What Happens When Your Credit Card Transaction Fails?

While using Credit Cards, we often find to our disappointment that the transaction has failed. This may happen at merchant establishments or even while doing online transactions. Of course, this is one condition that all Credit Card users must bear in mind when they Apply for a New Credit Card. However, should a transaction fail, the card user must know the reason behind it and ensure its rectification immediately so that it doesn’t happen again.

Impact of failed Credit Card Transactions

Usually, it is seen that expired cards and insufficient funds are the main reasons behind failed transactions. However, transactions may even fail when there are sufficient funds in the card account and the potential customer tells his merchant that he used his card successfully for another transaction only a few minutes earlier. This is where it becomes a trifle perplexing.

A failed transaction is a fairly serious issue because it results in lost customer support contact and/or sales. This implies that it costs real money. An average merchant tends to squeeze about 100 basis points from his Credit Card processing rates. Yet by switching payment gateways to garner 100 basis points that result in a paltry 3% increment in a failed transaction doesn’t actually make sense.

The Root Problem

The fundamental problem lies in data. Neither do merchants possess absolute nor relative data. The cardholder knows what his rate of decline is. But how is it comparable with other merchants operating at his gateway or with another merchant at a different gateway? The answer too often for higher decline rates from a particular gateway is cryptic and difficult for merchants to understand. Payment gateways tend to be opaque because a majority of failed transactions happen because of security/fraud filters or because they simply don’t know at the account management/support level.

Online transactions on Credit Cards that are secure are processed on the ISHS’s behalf in real-time by Ingenico, an authorised service provider for merchant payments. It needs to be borne in mind here that the ISHS cannot control a transaction refusal and the Credit Card issuer doesn’t disclose to the ISHS why your transaction failed. This, in turn, implies that the ISHS cannot solve the issue that involves the cardholder and the card issuer only. In case a transaction fails, the ISHS can only recommend using another card or trying again with the same credit later. This usually solves the problem in most cases.

However, even though Ingenico makes use of the highest security levels currently available, Credit Card transactions also fail because of the following main reasons:

 

·      The cardholder uses a wrong card number or isn’t aware that he has reached his specified card limit. If you have keyed in the wrong card number, you will most likely receive an error message that indicates the invalidity of the card number. If not, check the card’s number carefully when filling out all necessary forms.

• ·         The card issuer has implemented a security measure for fraud prevention for the cardholder’s protection from card abuse.
• ·         The merchant site has technical issues which make it impossible to accept the Credit Card’s details including the date of expiry and PVV number, rendering the transaction incomplete.
• ·         The charge has exceeded the optimum amount allowable for a single charge. Should this happen, you can contact the card issuer with a request for increasing this limit.
• ·         The card has touched the optimum number of charges allowable in a given period. When faced with this problem, first check the number of times your card is chargeable in a pre-determined time period and request your bank to raise the limit. Wait for your request to be granted and charge the card again or pay using another card.
• ·         The card does not honour charges from online sources. If this is the case, ask your card issuer to allow this benefit. Alternatively, use a card that is compatible with online transactions.
• ·         Certain cards don't entertain international transactions. For any payments made while you’re abroad, first ensure that the card accepts and entertains international charges. If at all it doesn't, request your bank to issue you with a card that enables international transactions.
• ·         The card is unauthorised for MO/TO type transactions. This calls for contacting your bank to allow mail order/telephone order transactions.
• ·         You may have keyed in the wrong expiry date. This happens mostly when doing transactions over mobile phones. Moreover, your card may have actually expired without your knowing it and you need to use a separate card. Also, don’t forget to replace the expired card with a new one so that the same incident doesn’t happen again. 

·         Inaccuracy in the billing address may lead to failed transactions also. The billing address must match the one that your Credit Card issuer has. However, address matching is seldom the cause for a transaction to fail as compared to the other reasons stated above.

Also Read: 6 Factors That Affect Your Credit Score Points

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