit card issuer approves or declines the card transaction. When a charge fails, the issuer sends an error code to the business. These credit card decline codes can be helpful in understanding why a payment hasn’t gone through.

Types of credit card declines

Below is a list of credit card decline codes for the most common scenarios that result in a rejected payment:

• Code 51—Insufficient funds: The cardholder does not have enough money to cover the transaction in the account associated with the credit card.
  
• Code 65—Credit limit exceeded: The cardholder has spent over the credit limit associated with their card, and they will need to clear their balance before they can proceed with the transaction.
  
• Code 54—Expired card: The credit card is expired and is no longer a valid payment method.
  
• Code 14—Incorrect card number: This error code typically occurs during online transactions, when the card number entered does not match the real credit card number (likely due to human error).
  
• Code 63—Wrong CVC: The three- or four-digit security code (CVC) entered during the transaction is incorrect.
  
• Code 41—Lost card, pick up: The cardholder has reported the card as lost, and all transactions have been frozen to prevent fraudulent charges.
  
• Code 43—Stolen card, pick up: The cardholder has informed the issuer that the card has been stolen, so future transactions will be denied.
  
• Code 05—Do not honor: The issuing bank has declined the card for an unknown reason.
  

In addition to the common codes listed above, there are other credit card decline codes for when a charge fails. We have compiled a complete list of error codes for Stripe customers here.

What businesses should do when a credit card is declined

Credit card declines can be a challenge for business owners, whether they sell their goods and services online, in person, or both. Depending on the error code, business owners can take the following actions when a credit card decline occurs:

• Ask the customer to try using the card again, in case the decline was caused by human error. This is a helpful tactic when the decline code is associated with incorrect information, such as a mismatch of CVC code, PIN, ZIP code, or card number.

• Recommend to the customer that they use another payment method. This is the best solution when the decline code indicates a card has been reported lost or stolen, or if there are insufficient funds to cover the transaction.

• Suggest to the customer that they contact the card issuer to find out why the credit card has been declined. This is the best option if the error codes tell you the card has been declined for an unknown reason.

How businesses can reduce credit card declines

While credit card declines cannot be completely eliminated, businesses can decrease the number of failed transactions with a few key strategies.

Maintain a strong security system
Credit card declines happen when issuers detect a potential risk for fraud. Businesses with high chargeback rates—the number of customers contacting the bank to dispute a transaction—will have a higher number of credit card declines, since their history will prompt issuers to regard their transactions with a more conservative margin of doubt.

To reduce chargeback rates for your business, it’s important to establish a robust security system against fraud. Stripe Radar uses machine learning to analyze data and identify suspicious transactions. By interpreting network partner data, customer payment information, and checkout flows, the system can effectively detect high-risk activity without blocking legitimate payments—so your customer sales remain unaffected. Stripe users don’t need to do any additional work to set up Radar, since it’s already integrated into Stripe’s suite of products.

Accept digital-wallet payments
Digital wallets—such as Apple Pay and Google Pay—use two-factor authentication, which requires a password or biometric ID to complete a transaction. Thanks to this additional layer of security, payments that use these tools have a higher acceptance rate from card issuers. Businesses can set up Apple Pay quickly with Stripe, making it easier for customers to pay using apps or their Apple device. Read more about how to set up Apple Pay for your business here.

Make sure your billing information is accurate
If your business has an online checkout process, accurate customer data can reduce credit card declines. On your checkout page, try to collect as much billing information as possible (such as billing address and ZIP code), so the card issuer can quickly verify that a payment request is legitimate.

Improve your payment experience
If you want to build a smoother checkout process for your customers, Stripe can help. Our Checkout page is a ready-made interface that makes the process as simple as possible. With smart features such as address lookup, real-time card validation, and credit card issuer recognition, it’s designed to increase conversion rates for your business.

Stripe also supports in-store payments through Terminal, which can be integrated with your online sales channels. It is compatible with Stripe’s suite of products, such as Payments, Connect, and Billing.

Creating a simple, secure payment process is important for protecting your business—and your customers—from the hassle of credit card declines. Stripe’s payments platform is here to help, with a range of software and APIs to help you grow your sales. Learn more about how our offerings can make a difference for your business.