Being informed by a cashier that a payment has been declined, especially in a public setting like a store, can be difficult. With 50% of all payments in the UK in 2022 made via debit cards, payment declines are a growing concern among consumers and businesses alike.1
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While the reasons for payment declines can vary, it’s essential to understand the potential impact and possible solutions.
A payment decline can happen when a consumer attempts to make a purchase, but the card issuer, payment gateway, or financial institution doesn’t authorise the transaction.
One common type of payment decline is a card decline, which involves debit or credit cards. These can be particularly frustrating for consumers who’ve taken the time to browse a store, choose their products, and head to checkout — only to discover their payment has been rejected.
For businesses, payment declines can result in lost sales and revenue. If a business experiences a high rate of payment declines, they may even face regulatory challenges.
Some frequent causes of payment declines include:
Insufficient funds are one of the biggest reasons payments are declined. This occurs when the account linked to the payment method doesn’t have enough money to cover the transaction.
Regardless of the cause, these payment declines are often inconvenient, requiring the individual to look for a cash machine, borrow money from a friend, or walk away from the purchase. Some financial institutions may also charge overdraft fees when a payment is declined due to insufficient funds, adding extra financial burden to an already stressful situation.
Expired or invalid cards (such as those not yet activated, or ones reported lost or stolen) are another common cause of payment declines.
To help reduce the chance of payment declines:
Payment declines can also occur due to technical issues and glitches in the payment processing system, such as server downtimes, software bugs, and other transaction errors.
Unlike other causes of payment declines, these are often beyond the control of both a consumer and business. But because they’re often unpredictable, they must be tackled quickly.
To mitigate technical glitches, businesses can:
Payment declines may lead to several potential impacts. Here are some examples:
Here are some possible tips to help reduce payment declines:
Want to find out more about how to manage your money? Read on for tips on personal budgeting.
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