Payments · Practical guide · 4 min read
Payment declines: a practical governance guide for merchants
Declines have different causes: issuer decisions, data quality, authentication, your own fraud settings and routing. Governing them starts with separating these causes using decline codes, then assigning each to an owner.
- Who this is for
- Heads of payments, payments operations teams and CFOs.
- Why it matters
- A declined payment can be a lost sale. A single overall approval rate hides which causes are controllable and which are not.
Executive summary
- 1Analyse decline codes rather than one approval rate.
- 2Assign each cause to an owner.
- 3Review regularly, because issuer behaviour changes.
What causes payment declines?
| Source | Examples | Typical owner |
|---|---|---|
| Issuer decisions | Insufficient funds, suspected fraud, card policy | Customer journey and messaging |
| Data quality | Invalid card number, expiry or CVV | Checkout and product |
| Authentication | Authentication required or failed | Payments and fraud |
| Your fraud settings | Rules blocking legitimate customers | Fraud and risk |
| Routing and set-up | Provider or configuration issues | Payments operations |
What practical steps help?
- Respond to decline codes appropriately, for example offering another payment method after insufficient funds.
- Use checkout validation to reduce data errors.
- Review fraud rules so they do not block too many good customers.
- Consider network tokens and credential updating services where available.
- Offer payment methods your customers prefer.
Issuers adjust their decisioning over time, so this is an ongoing discipline rather than a one-off fix. No specific improvement in approval rates is implied.
Sources and methodology
- Bankhawk practitioner analysis. No benchmarks cited.
Understand where your payments fail
Tell us your providers and markets. We will outline what a decline review would examine.
Discuss your payment performance