Declined transactions frustrate cardholders and issuers alike. For issuers, managing declines strategically can improve approval rates, reduce friction, and enhance customer trust.
Decline codes are responses from the card issuer or payment processor indicating why a transaction was unsuccessful. These codes typically fall into three main categories: soft declines, hard declines, and issuer-specific declines. For card issuers, recognizing these categories and taking a proactive approach to decline management can lead to higher approval rates, reduced customer churn, and stronger operational efficiency.
Optimizing Card Decline Codes: Strategies for Issuers
Fraud and Security Declines
Do Not Honor – Code 05
This decline happens when an issuer blocks a transaction due to suspected fraud, policy rules, or unidentified risks. The lack of clear reasons can frustrate cardholders and issuers, leading to lost sales.
How Issuers Can Address This:
- Implement risk-based authentication (RBA) and AI-driven fraud detection to distinguish genuine from suspicious transactions.
- Enable real-time issuer-merchant collaboration through platforms like Visa’s Verifi, Mastercard’s Ethoca, and fraud prevention solutions to resolve flagged transactions instantly.
- Offer real-time self-service verification tools, such as transaction alerts with one-tap approval, to help legitimate transactions go through while reducing support calls.
Invalid Card Number – Code 14
A transaction is declined when the entered card details do not match a valid account, often due to manual input errors or attempted fraud.
How Issuers Can Address This:
- Use real-time validation at checkout, such as Luhn algorithm verification, to reduce manual errors.
- Deploy fraud detection tools like Feedzai or Visa Protect that identify unusual input patterns before processing the transaction.
- Encourage digital banking apps for card storage, reducing the chances of mistyped details and unnecessary declines.
Expired or Restricted Cards
Expired Card – Code 54
Expired card declines are common, especially for recurring payments, disrupting subscriptions and issuer revenue stability.
How Issuers Can Address This:
- Integrate automated card updater services like Visa Account Updater, Mastercard Automatic Billing Updater, and Marqeta’s real-time payment solutions to refresh stored credentials before expiration.
- Implement tokenization to ensure stored card details remain valid for ongoing transactions, preventing disruptions. For example, Visa Token Service replaces card details with a unique token, allowing secure transactions even if a card is replaced or reissued.
Restricted Card – Code 62
Certain transactions may be blocked due to issuer-imposed restrictions, such as geographic limitations, merchant category restrictions, or cardholder-set controls.
How Issuers Can Address This:
- Enable transaction controls in mobile banking apps, allowing cardholders to adjust restrictions dynamically.
- Conduct periodic policy reviews to refine decline parameters, ensuring that security measures do not interfere with legitimate transactions.
Financial Declines
Insufficient Funds (NSF) – Code 51
A card decline due to insufficient funds occurs when a cardholder does not have enough available balance to cover the transaction. NSF declines are among the most frequent and frustrating, often leading to abandoned purchases and negative customer experiences.
How Issuers Can Address This:
- Products like Kipp’s enables issuers to approve over-the-limit or overdraft transactions in real time, selectively approving transactions based on risk criteria while ensuring minimal exposure. Contact us to find out more.
PIN and Authentication Issues
Incorrect PIN – Code 55
A transaction is declined when the entered PIN does not match the one on file, preventing cardholders from completing their purchase.
How Issuers Can Address This:
- Encourage biometric authentication, such as fingerprint or facial recognition, as a secure alternative to PIN-based transactions. Companies like iProov and Thales offer advanced biometric authentication solutions for issuers.
- Offer secure PIN reset functionalities within mobile banking apps using solutions like Marqeta’s dynamic authentication tools, allowing cardholders to update their credentials quickly.
Final Thoughts for Card Issuers
Effective decline management improves approval rates, reduces friction, and strengthens issuer-customer relationships.
Issuers that refine decline management will boost approvals, retain customers, and maximize revenue.
Want to reduce NSF declines and improve customer experiences? Kipp’s real-time solution helps issuers selectively approve transactions, minimize customer friction, and boost revenue. Contact us today to learn more.
