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If you’re an ecommerce merchant and your payment decline rate is rising, you don’t need a new checkout. You need a clearer diagnosis.
A failed payment can point to something as simple as an authentication issue or as complex as an issuer decision made with incomplete data. Since these failures happen at checkout, even small fixes can pay off quickly. But before we get into what to fix and how, let’s define what the term “payment decline rate” means in ecommerce and what shapes it
TL;DR
- Your payment decline rate is the share of payment attempts that stop before being passed along for merchant approval. That can happen because the request never makes it to the issuing bank or because the issuer declines it.
- Payment declines are caused by a mix of factors, including issuer/account issues, technical or routing problems, authentication friction, network rules and/or thin transaction data.
- Some of the best strategies merchants can use to reduce their payment decline rates include monitoring for technical issues, optimizing authentication flows, attaching more context with the authorization request and improving post-decline recovery efforts.
What the payment decline rate measures in ecommerce
The payment decline rate shows how often transactions fail at checkout — specifically, the share of payment attempts that stop before the order reaches you for approval.
There are two main points in the payment flow where these declines happen:
- Before bank authorization, when the transaction never reaches the issuer because of processor- or network-level constraints, like requests missing required details, authentication data that isn’t passed correctly, routing issues or network rules that block the request upstream.
- During bank authorization, when the issuing bank rejects the transaction because of signals like fraud risk, insufficient funds, invalid credentials or account-level restrictions.
Keep in mind that the payment decline rate is not the inverse of the payment approval percentage. Approval percentage reflects whether a transaction ultimately succeeds after retries, routing or recovery steps. Decline rate focuses on failures at the point a payment is attempted.
How merchants typically categorize payment declines
Declines can happen at different points in the payment flow, but most ecommerce teams group them into two buckets: soft declines and hard declines.
Soft declines
A soft decline usually means the transaction didn’t go through on the first attempt, but it may be recovered if the customer retries, completes a verification step or when the temporary issue clears. But whether you win the order back depends on what you do next: do you keep the customer in the flow, preserve the cart and give a clear next step?
Hard declines
Hard declines, on the other hand, are more final. The issuer blocks the transaction because approval isn’t possible without action from the cardholder. For example, updating an expired card, resolving insufficient credit or replacing (or unfreezing) a card that’s been reported lost or stolen.
Unlike soft declines, retries don’t help here. The only way for the order to go through is for the customer to try a different payment method or contact their bank to resolve the issue.
Together, soft and hard declines explain how payments fail. The next question is why they’re happening in the first place.
What drives up payment decline rates in ecommerce?
Payment failures at checkout usually come from a mix of customer, technical, risk and policy factors.
Card- and account-level issues
Many payment declines originate with the issuing bank and are driven by the customer’s card or account status. These conditions shape the issuer’s authorization decision before a decline shows up as “soft” or “hard” at checkout.
That same decisioning logic applies when a transaction looks unfamiliar to the issuer (like a first-time purchase or a cross-border order), increasing the chance of the order being turned away.
Technical and integration problems
Sometimes declines have nothing to do with the customer or issuer risk decisions. Gateway outages, processor routing issues, timeouts, duplicate authorization requests, or misconfigured authentication flows can all cause transactions to fail. These issues often show up as sudden spikes in declines and tend to affect even your most trusted customers, making them especially damaging to conversion. Though 45% of customers say they’ll just try an alternative payment method after a false decline, 16% say they’ll just abandon the transaction while 19% will order from a competitor instead, according to Signifyd consumer survey data.
Network, regulatory and policy constraints
Some drivers of payment declines sit outside your direct control. For example, regulations like Strong Customer Authentication (SCA) in Europe add steps to the checkout flow, which increases failure risk when customers drop out or authentication isn’t handled cleanly. Card network monitoring programs and issuer policy changes can also make certain transactions harder to approve, even when nothing has changed on your side.
