We occasionally hear that a customer cannot complete checkout on their site using a valid credit card. The card is declined at checkout, or the card is declined when a recurring payment is processed. In some cases, the site owner can process the card directly through the virtual terminal, so its clear the card is valid. So why is the payment gateway rejecting the card?

“Risk Models”, credit card companies and your payment processor.

Credit card companies have “risk models” that will reject payments for various reasons. One common one that comes up is when the initial payment is much lower than the renewal payments. So something like $5 now, then $100/year. Credit card companies and payment processors use complex algorithms that determine whether a payment should succeed or fail, even if the card is valid and all the “checks” are good (card number, CVV, name, billing address, etc.) There aren’t any hard fast rules, but one case we’ve seen is having a higher recurring amount, which makes it a bit more likely to be denied and could tip the scales.

So what can you do about it?

There are factors on the customer’s side that you don’t really have control over. Some of these include:

  • Has the account have been compromised (fraud alert) in the past?
  • What is their current credit score?
  • What are their average monthly purchases? What percentage of this is for online sales?

One uncontrollable factor on the merchant side (that’s you) is a kind of “business score” that the credit cards keep secret. This is a factor you don’t have that much control over either.  Keep this rating healthy by processing refunds and chargebacks quickly. As long as they are low (> 5%) there shouldn’t be problems.

So, what should you do when you are dealing with a customer that really wants to give you money, but for some reason their card is denied?

One thing that I’ve heard helps is to have the customer call their credit card company and say

“I’m trying to make a charge at YourBusiness.com/etc and it’s coming back denied.”

The credit card company will sometimes be able to do something so that transaction can go through one time. This act can increase that hidden business score, hopefully reducing the possibility that a similar checkout situation is rejected in the future.

Sometimes, the payment gateway (we know for sure this is true of PayPal and Stripe) will have extra information in their logs about why something was denied. So try calling your gateway and ask for details on the failed transaction (it helps to have the last 4 digits of the customer’s card number if they are willing to share this with you). But often there isn’t that much more information about the credit card failures.

If you’ve mediated a similar situation on your own site and have any words of wisdom, please post in the comments below. I’m interested to hear about other cases where a valid card has failed – any what steps you took to resolve it.

Comments (4)

Good info. In our case we’ve been getting cards decline because;

International purchases. User lives in Mexico/Europe/ETC. and is trying to place an order in USA.
Stripe doesn’t allow Visa Electron Cards.
Maestro cards gives us a little trouble.
Pre paid cards don’t always work.
Purchase limit, the amount of the transaction is higher than all previous purchases with that card.

And this is important:

Merchant account settings. We were getting 40-60% declines and it was because it was set up with a strict rules, if the street/number/name/lastname/cvv/billingaddress had to match *exactly* and if it didnt’ it rejected the transaction (this was with authorize.net) once we remove the rules, we haven’t had an issue since then. Stripe is way way easier to collect than other processors.

Another thing, if you are not using stripe or paypal, make sure you are approved with VISA, MC, DISCOVER, AMEX.

We were getting declines with all AMEX cards. We found out it was because we needed to submit a different application for them to allows to do it. We did, and problem solved.

Sometimes calling the gateway (in my case, PayPal) usually you can ask about whether or not there are problems on your end vs their end. While they can’t give you specific details about why, the best they can do is tell you if things are working correctly. I have an old account type with them (Premier) and feared that PayPal Express wouldn’t work on the site. In this case, it does.

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