A card payment can be declined for many different reasons. Some declines are temporary and may succeed after the customer takes action or the transaction is tried again. Others indicate that the payment should not simply be resubmitted.
The terms soft decline and hard decline are useful ways of grouping these failures, but businesses should not rely on the labels alone. The actual response received from the issuer, card network, payment gateway or payment provider should determine what happens next.
For businesses processing significant card volumes, the important question is not simply how many payments are declined. It is why they are declining, where in the payment journey they are failing, and which declines could potentially have been recovered.
MAS View: A decline problem is not solved by repeatedly retrying failed payments or simply switching provider. Merchants first need to separate genuine issuer decisions from preventable payment-stack friction.
What Is a Card Payment Decline?
When a customer attempts to make a card payment, an authorisation request normally travels through the merchant's payment infrastructure towards the card issuer.
The issuer then decides whether to approve or decline the transaction based on the information available to it. That can include the card status, available funds or credit, transaction amount, authentication data and fraud or risk signals.
However, not every failed payment necessarily originates with the issuer. A payment can also fail because of:
- incorrect card details;
- an expired credential;
- a failed or incomplete authentication process;
- gateway or processor errors;
- merchant fraud controls;
- technical integration problems;
- unsupported cards, currencies or transaction types; or
- issuer restrictions.
This distinction becomes important when analysing payment performance.
What Is the Difference Between a Soft and Hard Decline?
A soft decline generally describes a declined payment where the underlying issue may be temporary or potentially recoverable.
A hard decline generally describes a failure where simply attempting the same payment again is unlikely to resolve the problem.
| Decline type | Typical situation | Possible response |
|---|
| Soft / potentially recoverable |
Temporary issuer problem |
Retry later where permitted |
| Soft / potentially recoverable |
Authentication required |
Complete the required authentication flow |
| Soft / customer action |
Insufficient funds |
Customer may retry later or use another payment method |
| Correctable |
Incorrect card or security information |
Ask the customer to correct the information |
| Hard / credential problem |
Lost, stolen, invalid or restricted card |
Request another payment method |
| Hard / merchant or issuer restriction |
Transaction not permitted |
Investigate the reason rather than repeatedly retrying |
Important: soft and hard are not universal classifications applied identically by every PSP, acquirer or card network. The same general payment problem can be represented differently depending on the provider and payment flow.
Merchants should therefore use the decline response and any network or merchant advice returned by their own payment provider rather than building retry rules from a generic list found online.
The MAS Payment Decline Framework
When analysing recurring or unusually high card decline rates, Merchant Advice Service recommends working through:
Decline Type → Response Code → Authentication → Credential → Routing → Retry → Provider Fit
This helps businesses distinguish between individual customer payment failures and wider problems with their payment infrastructure.
What Causes Soft Card Payment Declines?
Potentially recoverable declines can happen for several reasons.
Insufficient Funds or Credit
The customer's account may not have sufficient available funds or credit at the point the payment is attempted.
For an ecommerce purchase where the customer is present, offering another payment method may be preferable to repeatedly attempting the same card.
For subscriptions and recurring billing, retry timing can matter because the customer's financial position may change before a later collection attempt.
Temporary Issuer or Processing Problems
An issuer may temporarily be unavailable or a payment may experience a processing error.
Where the response received indicates that another attempt is appropriate, the transaction may succeed later.
This is different from repeatedly resubmitting every declined payment regardless of the decline reason.
Authentication Required
A transaction may require further customer authentication before it can proceed.
This is particularly relevant to online payments where EMV 3-D Secure (3DS) is used to exchange transaction and authentication information between the merchant and card issuer.
Where authentication is required, the correct response may be to allow the customer to complete the authentication process rather than simply resubmitting the original authorisation.
Customer Information Needs Correcting
Incorrect card numbers, expiry dates, security details or other customer-entered information can also cause payments to fail.
In these cases, attempting exactly the same incorrect information again is unlikely to help. The customer should normally be given the opportunity to correct it.
What Causes Hard Card Declines?
Some decline responses indicate a more fundamental problem with the payment method or transaction.
