Preventing false declines, failed online subscription payments

There are several reasons why a recurring payment for a subscription might be declined. Some reasons are legitimate, such as obvious CNP fraud, a charge to a card that’s maxed out, or a charge to a card that has expired or been canceled. Other declines may appear to be fraud but result from payment processing issues, a problem that nearly half of the top-performing subscription businesses recognize as an issue, per PYMNTS.

Declines can also result from human error. For example, what happens if a customer enters their address slightly wrong, perhaps mistyping one digit in their ZIP code? Many basic off-the-shelf fraud solutions, including some built into popular e-commerce platforms, will flag the order as fraud because the customer’s entry won’t match the entry in the Address Verification System (AVS). If the fraud solution is set up to reject all orders flagged as fraud automatically, then that order will be declined. Likewise, if a customer forgets to update their billing address with the retailer after a move, subsequent subscription payments may be declined because of the mismatch between the billing address stored by the merchant and the new billing address associated with the payment card.

Fraud screening rules may also result in declines in good orders. For example, if a customer’s card is issued by a bank in another country and the default fraud rules prohibit cross-border payments, that may trigger an automatic decline, even if the order is legitimate. Customers who are new to online shopping and those with relatively new credit card accounts may also have their orders declined based on fraud rules about the age of the account or the extent of the customer’s online shopping history.

To prevent false declines, your business must first understand the scope of the problem. For many retailers, this is difficult because their fraud solution may not differentiate between false declines and actual fraud attempts. If this is the case, it’s possible to back-test batches of declined orders to see what percentage were good orders.

With this data, you can see how much revenue–and how many customers–your business is losing to these errors. For example, did any declined customers try to place their order again, or did they disappear? You can also analyze your company’s social media mentions for comments about declines to understand how the problem might affect your marketing efforts.

Looking more closely at orders declined in error can identify specific triggers for false declines. For example, perhaps most declined orders originated overseas or had data-entry errors in the customer data fields. Knowing the causes and the scope of the issue will help you create a plan to fix it.

If your false declines are caused mainly by customer data entry errors, find ways to minimize data entry requirements while still gathering the information you need to screen orders, fulfill them, and maintain evidence to dispute future chargebacks. One of the easiest ways to minimize data entry requirements is by accepting digital wallet payments that store and provide customer data. 57% of consumers in the five-country survey find digital wallets to be convenient alternatives to credit card payments, so adding these options also helps meet your customers’ CX expectations.

If other factors like cross-border orders or new customer rejections create a false decline problem, adjusting your fraud control rules may resolve the problem. For example, you may need to set new rules for international customers and those new to e-commerce. It’s also a good idea to avoid automatic rejections for all flagged orders and review those orders to avoid declines based on minor errors rather than fraud. Finally, if payment processor errors are causing payment declines, it’s essential to work with the processor to find a way to reduce those errors.

Preventing false declines in subscription e-commerce requires time and research, but the payoff is more revenue, stronger customer relationships, higher customer lifetime value, and a better reputation for your brand. These are all valuable outcomes at a time when the competition for subscriber dollars and loyalty is intense and growing.

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