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

Stephanie Vozza, Writer

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. According to a survey from CompareCards.com, more than one in five American consumers said they have had a credit card declined at least once in the past 12 months, which is more than 40 million people. Shoppers may assume the worst, but sometimes the reason has nothing to do with the customer’s 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 troubleshooting or remedying the situation to provide the best customer service.

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What to say to the customer

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 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 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, expiration date, CVV, and ZIP code.

This can give you some insight on next steps.

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 ZIP code.

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 ZIP code, and a quick fix helps 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 remedy the situation quickly, you can also ask the customer if they want to try another form of payment

Eliminate the potential for fraud

Another reason a card can be declined is due to potential misuse. According to the latest information from The Nilson Report, a global card and mobile payments trade publication, card issuers lost $19.21 billion in 2018 due to fraud. 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 traveling 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 declined card is a final decision, and swiping it over and over likely won’t remedy the situation.

A better solution 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.

Stephanie Vozza is an experienced writer who specializes in small business and retail. She has been a regular columnist for FastCompany.com for five years, and her byline has appeared in Inc., Entrepreneur, and Parade.