Every merchant has felt it: a great customer is ready to buy — and the payment fails. Often, it’s a false decline: a legitimate transaction rejected by the issuer because the card data is outdated or the transaction didn’t include the right details. The cost is steep. Beyond a lost sale, false declines erode trust in the merchant, inflates costs, and chips away at brand reputation.
The ripple effects of a failed payment
Globally, false declines drain an estimated $443 billion in revenue each year — nearly 70-times the losses from actual fraud.[1] In the U.S. alone, $157 billion in 2023 eCommerce sales were at risk, with $81 billion projected as permanently lost. Pair that with the reality that 11% of all eCommerce transactions fail — and that 41% of consumers say they’ll never shop with a brand again after a false decline — and the business case to fix the problem is undeniable.[2]
For merchants, this means wasted acquisition spend, diminished value and a growing operational burden. Consider that up to 15% of recurring transactions fail simply due to outdated credentials, and 82% of online retailers struggle to diagnose why payments fail — making recovery even harder.[3]
Recurring payments and the authorization challenge
Storing credentials — card-on-file transactions (CoF) — streamlines checkout and powers subscriptions, but it also introduces unique authorization hurdles. In most cases, cards will expire after a specific period or are reissued due to numerous circumstances. And if a merchant doesn’t pass complete data — or the proper indicators that a payment is recurring, installment-based, or CoF — authorization requests are often declined.
The compliance bar is rising, too. Stored credential rules from the card networks include requirements that merchants authenticate, store, and link recurring transactions back to the original authorization. Strong Customer Authentication (SCA) applies to the first, cardholder-initiated transaction, while merchant-initiated recurring payments may qualify for exemptions when correctly set up and flagged.
Optimizing authorizations without compromising security
Reducing false declines starts with data quality and collaboration. Merchants should consistently send complete transaction information, like Address Verification Service (AVS) and Card Verification Value (CVV) and accurate billing details — and ensure the right indicators (recurring, installment, CoF flags) are applied. Working closely with acquirers and issuers to share insights, monitor issuer-specific approval rates, and tune strategies can move the needle quickly. Advanced practices matter: intelligent retry logic (not blind resubmissions), continuous approval-rate monitoring, and pre-authorization fraud screening to help filter genuinely risky transactions before they ever reach the issuer.
This is where PNC Merchant Services can help. PNC delivers an integrated platform purpose-built to improve approvals while protecting the customer experience.
- Authorization Optimization increases authorization approvals by enriching transaction data, routing dynamically to best-performing networks, enabling secure authentication (e.g., 3DS), and using machine learning to inform smart retries. The result: less friction and lower operational cost.
- Card Account Updater automatically refreshes expired or reissued credentials — critical for subscriptions, cards nearing expiration, and declines tied to stale data — reducing involuntary churn and manual rework.
- Network Tokens replace static Primary Account Numbers (PANs) with merchant-unique tokens that update in real time when the underlying card changes. Tokens enhance security and compliance, while improving authorization approval rates and keeping the checkout experience seamless.
Deployed together, these solutions compound. Card Account Updater keeps credentials current. Network Tokens provide persistent, secure identifiers for, but not limited to, eCommerce, CoF, Digital Wallet, and mobile app transactions. Authorization Optimization leverages intelligence and machine learning to maximize approval rates. The combined impact: fewer false declines, higher conversion, enhanced security and better retention.
Reducing unnecessary payment failures
Adopting Network Tokens and Account Updater in tandem helps to modernize your payment infrastructure while retaining access to the PAN for lifecycle management. Monitor decline codes and chargebacks continuously; target the root causes with tailored strategies and fine-tuned fraud tools. Importantly, help maintain compliance with stored credential network rule requirements and SCA standards — correct setup and signaling are essential for avoiding unnecessary declines.
False declines may be persistent, but they’re not inevitable. With better data, closer collaboration, and advanced tools like PNC’s Authorization Optimization, Card Account Updater, and Network Tokens, merchants can turn many failed payments into reliable approvals — helping protecting customer trust and unlocking sustainable growth in the digital economy.
Let’s build your brilliant
Whatever the size, scope or needs of your business or organization, PNC Merchant Services is here for you, offering solutions geared for your industry. Learn more here.
Source
[1] Nomupay
[3] PYMNTS
