What a Merchant Should Know About Credit Card Declines

Credit Card Declines

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Accepting credit cards for your business has many advantages. One of the most convenient aspects is knowing instantly whether a payment was approved or declined. Rather than waiting days and dealing with a returned ACH payment, your business can know within seconds whether a card has gone through.

When a card has been declined, the most common credit card denial code descriptions can give you a some idea of the reason the payment was unsuccessful. However, the world of credit card payment processing is complicated. There are countless reasons a card might be declined that are not so easy to figure out. The most common credit card declines are due to low funds (Insufficient Funds) or are a general decline from the cardholder’s issuing bank (Do Not Honor). Some others have nothing to do with the consumer. These require you to understand a bit more about the payment process and how your company’s merchant account is set up.

SIC Codes and Credit Card Declines

Do you know enough about your SIC code to troubleshoot why it’s causing a card decline? Along with issuing bank and consumer issues, Standard Industrial Classification (SIC) codes can bar a payment from being completed. A decline of Restricted SIC or Restricted Card may indicate the cardholder’s bank has deemed your business unsuitable for the type of card being used.

SIC decline codes don’t happen often when accepting payments, which is why some merchants may not think to research theirs. But just one declined payment can be a frustration when you’re focused on the bottom line. One of the most common examples of an SIC code causing a card decline is the use of a Health Savings Account card. If your business is not coded properly to accept a card from a Health Savings Account, the payment will not go through.

Sometimes a merchant will be set up with a generic SIC code of 7299 (especially when a business doesn’t fall neatly into a category) and many issuing banks will block a customer transaction from businesses with this type of generic category code.

When you see this error, but need to secure a payment immediately, it is best to have your customer choose a different way to pay. However, this does not solve the underlying problem. To find out why the SIC code and card are incompatible, contact your merchant service provider to make sure you’re categorized correctly. If you’re in the right category, there is nothing you can do to fix the incompatibility causing some credit card denials. If you are not in the correct merchant category, your merchant service provider can help you get the proper SIC code for your business.

AVS and CVV Declines

AVS is an address verification system which deals with two fields a merchant can require on their payment forms.

  • Street Address
  • Zip Code

The street address entered during a payment should match the billing address the cardholder’s issuing bank has on file. Because the system was set up several decades ago, it only reads numbers. Therefore, the important element in an address match is a correct street number and zip code.

If the card declines due to AVS mismatch, the cardholder must call their bank to verify the address listed is correct. This is because the issuing bank (cardholder’s card provider) is the origin of this particular type of card decline.

CVV, card verification value, is sometimes also referred to as CVC, card verification code or “security code”. All  refer to the same item – the three digits found on the back of all Visa, MasterCard and Discover Cards. For American Express, the CVV is a four-digit code located on the front of the card.

A merchant has the ability to set up their merchant account to check for CVV verification from the issuing bank in order to approve a card transaction. If you receive a CVV mismatch decline message, make sure you haven’t entered the number incorrectly. If you continue to get a decline upon re-entering the CVV, the transaction might be fraudulent. You may advise the cardholder to call their issuing bank, and will need to ask for a different form of payment.

Most merchants can use their card association’s AVS and CVV filter options to help prevent fraudulent transactions and chargebacks. These filters can usually be set up through your payment processing software or gateway. Be aware, if these modules are not set up in your system, mismatched addresses will not cause a card decline.

Voice Authorization Required or Voice Call

Occasionally you may get a response of Voice Authorization Required or Voice Call. This does not always mean the transaction will be declined. Rather, the issuing bank wants you, the merchant, to authorize the transaction through a telephone call. This is sometimes required when a cardholder is close to their spending limit. In this case, you have a few options:

  1. Treat the transaction as a decline and request another form of payment.
  2. Choose to call into the card’s voice authorization line. You must provide your merchant ID number (found on the statement you receive each month from your merchant service provider) and the card details. If the transaction is approved, you will receive the authorization code over the phone, and must process a post authorization. Your payment processor can give you instructions on how to do this.

The card association voice authorization telephone numbers are as follows:

  • Visa or MasterCard: 800-228-1122
  • American Express: 800-528-2121
  • Discover: 800-347-1111

Addressing a Credit Card Decline

If you are certain that you have the correct address, and have verified the card type, the most effective way to get to the bottom of a credit card decline is to ask the consumer to contact their issuing bank for further explanation. There is little that can be done for a card decline if the bank is not consulted. If you understand what caused a decline, but it can’t be addressed immediately, it may be best to simply ask your consumer for a different form of payment.

If all else fails, you may also consult your payment processor about the common reasons for the codes you are seeing. Keep in mind, however, although you processor may be able to help investigate why the codes are occurring, the customer contacting their issuing bank is frequently the only way to resolve a credit card decline.

Credit Card Decline Messages You Should Know


Error

Card Expired

What It Means

The card has expired and is no longer good to make purchases

What To Do

Verify information with consumer. If the card has expired (and the date wasn’t just miskeyed), ask for an alternate form of payment

Error

Insufficient Funds

What It Means

The account being charged doesn’t contain the funds to make the payment

What To Do

Ask the consumer for an alternate form of payment

Error

Do Not Honor

What It Means

Usually indicates there is a problem with the consumer’s account

What To Do

This can be solved by having the consumer speak to their issuing bank to clear up the source of the problem

Error

Restricted SIC

Or

Invalid Service Code

What It Means

May indicate the cardholder’s bank has deemed your business unsuitable for the type of card being used

What To Do

Contact your merchant service provider to ensure you are listed under the proper SIC code for your business

Error

AVS Mismatch

What It Means

The address provided during payment does not match the card’s billing address

What To Do

Clarify with the consumer that they need to provide the billing address. If this still does not work, ask for another form of payment and have them contact the issuing bank

Error

CVV Mismatch

What It Means

The CVV code entered does not match that of the card

What To Do

Verify the code with the consumer to ensure it wasn’t mistyped

Error

Merchant Does Not Support This Card Type

What It Means

You merchant account is not set up to accept this type of card (Ex: American Express, Discover, etc.)

What To Do

If you wish to accept these card types in the future, speak to your merchant service provider about the necessary steps

Error

Voice Authorization Required

What It Means

Merchant must authorize the transaction with the issuing bank over the phone

What To Do

Call the appropriate telephone number listed above, or ask for another form of payment


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