Most consumers utilize eCommerce for the ease and simplicity, but occasionally an order gets declined which can be aggravating and cause the consumer to rethink and sometimes cancel the transaction altogether. A recent study shows that of the consumers who try submitting a payment for a second or third time, about 50% of the transactions are rejected in those attempts. Of the consumers whose cards are declined on their first payment attempt:

  • 50% of customers will contact the card issuer or your office to report the decline
  • 34% of customers try a different card
  • 39% decide to not make the purchase
  • 10% try a different online merchant

What Causes Declines?

Before a transaction is approved, the payment is passed through several processing stages such as the acquirer and gateway, the banks of both the customer and the merchant, the credit card issuer and more. When a credit card payment is made by a customer, there is always a risk that the payment will be declined in the process.

So if a transaction is being handled legitimately, why would a decline happen? Some processes are out of your hands, such as network downtime or card freezes triggered by the card user’s card itself due to high or unusual activity.  However, additional things can cause a decline and recent security breaches and the ever increasing sophistication of those committing fraud have made credit card companies have to re-evaluate and increase their fraud prevention efforts.

The algorithms used for flagging transactions aren’t widely published to prevent abuse and those attempting to commit fraud circumventing the process, so it can be difficult to understand exactly what triggers an event. However, we do know that fraud protection systems use a formula made of up approximately 500 elements to assess the risk that a transaction might be fraudulent.

Product Type Affects Declines

One interesting consideration for card declines is the type of product you offer. Domestic physical goods see decline rates in a range of 3% to 4%, but digital goods and services tend to see decline rates at closer to 15%.

Methods to Reduce Card Declines

  • Manually review questionable and high-risk orders. Some carts will allow a manual review to identify truly fraudulent orders and provide insight into how to distinguish fraudulent from legitimate purchase behavior. This can be a time-consuming option and as a result, can cause operational expense which will make it less practical for merchants with many orders daily.
  • Implementing a tool known as 3-D Secure to the cart system. 3-D Secure is an authenticated payment system. 3-D Secure systems recreate the high level of security of a physical payment environment by requesting further payment authentication by use of a card password. When configuring your shopping cart checkout, consider reverting to 3-D Secure Transactions after you’ve received a second declined authorization attempt by the customer’s issuing bank.
  • There are several fraud prevention and security tools available and a great deal of this process comes down to the shopping cart environment you utilize for your eCommerce site. We regularly work with merchants utilizing platforms such as WooCommerce, Magento and OSCommerce which all have a variety of modules created to meet merchant functionality needs.
  • Most often with international transactions, declines occur because the payment is flagged as fraudulent since the payment provider is not optimized for the credit card scheme or for cross-border transactions from certain regions. For example, a payment processor based in the UK might have high acceptance rates for cards issued in the UK and even the US, but may suffer high decline rates for payments from China because its fraud detection services are not optimized for the Chinese market. By ensuring your tools are configured to process cards from your target markets, you’ll be able to reduce such errors.
  • Most shopping cart platforms are configured to return a generic error code whenever a transaction is declined such as “Transaction Error: Please check your card details and try again”. One step that can be implemented to help your customers is to provide more specific details based on the error code received and when possible, provide solutions to resolve the issue.

Additionally, it’s always a great practice to prevent transaction declines by offering alternative payment methods on your site such as eWallets, direct bank transfers (ACH) and other solutions, you provide additional options for customers whose credit cards are being declined.

If you found this information useful and would like to know more, I welcome you to contact me with any questions you may have.