Credit Card Declines Are Destroying Businesses — Here’s How to Fight Back

Credit card declines are a silent revenue killer that many businesses overlook.

When a customer clicks “Buy Now” and gets a “card declined” message, you’ve likely lost not only the sale but also the customer’s trust. These failed payments quietly erode your bottom line through lost sales, support costs, chargeback risks, and the wasted spend on customer acquisition. Research shows that over 10% of online checkouts fail due to payment declines, costing e-commerce and subscription businesses millions.

The scale of the problem is staggering: legitimate transactions rejected as false declines cost businesses about $443 billion globally each year, including $157 billion in U.S. e-commerce losses in 2023 alone. That’s more than the losses from actual fraud. Worse, about 26% of shoppers facing payment issues buy from competitors, and nearly 4 in 10 consumers never return after a false decline. A single decline can permanently cost you a customer. In this blog, we’ll explore the top reasons for declines, their impact, and how to reduce them.

Top Reasons for Credit Card Declines

Understanding why transactions get declined is the first step to fixing the problem. Credit card declines occur for a variety of reasons, but a handful of common culprits cause the majority of failed payments. Below, we break down the top reasons your customers’ cards might be rejected:

Insufficient Funds

The number one reason for credit card declines is simply insufficient funds or credit limit. If the cardholder doesn’t have enough available balance to cover the purchase, the issuing bank will reject the charge. This is incredibly common – by some estimates, almost half of all declines are due to insufficient funds.

It can happen with credit cards that are maxed out or debit cards with low balances. For example, a customer living paycheck-to-paycheck might attempt a purchase before their account has funds, triggering a decline. Unfortunately, there isn’t much a merchant can do to “fix” a customer’s lack of funds at the moment of purchase. However, being aware of this reason can inform your strategy. Some businesses offer alternative payment options like installment plans or “buy now, pay later” for costly items, so that a purchase isn’t lost entirely due to a temporary funds issue.

While you can’t approve a charge that the bank won’t allow, you can provide other ways for the customer to complete the sale despite a tight budget or credit limit. Banks and card networks use sophisticated fraud detection systems to protect cardholders, and sometimes those systems decline legitimate transactions by mistake.

If a purchase triggers certain red flags in the issuer’s system, the bank may decline it under a generic “Do Not Honor” code or a fraud code, even if the customer actually has funds and is the legitimate cardholder. Common fraud triggers include unusual purchasing patterns, very large orders, a card being used in a new location or foreign country, or multiple rapid-fire purchase attempts.

For instance, a customer buying an expensive item outside their home state might hit the bank’s fraud filters and get declined until they confirm the purchase. These false declines for suspected fraud are a huge problem: roughly 40% of all declines come from generic issuer refusals or fraud suspicions. The merchant loses a good sale, and the customer is left annoyed (or worse, questioning the legitimacy of your business).

In 2023, U.S. eCommerce firms were projected to lose an astonishing $157 billion due to false declines like these. While fraud prevention is necessary to avoid chargebacks, overly aggressive filters – whether on the bank’s side or your own – can cost you more in lost sales than fraud itself. It’s a delicate balance: you want to block stolen cards and bad actors, but not at the expense of turning away genuine customers because of a false alarm.

Expired Cards and Outdated Data

Credit cards don’t last forever. Most cards have an expiration date (typically every 3–5 years) after which the card must be renewed. If a customer’s card has expired, or if the card was replaced (due to loss, theft, or an upgrade) and they haven’t updated the new details, any transaction on that old card number will be declined automatically.

Expired card declines are especially common in subscription and recurring billing scenarios, where the customer’s card is stored on file. It’s easy for subscribers to forget to update their payment information when they get a new card. The result is an involuntary cancellation when the payment fails. Studies show that failed payments (like expired cards) account for 20–40% of churn in subscription businesses.

That means a huge chunk of customer loss is completely avoidable with up-to-date billing info. Outdated data isn’t limited to expiration dates – it also includes things like an old billing address or a card not yet activated. If the billing address on an order doesn’t match the address on file (AVS mismatch), or the customer is trying to use a new card that hasn’t been activated, the issuer may decline the transaction for security reasons.

The bottom line is that stale or incorrect card data will stop a sale in its tracks. Merchants who rely on recurring payments need to be especially vigilant about this, as half of subscription churn is caused by avoidable payment failures like expired cards. Keeping customer payment details current is crucial to preventing these needless declines.