Examples can include:
- a card that has been reported lost or stolen;
- an invalid or closed account;
- a restricted card;
- a transaction type that the issuer does not permit;
- revoked payment authority; or
- certain security or fraud-related decisions.
Repeated attempts against these types of response can be ineffective and may create unnecessary transaction traffic.
The correct action can instead be to request a different payment method, ask the cardholder to contact their issuer, or investigate whether the payment itself has been constructed correctly.
What Do Card Decline Codes Mean?
Payment providers frequently translate issuer and network responses into more merchant-friendly decline descriptions.
You may therefore see messages such as:
- insufficient funds;
- expired card;
- incorrect security code;
- authentication required;
- issuer unavailable;
- transaction not permitted;
- generic decline; or
- do not honour.
However, the precise meaning and recommended action can depend on the card network and provider.
A vague response such as “do not honour” should not automatically be interpreted as a permanent hard decline. It may simply mean that the issuer has not provided the merchant with a more detailed reason.
Businesses using an API integration should consider whether their payment system captures the underlying decline reason and any available advice information rather than recording every unsuccessful transaction simply as “payment failed”.
For businesses reviewing their payment architecture, see our guide to payment API integration.
Authentication Failure Is Not the Same as an Authorisation Decline
This distinction is particularly important for ecommerce merchants.
Authentication is about establishing confidence that the person making the payment is entitled to use the payment credential.
Authorisation is the issuer's decision about whether the transaction itself should proceed.
A payment can therefore encounter problems during authentication before a normal authorisation decision is reached.
Equally, successful authentication does not guarantee that an issuer will approve the subsequent payment. The issuer can still decline for another reason.
EMV 3DS is designed to support secure card-not-present authentication by passing relevant transaction, payment method and device information between participants in the payment journey.
For merchants, this means declining payments should be analysed alongside 3DS authentication outcomes rather than looking only at the final approved/declined result.
Should Merchants Automatically Retry Soft Declines?
No. A potentially recoverable decline does not mean the merchant should immediately resubmit the transaction repeatedly.
The appropriate action depends on the response received.
| Situation | Better response |
|---|
| Issuer temporarily unavailable |
A later retry may be appropriate |
| Authentication required |
Complete authentication |
| Incorrect card data |
Ask customer to correct the information |
| Expired credential |
Update the payment credential |
| Lost or stolen card |
Request another payment method |
| Generic issuer decline |
Follow provider/network advice or ask customer to contact issuer |
Payment networks and providers increasingly return additional advice alongside decline information to help merchants determine whether a transaction should be attempted again.
MAS View: The objective should not be to maximise the number of retries. It should be to make the correct next decision for each failed payment.
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Why Recurring and Subscription Payments Need Different Decline Management
Payment recovery becomes particularly important for businesses using subscriptions, memberships and other recurring-payment models.
The customer may no longer be present when a subsequent payment is attempted, so the business cannot always ask them to correct a problem immediately.
Recurring payment performance can therefore depend on several capabilities working together:
- correct credential-on-file setup;
- appropriate recurring-payment indicators;
- account updater services;
- network tokenisation;
- intelligent retry logic;
- customer communications; and
- a process for obtaining a replacement payment method where necessary.
Read our detailed guide to subscription payment processing.
How Account Updater Services Can Reduce Failed Payments
Cards change.
A customer's card may expire, be replaced after being lost or stolen, or receive updated account information even though the underlying customer relationship with the merchant continues.
Card-network account updater services can enable participating issuers, acquirers and merchants to exchange updated credential information.
This is particularly useful for businesses collecting recurring payments because it can reduce failures caused purely by outdated stored card information.
It is still important to distinguish a credential update from a genuine issuer decision not to approve a payment.
Can Network Tokenisation Improve Authorisation Rates?
Network tokenisation replaces the underlying primary account number used in a digital payment environment with a network-managed token.
As well as reducing exposure of sensitive card credentials, network tokens can support lifecycle management when underlying account details change.
Visa reports that network-token transactions can achieve higher authorisation rates than comparable transactions using raw card numbers, although the actual benefit will depend on the merchant, issuer, market and payment setup.
