What you should know about retrying a payment

Common reasons merchants retry transactions

The decision to retry a transaction is often driven by the potential to capture sales that might otherwise be lost – after all, 44% of consumers give up on a purchase after experiencing a decline.¹

Successful retries, which usually occur in situations that can easily be resolved, allow merchants to recover these abandoned carts and boost revenue. Customers may also feel greater satisfaction, as they don’t need to re-enter their payment information or seek alternative sites for their purchases. There may be a benefit to retrying a card, especially when it comes to recurring payments for subscription-based services or products, where a customer is not even present to retry with an alternate payment method.

That said, card networks strive to keep their systems as efficient as possible. Merchants who excessively retry transactions can drastically impact network bandwidth. To mitigate this, many networks have imposed penalties on businesses for over-retrying transactions – on average, merchants pay $12.10 in fees per rejected or retried payment.²

Beyond financial penalties, excessive retries can also lead to:

• A negative customer experience. Customers may perceive multiple retries as a sign of a business's inefficiency or security issues, which can erode trust.
• Increased transaction latency. Each retry takes time, and as attempts accumulate, they can lead to frustrating delays that cause shoppers to abandon their carts.
• Higher chargeback rates. When customers see multiple charges due to retries, they may dispute them, leading to chargebacks. Or multiple retries may steer an issuer to approve a questionable transaction that may also later result in a dispute or a chargeback. This may affect immediate revenue and may increase the merchant's chargeback ratio, potentially resulting in higher processing fees. Additionally, going through the chargeback process can be painful and costly for the merchant, requiring significant time and resources to resolve each case.

Types of payment declines

Navigating common decline reasons

With credit cards being the second most popular online payment method globally,³ decoding the underlying reasons for transaction declines may allow businesses to make more informed decisions.

Credit card decline codes offer insights into why a transaction was declined. Some common codes include:

• 02: Cannot approve at this time, try again later. Indicates a temporary issue that may be resolved later.
• 05: Do not honor. The issuing bank has declined the card for an unknown reason.
• 14: Incorrect card number. The credit card number was entered incorrectly.
• 41: Lost card, pick up. The card was reported as lost.
• 43: Stolen card, pick up. The card was reported as stolen.
• 51: Insufficient funds. The cardholder's account has insufficient funds to cover the transaction.
• 54: Expired card. The credit card has expired and is no longer valid for payments.
• 63: Wrong CVC. The security code (CVC) was incorrectly entered during the transaction.
• 65: Credit limit exceeded. The cardholder has exceeded their permitted credit limit and must settle their balance.

Whether the next steps involve retrying transactions, recommending alternative payment methods, or taking steps to address the root cause, businesses can be better equipped to avoid retry penalties, reduce fraud, and minimize card processing fees.

Hard vs. soft declines: The critical differences

A hard decline occurs when a transaction cannot be processed due to permanent reasons, such as a closed account or an expired card. Attempting to retry a hard decline is usually futile and can lead to customer frustration or increased scrutiny by card issuers.

Comparatively, soft declines – often resulting from temporary issues such as insufficient funds or bank outages – can typically be resolved with a successful retry after a short wait.

Visa categorizes declined transactions to help merchants discern the reasons behind them and gauge the feasibility of a retry.

These categories include:

• Category 1: Consists of hard declines such as "No Account" (where the card number is not on file with the issuing bank) and "Invalid Transaction" (where the card doesn't support the type of transaction). Transactions should not be retried.
• Category 2: Includes soft declines like "Insufficient Funds" or "Limit Exceeded." For this category, Visa allows 15 retries over a rolling 30-day period.
• Category 3: Comprises both hard and soft declines such as "Expired Card" and "PIN Try Exceeded." Similar to Category 2, there’s a limit of 15 retries over a 30-day rolling period.
• Category 4: Encompasses declines where the bank will not accept the transaction for unspecified reasons. The customer must contact their bank to resolve these issues before retrying.

