Payment Pulse – Ep. 48

Learn why credit cards get declined, how businesses can respond, and how staff training and flexible payment options can help keep checkout moving.

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Episode Transcript

Noelle: Welcome back to The Payment Pulse. This is where we break down payment topics to help small business owners make more informed decisions. Today, we’re talking about something that just about every business that accepts credit cards has experienced, and that’s a declined payment.

It’s an uncomfortable situation. A customer’s ready to check out, they tap or insert their card, and suddenly the transaction doesn’t go through. But here’s the thing: a declined payment doesn’t always mean a lost sale.

Joe is joining me today to walk through why credit card payments get declined, what businesses can do when it happens, and how to keep the checkout experience moving. Joe, let’s jump right in and start with the basics. When a credit card gets declined, what’s actually happening behind the scenes?

Joe: When a customer makes a card payment, there’s actually quite a bit happening in just a few seconds. The transaction is sent through the payment network to the financial institution that issued the card, and then the issuer reviews it and decides whether to approve or decline the payment. If it’s declined, that simply means the issuer hasn’t authorized that particular transaction.

Noelle: And in that case, does the business typically know why the payment was declined?

Joe: Not necessarily. Sometimes the payment system provides a response code or additional information, but often the businesses just see a decline message on site. And, that’s important because a declined payment doesn’t automatically mean the customer doesn’t have enough money. There are several reasons why a perfectly legitimate purchase might not go through.

Noelle: And I think a lot of people probably associate a declined card with insufficient funds. What are some of those other common reasons?

Joe: Insufficient funds, of course, or available credit is certainly one possibility, but there are many others, like you were saying. And, one of the simplest is incorrect payment information.

This is especially common with online purchases, invoices, or manually entered transactions. Something as small as a mistyped card number or incorrect expiration date, or even just the last CVV  security code, that can prevent a payment from going through.

It can also happen with recurring payments if the business has an expired or outdated card saved on file as well.

Noelle: So what about when a bank flags a transaction for security reasons? Can that cause a purchase to be declined as well?

Joe: Absolutely. Banks and card issuers have fraud prevention measures designed to identify potentially suspicious transactions. For example, if someone makes a purchase that’s significantly larger than what they normally would spend or they’re shopping somewhere unusual, their bank may flag that. Those protections are important, but they can occasionally result in a legitimate transaction being declined.

In that case, the customer may need to contact their bank, confirm the purchase, and then, of course, try it again.

Noelle: And are there times then when the customer has funds available but the payment still doesn’t go through?

Joe: Yes. Some cards have daily spending limits, single transaction limits, or restrictions on certain types of purchases, and sometimes the issue isn’t related to the customer card at all. A connectivity problem, payment terminal issue, or temporary processing interruption could also prevent a transaction from going through.

So the important thing to remember is that there isn’t one universal reason for a declined payment, and businesses shouldn’t jump to conclusions.

Noelle: Oh, okay. So let’s say a customer is at the register, their payment gets declined, and maybe there’s a line forming behind them. What’s the best way for a business owner to handle that situation?

Joe: Yeah. First and foremost, keep it professional and make the customer feel comfortable. A declined payment can be embarrassing, and the last thing you want is an employee announcing that someone doesn’t have enough money, especially when that might not even be the reason. Instead, I’d keep the conversation neutral.

Something as simple as, “It looks like that payment method wasn’t approved. Would you like to try again or use a different payment method?” That gives the customer an opportunity to resolve the issue without putting them on the spot. If the card information was entered manually and it was entered incorrectly, and that you might be able to see, or the terminal is prompting a read error, trying that transaction again may just solve the problem as well.

But repeatedly running the same declined transaction usually isn’t going to fix an issue on the bank side. In fact, multiple attempts could trigger additional security measures. And if the card still isn’t working, that’s where having other payment methods available can really make a difference. This is where businesses have an opportunity to save the sale.

Rather than letting one declined payment bring the checkout process to a complete stop, give the customer another way to complete their purchase. Ultimately, the goal is to keep the experience positive and make it easy for the customer to take the next step and avoid losing a sale over something that might be easily solved.

Noelle: Okay, so what if it’s not just one customer? Let’s say a business starts to see a few declined transactions in a row. Should that raise a red flag?

Joe: It definitely should prompt a closer look. One declined card usually isn’t a reason to think something is wrong with your payment system, but if several unrelated customers suddenly start having issues, that could point to a broader technical issue.

Noelle: So in that case, what should a business look at first?

Joe: Start with the basics. Is your internet connection working? Is your payment terminal, connected properly? Is your point-of-sale system functioning normally? Also, pay attention to whether the problem is affecting one particular card type or multiple payment methods. If several customers are having trouble with different card types, that could indicate something beyond an individual card issue.

And if everything looks normal on your end, but the problem continues, contact your payment provider or support team. They may be able to help identify a processing issue or a service interruption. The key is recognizing the pattern early so you can troubleshoot and minimize disruption.

Noelle: We’ve talked about what causes declines and what to do when they happen. Is there anything businesses can do proactively to help prevent them?

Joe: Absolutely. You can’t prevent every decline because many of those decisions happen on the card issuer side. But there are steps businesses can take to reduce avoidable issues. Start by keeping your payment technology and point-of-sale software up to date. Make sure employees understand how to properly process different types of transactions, whether that’s chip cards, contactless payments, or manually entered payments.

And when entering in card information manually, take a moment to double-check the details before submitting.

Noelle: So we’ve touched on offering different payment methods a few times today. It sounds like that’s an important part of being prepared as well.

Joe: It really is. We often talk about payment flexibility in terms of convenience and meeting customer preferences, but it’s also valuable when something doesn’t go as planned. If a customer’s first payment method doesn’t work, having another option readily available gives you a better chance of completing that sale.

And beyond the technology, employee training is just as important. Make sure your team knows how to respond when a decline happens. Having a simple, consistent process helps employees confidently guide customers through the next steps instead of scrambling to figure out what to do.

Noelle: So Joe, before we wrap up, what are the biggest things that you want small business owners to remember about declined payments?

Joe: I’d narrow it down to three things. First, don’t assume you know why a payment was declined. There are many possible reasons, and the business doesn’t always have access to the specific cause.

Second, focus on what happens next. Check for simple errors, keep the customer interaction professional, and offer another way to pay if possible. A decline doesn’t have to mean the end of a sale.

And third, be prepared. So keep your payment technology updated, train your employees, and make sure you have flexible payment options available. Ultimately, you can’t control every approval decision, but you can control how your business responds. And sometimes that response is what makes a difference between a lost sale and a completed purchase.

Noelle: That’s great advice, Joe. And as always, thank you for joining us today.

Joe: Thanks, Noelle.

Noelle: And thanks to everyone for listening. We’ll see you next time on the Payment Pulse.

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