AVS or CVV Mismatches

When processing a card-not-present transaction (like online payments), merchants often use security checks like AVS and CVV to validate the card. AVS (Address Verification Service) compares the billing address (often just the zip code) the customer provided with the address on file at the bank. CVV (the 3 or 4-digit security code on the card) is another layer of verification.

If either of these details doesn’t match what the bank has on record, the transaction may be declined or flagged as potentially fraudulent. Mismatches can happen because of a simple typo – the customer entering the wrong zip code or transposing a digit in the CVV – or because a fraudster has partial card information but not the correct billing details. These errors are a common cause of declines. About 1 in 5 declined transactions result from customers inputting incorrect card data (expiration date, number, CVV, or address).

From the merchant’s perspective, an AVS/CVV mismatch decline is a double-edged sword: on one hand, it prevents potentially fraudulent transactions from going through (good for avoiding chargebacks); on the other hand, it can also frustrate real customers who simply made a mistake at checkout. If a legitimate customer’s payment is declined because they entered a billing address incorrectly, that’s a sale you might salvage if they realize the error – but if they don’t, you’ve lost them. Tight AVS/CVV matching settings can reduce fraud, but they also contribute to false declines, so it’s important to find the right balance based on your business’s risk tolerance.

How Credit Card Declines Damage Your Business?

A declined payment isn’t just an IT issue or a minor inconvenience – it has tangible business consequences. When declines pile up, they can harm your revenue, your customer relationships, and even your standing with payment processors. Here are the key ways credit card declines can damage your business:

Lost Immediate Revenue

First and foremost, every decline is a sale that didn’t happen. You provided the product or service, the customer had the intent to buy, but the money never came through. That’s instant revenue out the door.

For small businesses and e-commerce stores, those lost transactions add up quickly. Imagine 5–10% of your attempted sales vanishing – it can mean the difference between hitting your monthly targets or coming up short. What’s worse, you’ve likely already spent money on that customer, whether on marketing to get them to your site or on inventory and fulfillment prep. A decline at the final step means those customer acquisition and operational costs were wasted. The average merchant manages to recover only about one out of every three declined transactions on retry or follow-up.

In other words, two-thirds of declined orders are lost for good. That’s a sobering statistic: if you had 100 failed payment attempts this month, roughly 67 of those sales won’t ever materialize, and the revenue is gone. This immediate revenue loss is the most obvious damage from declines – you feel it right away in your cash flow.

Long-Term Customer Churn

The hit from a decline doesn’t always end with that single transaction. There’s a longer-term cost in the form of customer churn and lost lifetime value. A customer whose payment is declined may not stick around to try again. Some will assume the problem is on your end (even when it isn’t) and walk away with a negative impression of your business.

Others might go buy from a competitor rather than re-attempting the purchase – in fact, about 26% of customers who experience a payment issue will purchase from a competing brand instead. Even more alarming, many consumers won’t come back at all after a bad decline experience. Studies show that 4 in 10 shoppers will refuse to buy from a merchant again if they feel their card was falsely rejected.

That means a single false decline isn’t just a lost sale today – it’s the loss of all future orders that customers might have placed with you. For subscription businesses, declines are the number one driver of involuntary churn. If a subscriber’s monthly payment fails and they don’t update their info in time, you’ve essentially “churned” a customer who didn’t choose to leave. Such payment failures account for up to 20–40% of churn in subscription models, which is massive.

Losing customers in this passive way is painful because you’ve done the hard work of winning them, and then lose them due to a payment glitch. Over time, high decline-induced churn will shrink your customer base and depress your customer lifetime value (CLV), meaning you earn less from each customer on average. Declines can quietly chip away at your loyal customer pool if not addressed.

Payment Processor Red Flags

Merchants aren’t the only ones paying attention to your decline rates – payment processors and banks are watching too. A high rate of declined transactions can act as a red flag to your payment processor (the company or bank that handles your credit card processing). From their perspective, an unusual number of declines might indicate that something is wrong. It could be a sign of fraudulent activity targeting your business (e.g., card testers attempting lots of stolen card numbers, which generate a flurry of declines), or that you’re not following best practices in handling payments.

