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April 13, 2023
by David Goodale

How to Reduce Declined Transactions

(Slightly edited from video transcript for greater readability)

Hello David here at Today I'm here to tackle the topic of how to reduce declined transactions and reduce the number of declined transactions that you get. Stay tuned. We'll dig in in one second.

anti fraud

Anti-fraud algorithm

The card issuer is the bank that gave the credit card to the cardholder. The issure is looking to get the best info you've got, to approve a transaction. All you need fro a transaction is a credit card number, an expiry date and an amount. That's it. You're not giving them a lot to go on. Card issuers have anti-fraud algorithms. They don't want fraudsters to steal credit card numbers and successfully use them. For example, if somebody's credit card limit is $10,000 and someone tries to do a $10,000 transaction at four in the morning from some overseas country at an online casino, the card issuer's anti-fraud system should hopefully go, eh, this doesn't sound right. What you don't know is exactly how the anti-fraud algorithm works. For the same reason that Google doesn't explain exactly how it's algorithm works.

If you knew exactly how their algorithm worked, it would render it useless. Instead, we can intuit, how we think it works and we can apply logic like we know that the more comfort we can give the card issuer, the greater the probability of an approved transaction. The first thing that you can give the card issuer, basically when doing an e-commerce or virtual terminal transaction, is the first thing that you should do is type in the customer's billing address, specifically the postal code or zip code. If you're, in the US and the street address, there are two address checks, the postal code and the street address. If it matches the address, it's more likely that the card issuer is going to approve the transaction.


CVV code

Similarly, on your credit card, there is a three-digit security code on the back. This is called a CVV code. You should always type the CVV code in for every order. It's another positive identifier for the card issuer. It's not the main ingredient that's going to change the world for you, but it's another little thing in your favor that hopefully moves the needle enough that you get that approval.

Cross-Border transactions

cross border

Another big thing that causes declines is cross-border transactions, which is something that can be hard to prevent. My note on the screen says, if possible, prevent the transaction from crossing a border. Well, that is good advice, but how do you do that? The reality is it's not advice that's actionable for all merchants. That's something that only larger merchants can do. I should be clear. What that means is if you are a Canadian-incorporated merchant and you're selling, for example to US customers, it would be nice if you also had a US corporation in a US-issued merchant account so that we can intelligently route your US transactions through our US merchant account because then that customer's card issuer won't see the transaction as an international transaction and that thereby increases the likelihood of an approval. Again, it doesn't make a massive difference, but if you're dealing with 10 million a month in sales, even a little difference can be a big difference. For small businesses, this is not good advice. We get both small and large merchants looking at our videos. If you're a larger merchant for your major demographics, you can look at getting a local domestic merchant account to lower your decline rate.

3D Secure

Something that all merchants can do regardless of size is consider using 3DSecure. I have other content on the channel talking about 3DSecure, but that's the second level authentication for e-commerce transactions. The other day I was doing a purchase online. I know I was on a different IP address than normal and I noticed that my bank challenged me. They were texting me a code. They wanted me to check my phone, and type in the code that had been texted to my phone for the transaction to be approved. If you use something like 3DSecure, there's a much higher likelihood that the issuer will approve the transaction because it's gone through that very high level of authentication.

Break up large orders into smaller ones when possible

I'm not done yet, though I have another one for you to break up very large orders into smaller orders. You can't always do that if you're selling a car on a credit card, which would be unusual, could be done, but you can't do anything about that. You're selling a car. Let's say you're a contractor and you're doing a home renovation and it's $12,000 and you're getting it declined. Well, you could just reasonably break the invoice up into the laundry room renovation, the kitchen renovation, and the living room renovation, and maybe they're $2000, $3000, or $6,000. That is perfect, so I want to be very clear. I'm not saying to fraudulently break up the invoice, but in that example, you can totally and very reasonably break the job into reasonable components.

Try at a different time

If you do that, the ticket amounts will be smaller and you will increase the chance of likelihood of an approval. Then after that, we're down to like Hail Mary things. If it's declined right now, try again tomorrow when you try again tomorrow, try at a different time of day. We know that card issuer anti-fraud algorithms are extremely sophisticated. Do they do velocity checks like how many other times has this card holder used their credit card in the last five minutes or the last hour? Are they usually awaking at this time of day? Sometimes you can be just far enough offsite of whatever their algorithms looking at for them to cause a decline. These are pure Hail Mary things. This is more desperation. There's not too much that you can do. We're getting to the end of the rope of your options.

call the bank

Ask the customer to call their bank

What you can do is if you're getting declines, you can always say to your customer, hey customer, I know that it's a little bit annoying and I'm sorry about this. We're doing everything we can. Your bank's saying no. Can you call your bank and ask them two questions? Did you see the transaction attempt on this day for $46? You first get them to confirm if they saw it and then you say, did you block it? You wait for them to answer. If they say yes, you say, can you please stop blocking it? They will re-release the block. The customer can come back and attempt the transaction again that time they should get approval.


That was my high-level overview of what you can do to increase your approvals or decrease your declines. I hope you helped give you some ideas of things that you can do, and I know it can be frustrating. This is an issue we tackle quite a lot at, particularly on that cross-border decline issue because we're able to issue merchant accounts in Canada, the US, the UK, Europe, and other countries. If you do have any questions or if you'd like to get a merchant account in any one of those countries, reach out to us at We'd be very happy to help. Thanks for watching. Have a nice day there. Bye now.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

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