In today's FAQ, an electronics store owner learns little known ways to lower the instances of credit card declines at his checkout page.

Q: I have too many credit card declines in my online business. Since 2019 I’ve been operating an online electronics store. I do pretty good numbers – about €150K a month and 1.12% chargebacks. But with the holiday shopping season coming, I need to fix this pesky problem fast!

Last year my store had about 63% approval rate on our customers checking out from my cart. This year has been putrid. My business is now trending 54% approvals and so far for October the numbers keep getting worse. Most of the reasons are “issuing bank decline” and “insufficient funds”, then there’s others like “transaction not permitted”.

Can you provide additional insight so I can help my electronics store approve more orders and reduce my credit card declines?

A: Thanks for your question. There are a variety of reasons credit card declines happen at a checkout. It really depends on a few factors.

Let me first explain the meaning behind those decline messages. The “issuing bank decline” is a common reason seen by online merchants accepting credit cards. It’s a vague response, but essentially the customer’s credit card issuer is telling you that they are not allowing the transaction.

Visa or Mastercard, or the customer’s bank could be limiting large purchase amounts (for example, selling a drone for €1050). Or, the purchase doesn’t fit the customers regular buying habits. As a result, the order is declined. Therefore, transactions over certain limit may be deemed suspicious by the cardholder’s bank and blocked.

The bottlenecks could also be because your customer’s bank is preventing orders from your merchant category code (MCC). The electronics category is known for being high risk so some banks are cautious to approve orders from this type of business. In any case, you may want to advise your customers to call their bank or credit card company to permit the transaction. Also, ensure you charge in USD if your merchant account is in Europe but you’re selling to Americans. This helps bypass currency exchanges.

You may benefit from having a second payment processor. An additional gateway allows you to “cascade” declined transactions. Therefore, a backup solution to ensure there are no bottlenecks and to try to recoup some of your issuing bank declines can actually help increase your conversions at checkout.

The message “insufficient funds” is one of a few obvious reasons for credit card declines (along with “expired card number”). It’s also a popular reason for especially now during the Coronavirus pandemic. Spending habits have changed significantly. Many people are low on available credit because they’re in debt and out of work. Things are so bad for some consumers that they are unable to make their minimum payments.

Want to see more credit card decline code explanations? Check out our blog “Monetize Your Traffic! Understand Transaction Decline Codes & Raise Revenue By 10%” parts 1 and 2.

Unfortunately, the consumer must make a credit card payment for a more reasonable credit utilization ratio. Or, they can ask their issuer for a credit limit increase. Until then merchants like yourself will have to find other ways to collect payment. As an example, some merchants are allowing their customers to pay in instalments and charging the card number for smaller dollar amounts.

Cross-border sales create friction

Since you’re in Europe we’re assuming that’s a sizeable part of your target audience. However, if you’re selling to other countries outside your region, that could be why you’re seeing more declines. It is harder for Europe-based bank to approve credit card sales from outside the EU (especially the US and Canada). International debit card transactions have an even poorer success rate. That’s because typically, customer’s bank only approves local transactions on debit.

Unfortunately, there’s a lot of friction between the technological infrastructure of EU banks and financial institutions from other regions around the world. This creates problems for merchants like yourself. Your sales will still see more declines even when the authorized user has entered all the correct billing address and other card information, like the CVV on the back of card.

Recommendations to reduce credit card declines

The following are recommendations we often make to our clients with high credit card declines which result in lower approval ratios. Hopefully they will be of use to your electronics store.

First pull a report and sort all declined transactions from the last 90 days in a spreadsheet to identify the most popular reasons. Next, you can start to apply a remediation plan for each decline reason. For example, if insufficient funds accounts for 25% of declined orders, you might want to offer payments by instalments. Or, attempt to rebill the prospective customer within 5 days in case more is credit available sooner than a month later.

In the case of issuing bank decline reason, it’s best to engage potential buyers during the sales journey. The last thing you want is for them to abandon your shopping cart at the final decision stage. If possible, include a customer support phone number, link to an FAQ, add disclaimer or use intuitive responses during the sales journey for why a new credit card order was rejected.

This is a chance for you to let them know they can easily make a phone call to their bank to permit the credit card transaction. Or, perhaps they need to be alerted that their card has an old expiration date and needs to be replaced.

More than anything, make sure that your electronics e-commerce site is secure. A potential buyer should feel comfortable knowing they’re putting sensitive card details and contact information with a trustworthy vendor. We advise all merchants to be PCI compliant and you should do the same. Make sure SSL certificates are up to date. Put trust symbols on your order page to ease buyers’ concerns about security. And, if possible, encourage visitors to create an online account before they purchase so security is at the forefront. Don’t forget to make strong passwords and 2-factor verification mandatory to curb identity theft incidents.

We hope these strategies work for your online electronic store. If you need more insight, feel free to reach our support team.

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