Remember, processors and acquiring banks have a vested interest in keeping fraud and chargebacks low. If your account shows patterns like 20–30% of transactions being declined (which is common in some high-risk industries but not normal for most businesses), it may draw scrutiny.

The processor might reach out to ensure you aren’t, for example, charging cards without customer authorization or experiencing a breach. In extreme cases, a persistently high decline rate could lead to higher processing fees or even jeopardize your merchant account. While declines themselves don’t incur chargeback fees, they do affect your overall authorization approval rate – a metric processors track.

If only 70% of your transactions are being approved and 30% declined, the card networks may view your business as higher risk compared to a merchant with a 95% approval rate. Maintaining a healthy approval-to-decline ratio is important for keeping a good relationship with your payment partners. In short, frequent declines not only cost you sales, they can strain your rapport with the very companies that enable you to accept payments. No business wants to be labeled “high risk” due to preventable decline issues.

7 Ways to Reduce Credit Card Declines Now

The impact of credit card declines is clear, but you’re not powerless against it. By taking action on multiple fronts, you can significantly reduce transaction declines and recover revenue that would otherwise be lost. Here are seven practical  strategies you can start using immediately to fight back against payment declines:

1. Use an Account Updater Service

One of the most effective tools for combating declines due to outdated card information is an account updater service. Account updater (offered by card networks like Visa, Mastercard, etc.) automatically provides you with updated card details when a customer’s card number or expiration date changes. For example, if a subscriber’s Visa card on file gets reissued with a new expiration date, the updater service can furnish the new date so your system charges the fresh card info before the old card declines.

This is a game-changer for businesses that rely on recurring payments or saved customer cards. Instead of chasing down customers for new card details (or losing them when payments fail), you seamlessly keep their payment information current. The payoff can be significant – Postmates saw a 1.72% increase in successful charges, recovering $60 million in revenue, after implementing card account updater services.

That’s a huge uplift from simply ensuring cards on file were up-to-date. Small businesses might not recover tens of millions, but the principle scales: an account updater can automatically fix many “expired card” or “replaced card” declines, boosting your approval rates and saving otherwise lost sales.

Many payment processors and billing platforms have account updater features you can enable (often for a fee or as part of a premium package). It’s well worth exploring – keeping customer card data fresh reduces involuntary churn and decline-related hiccups without any manual intervention. If you can opt into your gateway’s updater program, do it. It’s like an insurance policy against one of the most common decline reasons (expired/outdated cards).

2. Set Up Retry Logic for Failed Payments

Not every declined transaction is a lost cause. Often, declines are soft, meaning the issue might be temporary or resolvable (such as a network timeout or insufficient funds at that exact moment). Implementing a smart retry logic for failed payments can help you capture these transactions on a second (or third) attempt.

The idea is to automatically retry the card after a short interval, rather than giving up immediately. For instance, if a charge fails in a subscription billing run, your system could try again 2 days later, and then again a week later if needed. Many times, the payment will go through on a later attempt – perhaps the customer’s bank issue was resolved or funds became available. A large portion of recoverable declines can be won back with well-timed retries.

The key is not to retry too frequently (which can annoy customers with multiple alerts) but to space attempts strategically. Some best practices include waiting 2–3 days before the first retry, timing retries for when customers are likely to have funds (e.g., right after payday), and limiting the number of attempts (to avoid endless charges). Payment platforms like Stripe offer “Smart Retries” that use machine learning to pick optimal retry times based on success data. If your system supports this, take advantage of it.

Even without advanced algorithms, you can significantly improve your success rate by scheduling a few automated retries for soft declines instead of abandoning the transaction. Those extra recovered sales go straight back to your bottom line. Just be sure to communicate appropriately with customers (for example, send an email after the final failed attempt so they know to update their card). When done right, retry logic can turn many “maybe later” declines into approved transactions, reducing your overall decline rate.

3. Offer Multiple Payment Methods (Including Digital Wallets)

“Your card was declined” doesn’t have to mean the sale is dead – often it’s an invitation for the customer to try a different way to pay. Offering multiple payment methods at checkout greatly increases the odds that a decline won’t end in abandonment. If a customer’s credit card fails, they might have a debit card or an ACH bank payment as a backup. Or they might prefer to switch to PayPal, Apple Pay, Google Pay, or another digital wallet.

