The surge in card-not-present debit transactions has led to an increase in transaction declines, making the management of transaction attempts a growing challenge for issuers as well as merchants.
To encourage clearer communication between issuers and merchants, PULSE® is introducing four enhanced transaction decline categories with more-precise response codes to be used by either issuers or their third-party processors. The goal is to help reduce unnecessary transaction reattempts from e-commerce merchants by providing them with more information as to why transactions are declined.
“We’re trying to forge better information sharing by the issuer back to the merchant, and that will help determine merchants’ future decisions as to what to do next.”
Jeff Trachtman, Director of Product Management, PULSE
Costs of Unnecessary Retries
In recent years, merchants have been increasingly reattempting transactions multiple times in the hope of eventually obtaining authorization. Because merchants rely on decline codes to explain why transactions are declined, many of these reattempts are occurring because issuers have been overusing generic transaction decline codes, which do not provide detailed information regarding the decline.
These newly enhanced categories are particularly timely as e-commerce transactions are expected to continue trending upward. According to data released in the 2021 Debit Issuer Study, commissioned by PULSE, card-not-present debit usage grew by 26% in 2020. E-commerce transactions and card-not-present transactions for recurring purchases, such as monthly subscriptions, are key factors driving up both card-not-present usage and the number of transaction declines.
As a result, excessive authorization retries have been on the rise, contributing to increased costs, time-consuming back-office processes for both issuers and merchants and disappointing customer experiences. Among the top goals of the new categories is to help communicate to merchants when a decline is final and retries should not be attempted.
Enhanced Decline Categories
Effective October 9, 2022, PULSE will use four enhanced decline categories. These categories, along with precise decline response codes, will provide issuers with specific information to share with merchants as to why a transaction was declined.
PULSE is providing recommendations based on each category.
- For Category 1, PULSE recommends using response codes from this category only when the issuer does not intend to approve subsequent attempts. Category 1 codes include reasons such as invalid card number, expired card or stolen card.
- For both Category 2 and Category 3, communicate that the merchant should try again at a later time, either with the same transaction information or updated transaction information. Codes in these categories can include insufficient funds, inactive card, incorrect CVV or expired card.
- For Category 4, PULSE recommends that generic declines not exceed 5% of all denied transactions. Some examples of generic reason codes include do not honor, error or invalid response.
With these enhanced and more-detailed decline transaction categories, PULSE is striving to support best practices in e-commerce for both issuers and merchants. Providing opportunities to share more information can lead to more productive collaboration among issuers, merchants and consumers. A reduction in excessive authorization retries also could lead to lower issuer costs and better customer experiences.
If you have questions about these changes, please contact your PULSE Account Executive, or call 877-247-8573.