A person presenting a card reader that says declined on the screen
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Understanding Declines in Credit Card Processing

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Nic Beique | September 20, 2021

“Credit card declines are a frustration for everyone involved in a transaction. Understanding what you can do as a merchant can help.”
4 min read

    In addition to being upsetting for your customers, declines also represent lost sales for your business if not resolved.

    Who Decides if a Card is Approved or Declined?

    When a credit card is approved, it is the customer's issuing bank, not the payment processor or the card network, that is approving the card. An approval means that the credit card number and expiry dates are valid, the customer has enough credit for the transaction amount requested, and that the card has not been reported as stolen or compromised. It is important to note that an approval is not a guarantee of the transacted funds. There is always the chance that a chargeback is filed at a later date by the cardholder, either because their card was stolen or because of a dispute with the merchant.

    Why Does a Credit Card Get Declined?

    When a credit card is declined, it is typically declined by the cardholder's issuing bank, the entity that decides the outcome of the transaction. Most issuing banks do not provide a detailed reason for the decline to avoid fraudsters from "testing" credit cards and trying to determine the reason for the decline. If you get a decline notice, there are a few primary reasons that are most likely the cause. We list them below:

    Main Types of Credit Card Declines


    When you receive an "Invalid Card" error, it means that the system has completed a MOD10 check, the checksum formula used to validate a variety of identification numbers, and the formula was unable to validate the card numbers meaning the card entered is invalid. This is usually because the credit card number was entered incorrectly.


    If a customer has a card that has passed the expiry date listed on the front, then the card network won't be able to process it and they will need to present an alternate payment method or provide the updated expiry date. A large portion of declines are due to this reason.


    If you receive this message, then it is a normal decline by the bank. The most common reasons for a Declined - ND message are due to insufficient funds or a restriction placed on the card (such as reaching the credit limit).


    This is also a decline, but there is a pathway for potential approval. In this case, the bank is unsure about the transaction and would like the merchant to call the processor's call-for-auth center to do further verification on the transaction. If approved over the phone, the call center agent will provide you with an approval code for the capture.


    This decline means that you should "pick up the card" if you are in the physical presence of it. Think of movies where the waiter takes scissors and cuts the card in front of the customer. This is because the card has been taken out of circulation, either because it was lost and has been replaced, or was reported stolen. While not a certainty, this can be a warning sign that a customer is trying to process a fraudulent transaction using a stolen card. It should be noted that a merchant should never compromise their safety in trying to repossess a credit card.

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    Tips for Dealing with Credit Card Declines

    • Don't try processing the credit card multiple times. You will continue to receive decline messages and your merchant account may be flagged for potential fraud or abuse. Instead, ask the customer for another payment method.
    • Try to avoid processing the credit card for a smaller amount, as this may be seen as "testing" the card limit, and the transaction may be flagged for fraud. Instead of trying the transaction again at a lower amount, ask for another payment method from the customer.
    • Use services like the address verification service to help determine the validity of transactions and avoid processing fraudulent transactions.
    • For international transactions, some credit cards can have restrictions by default to decline all international payments. In this case, the customer would need to call their issuing bank (the number can be found on the back of the card) and let them know they are trying to process an international transaction. The bank will "unlock" the card, and you can try processing it again.
    • Some credit cards, especially business and corporate cards, can have restrictions on the type of purchases that can be made. Each merchant account has a SIC (standard industry code) associated with it, and a specific SIC could be prohibited from charging certain types of cards. In such an event, the cardholder again would need to contact their issuing bank to unlock the card before you can try processing the transaction again.

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