By providing these alternatives, you give customers an immediate plan B (or C) to complete their purchase. This is especially vital in e-commerce, where you can’t physically ask for another card – the onus is on the site to present options. Digital wallet payments like Apple Pay and Google Pay have been shown to improve authorization rates because they use tokenization and biometric authentication, which issuers tend to trust.

These wallets also automatically carry the customer’s correct billing info (reducing data entry errors), and they can bypass some of the traditional card entry friction. The result is fewer declines due to mis-typed details or fraud flags, and a faster checkout experience for the customer. Likewise, alternative methods like PayPal or buy-now-pay-later services can rescue a sale if a card is acting up – maybe the customer’s credit card was maxed out, but they have funds in their PayPal balance or another card linked there.

The goal is to close the sale via any possible route. If you only accept one type of card and nothing else, a decline is a dead end. But if you accept a variety of payment methods, a customer encountering a decline has other paths to try before giving up. This not only recovers revenue you’d lose otherwise, but also enhances customer satisfaction (they feel like you made it easy for them to pay). Review your checkout options and consider adding popular payment alternatives that make sense for your audience. A more flexible payment stack is a simple yet effective way to reduce transaction declines.

4. Educate Customers on Common Issues

Sometimes, the difference between a lost sale and a saved sale is simple customer education. Many declines can be resolved by the customer themselves, if they know what action to take. For example, a customer might not realize their card was declined because of an address mismatch or an expired card. By providing a helpful nudge or information, you can turn a failed payment into a successful charge.

But how do you do this? Here’s how:

• Start by crafting clear, informative error messages at checkout. Instead of a generic “transaction failed” message, specify why, if possible: e.g. “Payment declined – please check that your billing ZIP code and CVV are correct, or try a different card.” This guides the user to double-check the common culprits, like typos or outdated info. You can also offer real-time suggestions, such as “The card may be expired – if so, use a current card or update the expiration date.” Many customers will correct the error and re-attempt if given a clue, salvaging the sale on the spot.
• Beyond on-screen messages, think about educating your customers proactively. If you run a subscription service, send out reminders before the billing date saying,g “Make sure your card details are up to date to avoid interruption.”
• You might include a brief FAQ on why payments fail and how to fix issues (for instance, reminding them to notify their bank if they plan a large purchase that might trigger fraud protections). Educating customers also means being transparent about what to do when a decline happens – for example, reassuring them that “if your payment doesn’t go through, try an alternate payment or contact customer support for help.” This kind of messaging can reduce frustration and encourage the customer to try again rather than silently bail.

Remember, a confused or uninformed customer is more likely to abandon the purchase. By contrast, an informed customer who encounters a hiccup is more likely to take the steps needed (retry, use another card, etc.) to complete the sale. In short, a little education goes a long way in reducing unnecessary declines due to user error or uncertainty.

5. Use a Smart Fraud Filter

Every merchant needs fraud prevention, but your fraud controls mustn’t inadvertently decline good customers. Using a smart fraud filter or fraud prevention tool can help strike the right balance.

Services like Stripe Radar, Kount, or similar fraud detection systems leverage machine learning and large data sets to assess transactions in more nuanced ways than static rules can. Instead of a blanket rule that might decline any order over $500 or any first-time international order (which could snag legitimate buyers), smart fraud systems analyze numerous factors (device fingerprint, past customer behavior, global fraud patterns, etc.) to decide when to approve, decline, or challenge a transaction.

The benefit is reducing false positives, allowing legitimate purchases to go through while still blocking truly suspicious ones. For example, Stripe Radar can be configured to automatically approve transactions that look very low-risk, even if they trip one minor flag, or to prompt for additional verification (like 3D Secure) on medium-risk transactions rather than outright declining. By fine-tuning your fraud settings, you can minimize false declines and maximize your approval rate without opening the floodgates to fraud.

Sometimes, adding an extra layer of authentication for borderline cases is better than an immediate decline – the customer might tolerate an SMS code or 3D Secure prompt if it means the order ultimately succeeds. In fact, implementing the latest 3-D Secure 2.0 authentication has been shown to increase authorization success by up to 10% in some cases, by providing issuers more confidence to approve the transaction.