For a deeper explanation, read Understanding Network Tokenisation.
Can Payment Routing Reduce Declines?
For some larger or international merchants, payment routing can become another part of authorisation optimisation.
A sophisticated payment setup may be able to route transactions according to factors such as:
- country;
- currency;
- payment method;
- acquirer availability;
- transaction type; or
- commercial and performance rules.
This is one of the reasons larger businesses may consider payment orchestration or an acquirer-agnostic gateway.
However, routing is not a way to bypass legitimate issuer declines. It is primarily a way of designing a payment architecture that gives transactions an appropriate route to authorisation.
How Should Businesses Measure Card Authorisation Performance?
A single headline decline rate rarely tells the full story.
Businesses processing meaningful card volumes should consider tracking:
| Metric | What it can show |
|---|
| First-attempt authorisation rate |
How frequently an initial payment attempt succeeds |
| Decline rate |
Overall unsuccessful authorisation activity |
| Decline reason distribution |
Which problems are generating failures |
| Retry recovery rate |
How many appropriately retried payments are eventually recovered |
| 3DS authentication outcomes |
Whether authentication is contributing to payment loss |
| Recurring payment recovery |
Performance of subscriptions after initial failure |
| Country / issuer performance |
Whether particular geographies or issuing populations behave differently |
| Card type and payment method |
Whether acceptance varies materially by payment credential |
Where possible, these results should also be compared by customer location, issuer geography, transaction value, payment channel and acquiring route.
This creates a much more useful picture than simply saying that “5% of transactions decline”.
When Does a High Decline Rate Become a Payment-Provider Problem?
Many declines are completely outside a payment provider's control. A different PSP cannot create funds in a customer's bank account or make a lost card valid again.
However, the payment stack can influence other parts of the process.
Provider capability may become relevant where merchants identify problems involving:
- poor visibility of decline reasons;
- limited support for network tokenisation;
- weak account-updater capability;
- basic recurring-payment retry tools;
- 3DS implementation or authentication issues;
- limited acquiring or routing options;
- international acquiring strategy;
- overly restrictive fraud configuration; or
- technical limitations within the payment integration.
At that point, comparing providers can become part of a wider payment-performance review.
Should You Switch Payment Provider to Improve Approval Rates?
Possibly — but only after diagnosing the problem.
Changing payment provider because customers regularly have insufficient funds is unlikely to solve anything.
Changing provider may be more relevant if a business discovers that its current setup lacks important capabilities around authentication, tokenisation, credential updating, acquiring, routing, recurring payments or reporting.
For businesses considering a change, it is also important to understand whether stored cards and tokens can move with the business. Read our guide to changing payment gateway and migrating stored cards, tokens and recurring payments.
Businesses can also read our independent guide to comparing UK payment providers.
MAS View: A payment provider should not be judged only by its headline transaction fee. For merchants processing at scale, a small difference in successful authorisations can potentially matter more commercially than a small difference in processing price.
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How Merchant Advice Service Can Help
Merchant Advice Service helps UK businesses compare payment providers based on the merchant's actual payment requirements rather than simply headline rates.
Where authorisation performance is part of the problem, this can include looking at:
- current payment architecture;
- gateway and acquirer setup;
- transaction profile;
- recurring or subscription requirements;
- international processing;
- tokenisation;
- integration requirements;
- fraud and authentication tools; and
- provider capability.
Merchant Advice Service is free for merchants to use. Where a business chooses to proceed with a provider we introduce, MAS may receive a referral fee or commission from that provider.
Learn more about how Merchant Advice Service works.
Related Guidance
Sources
Editorial & Commercial Disclosure
This guide is intended to explain payment authorisation declines and the types of payment technology that may affect how businesses manage them. The most appropriate response to a decline depends on the merchant's provider, card network, issuer and transaction circumstances.
Merchant Advice Service is an independent payment consultancy and comparison service. We do not recommend a payment provider solely because of commission arrangements. Where a merchant proceeds with a provider introduced through MAS, we may receive a commercial referral payment.
You can read more about how we research and compare payment providers and our research and data methodology.
