When a transaction fails, the standard industry response is often to initiate a retry. There are, however, rules imposed by the card schemes that limit the retries attempts within a certain window period. PayPal quotes that up to 15 reattempts are permitted by Visa within a 30-day period for certain decline categories. Whilst Mastercard retries are limited to 10 in a 24-hour period. Exceeding these thresholds can result in fines, reaching into the thousands.
The approvals and rejections that merchants get from an authorisation request typically come in the form of 2-digit or 3-digit response codes, with each code indicating the reason a particular transaction is accepted or declined. The declined codes are categorised as 2 types:
◾Hard – the transaction cannot be reattempted
◾Soft – the transaction can be retried
But in fact, there’s more to it. There are a number of codes that are sitting in a shade of grey and can be prone to confusion… For example, “Do Not Honor” is a catch-all decline code used when an issuer rejects a transaction without providing a specific reason. This rejection could stem from various issues, which could lead to different fallback strategies, yet the code itself offers no clarity, leaving merchants guessing and, in many cases, shoppers frustrated by the failed transaction.
There’s a multi-layered process guiding how these codes flow, which, in my view, really highlights the confusion and challenges to not only interpreting these seemingly simple digits and but also managing all the technical details, rules, and processes involved.
◾Issuer: the response codes are issued by the issuing bank based on the customer’s account status, such as insufficient funds, transaction limits, or suspected fraud.
◾Card Networks: they receive and standardise these codes under industry norms, although slight variations can exist at network levels.
◾Acquirers/Payment Systems: they further refine the codes, grouping them in a way to give merchants clearer insights into decline reasons.
◾Merchant-Level Actions: based on these refined codes, the merchants then implement different strategies that may involve intelligent payment retries.
Understanding the declines root causes is crucial for determining the most effective actions to reduce lost sales and enhance the overall payment experience.
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