What to Do When a Customer’s Credit Card Is Declined

Disclaimer: Nothing in this article should be construed as legal, financial or tax advice. Please always consult a knowledgeable professional advisor.

As a business, you work hard to compete for and attract customers, so when they’re ready to seal the deal and make a purchase, it can be frustrating and a bit awkward if their credit card is declined.

Unfortunately, the situation is fairly common. With credit card spending on the rise in Britain, the rates will only continue to grow. Shoppers may assume the worst, but sometimes the reason a customer card is declined has nothing to do with their finances.

Declines come in two types: hard and soft.

A hard decline happens when the issuing bank doesn’t approve the credit card payment. This could be due to a maxed-out card, a mistake in the entry, or potential fraud.

A soft decline is when the card-issuing bank approves the purchase amount, but a failure takes place in another part of the transaction. For example, the processor’s system could be down, or the merchant isn’t running the latest version of their point-of-sale (POS) software.

While there are many reasons transactions can be declined, it helps when retailers have a set way of handling declined payment to provide the best customer service.

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What to say to the customer

So, a customer card was declined: what to do? Telling a customer their card was declined can be an uncomfortable conversation. The best approach is to be as understanding as possible. Most people have had a card payment declined at least once in their life, but it can still be embarrassing.

As discreetly as possible, explain to the customer that their bank has declined their card. If they used their card on a mobile POS device, they may see the declined message themselves.

In the Square Point of Sale app, you’ll see one of the following four errors when a credit card is declined:

  • Declined. Card has expired. Please use a different card.
  • Declined. Please use a different card.
  • Declined. Please have cardholder call issuer before retrying transaction.
  • Declined. Please verify the card number, expiry date, CVV, and postcode.

This can give you some insight on next steps for handling the declined payment.

Check the customer’s information

If the transaction was entered manually, the information entered must exactly match the cardholder’s account information that is on file with the issuer. Confirm with the customer that you have the correct billing address and postcode.

If you’re using the Square Point of Sale app and the card numbers turn red on the screen when entered, it’s likely due to a data entry mistake. Verify with the customer that the information entered is valid. It could be that the customer has recently moved and you have the wrong postcode, and a quick fix will help the transaction go through.

Confirm the card is valid

You’ll also want to make sure the card is valid. Sometimes customers forget to replace an expired card with the new one sent to them. If the card is valid and the information is correct, the customer should contact their card-issuing bank for more information.

To quickly remedy the situation of a customer card declined, you can also ask the customer if they want to try another form of payment.

Eliminate the potential for fraud

Another reason a credit card can be declined is due to potential misuse. According to the latest information from UK Finance, £1.2 billion were stolen through fraud in 2019. That puts payment card issuers on high alert.

If the purchase looks suspicious, it’s not uncommon for them to decline the transaction. This often happens when the customer is travelling or attempting a large purchase that is unusual for their established buying habits. In some cases, the customer will receive a text message or phone call from the card issuer to alert them to the potential misuse of their card. In this case, you may be prompted to wait a certain amount of time and run the transaction again.

Should you try the transaction again?

Sometimes a customer might ask you to try the card again. However, a credit card declined is a final decision, and swiping it over and over likely won’t remedy the situation.

A better solution for handling declined payment is to ask the customer to call their card issuer (typically via a toll-free number found on the back of their card) to look into the potential problem. Then you can attempt the transaction again once it’s been preapproved.

Give your customers credit

Losing a sale can be disappointing, but permanently losing a customer due to faulty handling of the situation is worse. The most important step is to stay professional and sympathetic.

Acknowledge that technology can provide challenges at times. This indicates that you assume the problem lies outside the cardholder’s control. When you take steps to relieve the tension, you can make your customer feel valued and respected.

When a customer card is declined, having a clear idea of how card processing works will help you navigate the process. The right system makes it quick and easy to accept payments, with options ranging from a virtual terminal to a mobile point of sale.