A Guide to Combating High Credit Card Decline Rates

For an online merchant, the most important measure of success is almost always the conversion rate: the more customers complete the checkout, the higher your revenues. But there is an equally significant metric that many merchants struggle with, that can impact your business: decline rates.

Before an online payment is approved, the transaction progresses through several processing stages and a variety of financial entities, such as acquirers and gateways, the banks of both the customer and the merchant (the issuing and merchant accounts, respectively), the credit card scheme, and more. When a credit card payment is made by a customer, there is always a risk that the payment will be rejected, or declined, by one of the payment providers or card issuers involved in the process.

When customers are ready to convert and their payment methods are rejected – regardless of the reason – the merchant and the brand can suffer the long-term consequences.

For example:

  • If customers’ first experience with the brand is credit card rejection, they might be discouraged from returning and buying from the merchant again in the future.
  • If returning customers’ payment methods are rejected, their brand loyalty might be compromised, due to the inconvenience of the credit card declines.

For these reasons and others, it is critical for merchants to understand why declines happen and take steps to prevent them, in order to focus on customer acquisition/retention and growing your revenues.

Brand loyalty can be upset when subscription payments are declined, as customers who set up automatic recurring billing expect a seamless payment process for goods and services they consistently require. When their payments are not completed properly, they might discontinue their subscription. Nevertheless, MasterCard approximates that 25-30% of subscription payments are declined.


Merchants feel the impact of declines sharply, as credit card declines constitute 2-5% of all potential sales, according to the Baymard Institute. Whereas 90-95% of transactions are accepted on the first try, 5-10% of consumers have to try a second or third time to submit their credit card details before the transaction is approved.

Of the consumers who try submitting payment details a second or third time, about 50% of the transactions are continually rejected. Of the consumers whose cards are declined on their first payment attempt, 2-5% of consumers merely abandon the purchase when their payment details are rejected.


Decline rates can occur because of simple errors as minor as incorrect payment details submitted, such as mistakes in the card number or CVV, insufficient funds in the cardholder’s account, or use of an expired method of payment.

Other reasons for declines can be more complex, including:

Payment erroneously flagged as fraud:

Many payment declines occur because transactions are mistakenly flagged as fraudulent, simply because 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 due to the fact that its fraud detection services are not optimized for the Chinese market.

Another mechanism used to detect fraud which may cause the payment provider to decline legitimate charges is freezing cards and declining charges when there is high card activity during a short period of time. While it is important to weed out and decline fraudulent charges, fraud “false positives” are a frustrating reality that can have negative results for your business.

Payment declined due to payment provider downtime:

Sometimes payments cannot be completed because the payment provider is not processing payments at that time for any number of reasons. Almost every payment provider experiences downtime now and again and, unless you work with multiple providers for redundancy purposes, you run the risk of rejected transactions and lost revenues during provider downtime.


Decline rates are clearly very problematic for a business’s bottom line, and it is therefore important to prevent them from occurring. Here are some tips for maximizing your transaction acceptance rate:

Implement Processing Redundancy

Instead of working with a single payment provider, implement multiple payment solutions. With provider redundancy, you can ensure that transactions declined due to processing downtime or internal problems are rerouted to available payment providers and authorized.

Benchmark Your Payment Providers

Key to any decline prevention strategy is understanding why the declines are happening in the first place. Whether you use multiple payment providers or a single gateway, acquirer, or PSP, generate and assess reports about your provider’s acceptance rates and overall performance. Many payment services do not provide transparent information about transaction acceptance rates, so make sure you are using technology that enables you to pinpoint the cause of the declines.

Dynamic Transaction Routing

Your payment solution might offer intelligent transaction routing to prevent transaction declines. This technology uses business logic to evaluate the reasons for card declines in real-time, and reroutes the transaction accordingly to a payment provider that will authorize the payment, assuming it is not identified as fraudulent.

Perfect Your Fraud Detection

One of the major causes of declines is imprecise fraud detection, which, as a protective measure, flags legitimate charges as fraud. By creating more sophisticated fraud detection protocols, you can prevent unnecessary declines caused by your fraud engine. Sometimes using more than one risk assessment technology and cross comparing the results can help prevent false positives and declines of legitimate transactions.

Accept Alternative Payment Methods

Prevent transaction declines by offering alternative payment methods on your website. By enabling customers to pay with e-wallets, direct transfers, and other solutions, you provide additional options for customers whose credit cards are being declined.

Oren Levy is the CEO of Zooz

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