You’ve added detailed descriptions and photos to each of your product listings. Customers leave glowing reviews for your customer service and merchandise. You’ve even optimized the entire checkout process. But sometimes, despite doing everything right, you may find that you’re losing 2%-5% of total sales on something you feel like you can’t do much about: credit cards declined by the processor.
While these declines are inconvenient and frustrating, they don’t always have to result in lost sales, customers and revenue. Here’s why credit card declined sales are happening and how you can recover them.
Reasons for Credit Card Declined Transactions
The scenario is more common than you think: You’re trying to charge a customer’s card for a transaction, and it ends up being declined somewhere in the processing network, typically by the cardholder’s bank.
It’s important to note that these “Card Declined” errors don’t result from a mistyped credit card or CVV number. In most cases, the card number is correct, but the bank is denying the charge.
While there are plenty of reasons a credit card may be declined by the processing bank, here are five of the most common:
- Card details have expired.
- The bank suspects fraudulent activity, so they refuse the charge.
- The customer has insufficient funds.
- There has been a high volume of card activity during a short period of time.
- The customer has exceeded a preset limit on online or international orders.
In many cases, the customer will first try re-entering credit card data or will try a different payment method altogether to see if the payment goes through. But if the problem persists, the customer may abandon their cart altogether — believing it to be a merchant issue — and try the same purchase from another seller.
Tips for Recovering Declined Credit Card Payments
Merchants don’t want to lose any more revenue to failed payments than they have to. These five tips can help merchants make more sales — even if the purchase doesn’t go through the first time.
1. Recharge the Customer
Some declines are due to insufficient funds — considered a “hard” decline — and the payment won’t go through no matter how many times you try. But if the failure was due to a “soft” decline reason, like issues with payment processors, networks or gateways, then merchants may have success when they recharge a customer.
2. Offer Alternate Payment Methods
One of the easiest ways to cover declined credit card sales is to immediately offer customers an alternate way to pay. This may be as simple as re-presenting the customer with the checkout form, or you may consider offering a new checkout option altogether, like PayPal or bank transfer.
3. Keep It Personal
Legitimate customers are bound to be embarrassed if their credit card is declined. And while a generic email notifying customers of the issue might be efficient, it’s not very personal — or effective. An estimated 85% of software-generated emails like these go unread. When customer loyalty is on the line, take the time to make a personalized phone call to customers. They’ll feel like you really care, and they’ll be more likely to become a repeat customer. For merchants that do need to send emails, they should ensure they use their own voice, send the right emails at the right time, and communicate an increasing sense of urgency throughout the email sequence.
4. Open a Backup Merchant Account
Some merchants open a separate merchant account with a different provider and route declined payments to that account. If the payment is declined by the primary processor, it’s possible this backup account will approve it.
5. Understand Why the Payment Failed
Payment processors don’t always share ample details about why a credit card payment failed. While Stripe generally offers a thorough explanation about the reason for the failed payment, PayPal tends to give less robust details, which may leave a merchant wondering what went wrong.
Today’s merchants can’t afford to leave money on the table when a credit card transaction is declined — whether those declines are coming from the credit card processor or the e-commerce merchant’s fraud prevention system. It’s important for e-commerce merchants to understand the order approval process, where problems can arise, and how they can safely approve more orders.
ClearSale’s ebook “Online Merchants: Stop Leaving Money on the Table” walks you through everything you need to know about the order approval process — including how to improve it. If, after reading it, you want to learn more about improving your order approval rates, just contact one of our experts. We’d be happy to tell you more.