Common reasons for payment failures
Payments fail for multiple reasons—over 130, in fact. Every time a payment fails, a reason code is given. The codes may be generic, such as System Error, or specific, such as Invalid CVV. Reason codes are intended to help merchants and cardholders understand why a payment failed. Unfortunately, the reasons aren't always clear-cut with many transactions failing for multiple reasons.
1. Broken payments process
System-related errors indicate that the authorization process failed. For example, communication lines were down, so the transaction could not be sent or the response could not be received. Other possibilities include:
- Authorizer Unavailable. The cardholder's credit card company is offline, meaning the authorizer is not available to approve or decline a transaction.
- No Response. The authorizer did not respond to the request within the designated time.
- Unknown Error. This generic code simply means that something went wrong in the processing of the transaction. The exact cause is unknown.
These reason codes mean something went wrong in the processing of the card. That doesn't mean the card has expired or flagged. Retrying the transaction is a viable option with these reason codes.
2. Expired credit cards
Payments may be declined for expired cards or incorrect billing information. Your customers may not always remember to update their information. Knowing the card status reason codes makes it easier to identify the problem and help the cardholder correct the issue, so the transaction can be authorized.
3. Insufficient funds
If the cardholder does not have enough money in the account to cover the purchase amount, this reason code may be delivered.
4. Fraud Protection
As fraudulent card usage rises, card issuers continue to tighten their fraud protection capabilities. Sometimes those protections get in the way of authorizing a legitimate transaction.
- Suspected Fraud. Card issuers perform multiple checks on each transaction to reduce the chance of fraud. For example, a transaction is completed in a clothing store in California. Within minutes, a second transaction request comes through for a hotel charge in New York. The second transaction may be declined because it's assumed the cardholder cannot be in two places at the same time.
- Merchant Code. Some authorizers deny transactions based on merchant code. Others implement a complex algorithm that looks at merchant code and location as well as prior card activity to determine whether a transaction should be authorized.
- Stolen/Lost Card. When a card is reported as lost or stolen, all transactions will be declined, even those configured as recurring payments.
As technology improves, so will fraud protection. Making sure everything is properly configured can help reduce the risk of an inappropriately declined transaction. Sometimes, legitimate payments are caught in the fraud detection process. Knowing the reason can help determine if a retry is possible.