Credit Card Decline Codes

What are Credit Card Decline Codes?

Credit card decline codes are error messages sent by banks or payment processors when a credit card transaction cannot be approved. These codes provide insights into why the transaction failed, whether due to insufficient funds, incorrect card details, suspected fraud, or technical issues. Each code is associated with a specific issue, allowing merchants and customers to understand and address the reason for the decline.

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While many declines are legitimate and safeguard users and merchants, decline codes also play a crucial role in fraud detection by flagging suspicious activities such as unusual spending patterns, geographic mismatches, or velocity triggers.

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How Do Credit Card Decline Codes Work?

Transaction Flow

Step 1 - Transaction Initiation: The customer provides their credit card details at checkout or during payment.

Step 2 - Authorization Request: The merchant’s payment processor submits the transaction request to the issuing bank.

Step 3 - Decision by Bank: The issuing bank evaluates the transaction using various criteria, including account status, fraud checks, and available funds.

Step 4 - Decline Code Issued: If the bank denies the request, it sends a decline code to the merchant to indicate the reason for rejection.

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Common Decline Code Categories

Customer-Related Declines: Issues tied to the customer’s account or card, such as:

• Code 51: Insufficient funds.

• Code 14: Invalid card number.

• Code 54: Expired card.

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‍Merchant-Related Declines: Issues with the merchant or payment processor, such as:

• Code 57: Transaction not allowed for the cardholder.

• Code 85: Issuer system unavailable.

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Fraud-Related Declines: Declines triggered by fraud detection mechanisms, such as:

• Code 62: Restricted card (suspected fraud or usage restrictions).

• Code 59: Suspected fraud.

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Technical Issues: Declines caused by system or network problems, such as:

• Code 96: System malfunction.

• Code 91: Issuer unavailable for authorization.

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Use Cases

Legitimate Scenarios

• Customer Notifications: Merchants provide clear error messages to customers based on the decline codes, guiding them to resolve issues like updating card details or ensuring sufficient funds.

• Fraud Prevention: Payment gateways analyze decline codes to identify and flag suspicious transactions.

• Risk Mitigation: Decline codes like "restricted card" (Code 62) help prevent fraudulent or unauthorized payments.

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Fraudulent Use Cases

• Card Testing Fraud: Fraudsters attempt small transactions to identify active cards, often resulting in a series of declines (e.g., Codes 14 or 51).

• Exploiting Decline Messages: Fraudsters may analyze decline responses to refine their strategies, such as using stolen cards where they know certain codes won’t block transactions.

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Impacts on Businesses

Positive Impacts

• Fraud Detection: Decline codes help merchants identify high-risk transactions and prevent chargebacks.

• Customer Experience: Providing clear, actionable messages for declines reduces customer frustration and improves trust.

• Operational Insights: Merchants use decline data to optimize payment processes, such as routing payments through different processors.

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Negative Impacts

• Lost Sales: Legitimate transactions may be declined due to overly cautious fraud systems or technical errors.

• Increased Support Costs: Handling customer inquiries about declined payments requires additional support resources.

• Reputation Damage: Frequent declines for legitimate transactions can harm the merchant’s reputation, leading to reduced customer trust.

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Operational Challenges

• False Positives: Overly sensitive fraud detection systems may trigger unnecessary declines.

• Complexity of Codes: Different banks and processors may use varying codes or interpretations, complicating resolution efforts.

• Fraud Adaptation: Fraudsters may study decline patterns to find vulnerabilities in payment systems.