“Declined,” “insufficient funds,” and “invalid card number” are some of the phrases subscription businesses fear most. And they’re not to blame–recurring billing can be complex. 

For example, for failed one-time transactions, an error message alerts the buyer, and they use another payment method to purchase. However, for recurring transactions, the card details are captured during sign-up and then held to retrieve automatic payments every billing cycle. 

But what happens when that information is outdated or has no funds? 

A declined credit card shouldn’t be the end of the road for your recurring business. Whenever a payment fails, the transaction can and should be retried. Leveraging a subscription and billing platform can help you recover otherwise-lost money and prevent involuntary churn.

A successful retry depends on many factors, including the decline message. There are 2,000+ types of credit card declines, but these are the most common: 

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Let’s break down and review each of these to understand them better.

Soft credit card declines

Soft declines occur when the card issuer approves the payment, but the transaction fails at another step in the process. They’re temporary authorization failures that may be successful after a retry attempt. 

Declined

  • Message customers see: Your card was declined. In order to resolve the issue, you will need to contact your bank.

  • Message you see: The customer's bank has declined their card. The customer will need to contact their bank to learn the cause.

Insufficient funds

  • Message customers see: The transaction was declined due to insufficient funds in your account. Please use a different card or contact your bank.

  • Message you see: The card has insufficient funds to cover the cost of the transaction.

Note: Business-to-consumer (B2C) businesses usually receive more generic “declined” and “insufficient funds” responses than business-to-business (B2B) companies because they typically have higher credit limits than consumers.

Temporary hold

  • Message customers see: Your card has a temporary hold. Please use a different card or contact your bank.

  • Message you see: The issuing bank has a temporary hold on the card. This is known as a 'Do Not Honor' response.

Restricted card

  • Message customers see: Your card cannot be accepted. Please contact your issuing bank for details or try another card.

  • Message you see: The card number has restrictions that prevent it from being used with your merchant account. It is likely a corporate card. The customer needs to use a different card.

Preventing soft declines

The most effective way to recover soft declines is with transaction retries. Recurly’s Intelligent Retries functionality uses machine learning to schedule retry attempts when they’re most likely to succeed. 

After implementing Recurly, we saw a 45% decrease in credit card declines

– Brian Zarlenga, Output General Manager

Every declined transaction is different, which makes a one-size-fits-all retry schedule less successful. Our dynamic analyzes each invoice that received a declined transaction and uses historical data from similar invoices and declines to determine the best date and time to retry it.

Hard credit card declines

Hard declines occur when the card issuer rejects the payment. These are permanent authorization failures that can’t be retried. 

Invalid card/account number

  • Message customers see: Your card/account number is not valid. Please update your card/account number.

  • Message you see: The credit card/account number is not valid. The customer needs to try a different number.

Invalid transaction

  • Message customers see: Your card is not allowed to complete this transaction. Please contact your bank or try another card.

  • Message you see: The card type cannot perform the transaction type. The card is likely restricted. The customer needs to contact their bank for details.

Expired card

  • Message customers see: Your credit card is expired, please update your card.

  • Message you see: The payment gateway declined the transaction because the expiration date is expired or does not match.

This “expired card” error is tricky. It could mean the card is expired or the expiration date does not match the date on file.

Card not activated

  • Message customers see: Your card has not been activated. Please call your bank to activate your card and try again.

  • Message you see: The card is brand new and has not been activated yet.

Preventing hard declines

For hard declines, we recommend leveraging an Account Updater. This service monitors your customers’ Mastercard, Visa, Discover, and American Express credit cards for changes, updating their information when necessary. 

In addition, you can also take advantage of a dunning campaign to collect payments. Dunning is the process of sending email alerts to subscribers when their payment fails, encouraging them to update their payment information and allowing the transaction to go through.

Effective dunning requires planning, testing, and optimization. Learn the 5 dunning dos and don’ts to minimize subscriber churn.

Fraud credit card declines

Fraud declines occur when transactions get blocked due to suspicious activities. 

Fraud stolen card

  • Message customers see: The transaction was declined. Please use a different card or contact your bank.

  • Message you see: The card has been designated as lost or stolen; contact the issuing bank.

Fraud address

  • Message customers see: Your billing address does not match the address on your account. Please fix your address or contact your bank.

  • Message you see: The payment gateway declined the transaction because the billing address did not match.

Preventing fraud declines

A robust fraud management strategy is key to avoiding fraud in payments. Fraud management identifies and prevents potential fraudulent activities toward your business or customers. 

Recurly has partnered with Kount, the leading fraud management platform, for superior fraud-fighting capabilities to reduce duplicitous orders and chargebacks, improve subscriber experience, and lower operational costs and churn. 

Say goodbye to 2,000+ types of credit card fails

As we mentioned early, not all payment fails are the same. Understanding the ins and out of the most common decline credit card messages can give you an insight into what revenue recovery tactic you need to strengthen to prevent involuntary churn and keep more revenue.

Leading subscription brands like Unbounce and AllTrails rely on Recurly to keep their recurring revenue growing–recovering up to 25% of failed payments and cutting involuntary churn to as little as 1%. 

Get in touch with us for more information about how Recurly can help you grow faster, smarter, and stronger.