A smarter fraud approach also learns and adapts; if you notice a lot of declines for “suspected fraud” that turn out to be false, you can adjust your thresholds or rules accordingly. The bottom line is to avoid one-size-fits-all fraud rules. Use dynamic tools (or managed fraud services) that let more good orders pass. This way, you’re fighting chargebacks and criminal fraud without fighting off your customers by mistake. Fewer false declines mean more completed sales and less revenue left unrealized.

6. Monitor Your Decline Codes

Not all declines are equal, and knowing why transactions are failing is key to fixing the problem. Every credit card decline comes with a decline code or reason message from the processor or bank. By monitoring these decline codes, you can glean actionable insights.

For instance, if you dig into your transaction reports and find that a large portion of your declines are coming back as “expired card” or code 54, that’s a clear sign you need to update stored card info (or remind customers to update their cards). If you see a lot of “insufficient funds” (code 51) declines, it might coincide with charging customers at particular times of the month – maybe right before payday – so you could adjust your billing cycle or add payment options like debit or ACH to capture those sales later.

A high number of “Do Not Honor” or generic bank refusal codes could indicate fraud suspicion; you might then tighten your fraud screening for truly risky orders but loosen it for trusted repeat customers (to avoid double layers of suspicion). The patterns in decline codes essentially highlight where the friction is. Tracking your overall decline rate and the frequency of specific decline reasons can help diagnose issues in your payment process. It allows you to take targeted action: perhaps reaching out to customers with expired cards on file, or tweaking your checkout form if many errors are due to CVV/ZIP typos.

Monitoring codes over time also tells you if changes you implement are working – for example, after enabling an account updater, “expired card” declines should drop. Make it a habit to review your processor’s decline reports or export the data periodically. Some processors even offer dashboards that break down declining reasons for you. By staying on top of this intel, you catch problems early. It’s a lot like monitoring vital signs in a patient – if something spikes, you investigate and treat it. Many unnecessary declines can be avoided simply by paying attention and responding to what the decline codes are telling you. In short, data is your ally in the fight against declines. Use it.

7. Update Expired Card Details Automatically

When it comes to expired cards and outdated payment details, a proactive approach can save a sale before it ever fails. Don’t wait for a transaction to decline – update expiring card info ahead of time through automation. We discussed using account updater services (which are ideal), but even if you don’t have a formal updater integration, you can implement processes to handle card expirations. For example, most subscription billing systems can be set to automatically email customers a month or two before their card’s expiration date, asking them to update their payment info.

This gentle reminder can catch customers before their card declines on the next renewal cycle. Many customers will respond and input their new expiration date or new card, preventing any interruption. You can also prompt for updates in-app or on your website when a user logs in (“Notice: Your saved card ending in 1234 expires next month. Please update to ensure continuous service.”).

Essentially, make it easy for customers to keep their info current. In cases where a card has already expired or been replaced, try to streamline the update process. Provide a direct, secure link for the customer to update their billing details as soon as a payment fails. The quicker they can update, the sooner you can rerun the charge and recover the sale. Some businesses even set up an automated workflow: when a decline comes back with an “expired card” code, it triggers an immediate email to the customer with a one-click update link.

This kind of responsiveness can win back the revenue within minutes or hours of the failed charge. The overall principle is to treat outdated card info as a preventable issue. By keeping on top of expiring cards (whether via an automated updater service or your notification system), you’ll dramatically cut down the number of declines that happen simply because a card on file went stale. This improves your continuity of revenue and spares customers the annoyance of a needless payment failure. It’s low-hanging fruit in the battle against declines – don’t overlook it.

Final Thoughts: Prevention Is the Best Cure

Credit card declines hurt revenue and disrupt the customer experience, but many are preventable with the right approach. Instead of waiting to recover lost sales, focus on identifying common issues—like expired cards, fraud flags, or insufficient funds—before they stop a payment. Tools such as account updaters, retry logic, and offering multiple payment methods help reduce friction and keep transactions moving. Customers don’t need to see the work behind the scenes—what matters is that the checkout works without problems.

Reducing declines isn’t a one-time fix but an ongoing effort. Track decline rates like you would conversion rates, and make adjustments as needed. Even small improvements can lead to meaningful gains in revenue and retention. Declines aren’t just something to accept—they’re something to address. By staying proactive and using available tools, you improve your chances of getting payments approved the first time, keeping your business running more efficiently.

Frequently Asked Questions