While some declines can be retried, others should not be. For every retry above Visa’s threshold, merchants will need to pay between $0.10 and $0.15 in fees.⁴

Mastercard TPE

Similarly, Mastercard enforces retry penalties for excessive authorization attempts. For instance, the 'MC TPE EXCESSIVE AUTH' fee, part of the Mastercard Transaction Processing Excellence program, is levied on merchants who continue seeking authorizations after an account number has already been declined by the issuer ten times within 24 hours.

This fee, set at $0.15, is designed to discourage redundant authorization attempts and maintain the integrity of the payment network.⁵

Leveraging retry strategies and machine learning

The ideal timing for retries varies depending on the reason for the decline. Immediate retries may be effective for short-lived technical issues, while waiting a few hours could address temporary financial issues like insufficient funds.

By assessing the best moment to reprocess a failed transaction based on the type of decline, time-based retries are a sophisticated strategy for managing declined transactions. Its benefits include recovering sales that might otherwise be lost due to temporary issues, like network outages or processing errors. However, the drawbacks are just as important to consider – too many attempts can irritate customers and lead to additional fees.

Regardless of whether you leverage sophisticated machine learning tools or basic retry strategies, it’s essential to keep customers informed about declines and retries. Prompt and transparent communication about transaction issues and remedial actions – whether through email, SMS, or in-app messages – sets customer expectations, maintains trust, and mitigates potential inconvenience.

Optimize and automate retries in the background so you can focus on what matters

Manually monitoring payment authorization can be time-consuming and costly. By optimizing payment retries in the background, merchants can focus on core business activities.

When choosing a solution, consider features such as:

• Intelligent retry logic. Machine learning scrutinizes historical data and transaction patterns to determine the optimal moment to retry a declined transaction. This eliminates the need for manual rules and guesswork.
• Advanced fraud tools. Improve approval rates by incorporating sophisticated fraud prevention mechanisms that reduce fraudulent transactions while ensuring legitimate ones are processed smoothly.
• Detailed reporting and analytics. In-depth insights into payment performance, the success rates of retries, and the effectiveness of fraud prevention strategies empower merchants to adjust strategies accordingly.
• Compliance and security. Adhering to the highest industry compliance standards and employing robust security measures to protect customer data gives both merchants and their customers peace of mind.
• Seamless integration. Tools that effortlessly integrate with existing payment infrastructures ensure quick setup and minimal disruption to ongoing operations.
• Global payment processing. For merchants with a global presence, prioritize options that support a wide array of payment methods across different countries.

PayPal Braintree's Smart Retries solution powers time-based retries with machine learning. It analyzes vast amounts of transaction data to make dynamic decisions on when and how to retry failed transactions most effectively, ultimately increasing the chances of approval without manual intervention.

The positive impact of an improved retry strategy

Advanced retry strategies may bring numerous benefits, including:

• Increased revenue. By boosting approval rates and reducing cart abandonment, merchants may see an uptick in revenue. For example, 50% percent of unintentional subscription churn is purely due to payment failures⁶ – implementing intelligent retry mechanisms can preserve ongoing revenue streams.
• Reduced operational costs. Automating the retry process eliminates the need for manual oversight, potentially saving valuable time and resources.
• Improved customer experience. With better retry strategies, customers enjoy smoother payment processes with fewer disruptions, increasing satisfaction and loyalty.
• Scalability and flexibility. Advanced systems are designed to handle high volumes of transactions and can adapt to evolving business needs effortlessly.
• Global reach. Expand your footprint into new markets and cater to customers with varied payment preferences.
• Enhanced security and compliance. Minimizing the risk of fraud and adhering to relevant regulations bolsters trust and security.

Striving for platform efficiency in implementing an improved retry strategy ultimately leads to reduced risk while maximizing opportunities for upside.

Let Braintree handle your declined transactions with ease

With the government reporting an estimated $247 billion in payment errors in 2022,⁷ the urgency for merchants to optimize their transaction handling processes cannot be overstated.

Rather than blindly retrying declined transactions, merchants should prioritize a strategic approach and explore intelligent retry solutions, such as PayPal Braintree. PayPal Braintree's optimized processing capabilities may not only enhance the likelihood of successful transactions but may also significantly reduce the operational burden, allowing enterprises to focus on growth and customer satisfaction.

Contact Braintree sales to learn more.