Fraud and risk controls
Fraud prevention also influences payment decline rates, often indirectly. Issuers already approach ecommerce transactions cautiously, and the signals merchants send during authorization shape how those decisions are made. Inconsistent traffic patterns, card testing activity or thin customer data can cause issuers to treat otherwise honest transactions as higher risk, increasing the likelihood of a decline. It’s worth noting that this is separate from merchant declines that occur after authorization. Those reflect internal risk decisions made by the merchant, not issuer authorization declines, and should be tracked separately.
Limited data and issuer context
Many declines ultimately come down to incomplete information. When issuers can’t clearly distinguish genuine customers from risky ones, they default to conservative decisions. In ecommerce, that uncertainty often shows up when a transaction comes through with no prior purchase history on the card, with changing device or location signals from one attempt to the next or with missing details in the authorization request that help establish familiarity or intent. You don’t always see that uncertainty until you measure how many payments are getting declined.
How to measure your ecommerce payment decline rate
You can calculate your payment decline rate by dividing the number of declined transactions by the total number of payment attempts, then multiplying by 100. For example, if 80 out of 1,000 attempted transactions are declined, your payment decline rate is 8%.
Payment decline rates often vary by payment method and channel, which is why a single top-line number rarely tells the full story. Understanding where declines are happening helps tie the metric back to the underlying drivers.
How to lower your payment decline rate
If your payment decline rate is trending higher than expected — often around or above the 10% mark for many ecommerce businesses — there are things you can do to help influence it. But first, you need to understand where transactions are failing and why. Once you have that clarity, you can see which parts of the payment flow you can actually influence and which changes will directly reduce the number of transactions that fail.
Pinpoint where declines are happening first
Start by breaking down your payment data through your processor or gateway dashboard. Most platforms provide decline reason codes, response timestamps and flow-stage logs that show exactly where failures happen — upstream at the processor or network before authorization or at the issuer during authorization. Pull reports filtering by decline code, segment by payment stage and watch for spikes by BIN, country or method to uncover patterns.
Monitor for technical and routing gaps
Declines that cluster around specific gateways, countries or processors often point to integration issues rather than risk. Keep a close eye on decline spikes by payment methods or issuing banks, and test routes or fallback paths regularly. Fixing configuration gaps and ensuring redundancy in your payment stack helps prevent good customers from being accidentally turned away. It avoids artificial spikes in your payment decline rate that have nothing to do with risk.
Optimize authentication flows to reduce avoidable declines
When SCA flows are clunky or inconsistent, legitimate transactions are more likely to fail or time out. In fact, a CMSPI analysis found that around 26% of SCA-related authentication attempts across Europe fail, meaning roughly one in four authentication attempts aren’t successful. While some of those failures reflect genuine fraud, figures show that 20% are good customers who can’t complete authentication because of an issue within the flow itself.
Supporting frictionless exemptions where possible and keeping customers in the same checkout flow after step-up helps prevent those avoidable declines.
Strengthen the data you send with each transaction
When payment declines trace back to missing or inconsistent information, the issue is often the quality of the authorization request itself. Incomplete billing or shipping details, poorly formatted cardholder data or authentication information that doesn’t pass cleanly through the payment stack can all make legitimate transactions harder for issuers to recognize.
This is usually a matter of data quality. Make sure each authorization request includes accurate, consistent details and that required data fields are populated and passed correctly from your gateway to the issuer. When transaction data is clean and predictable, issuers are better able to match the payment attempt to known cardholder behavior.
Solutions like Signifyd’s Authorization Rate Optimization (ARO) can be used to enrich authorization requests with verified identity and behavioral signals. That added context gives issuers a clearer view of each transaction and can increase bank authorization rates by up to 3%.
Improve your post-decline recovery
To save the sale after a decline, let customers retry a few times on soft declines. Or guide them to alternate payment methods, like a saved wallet or different card, without forcing them to re-enter all their details or rebuild the cart from scratch.
While retries don’t change whether the original attempt was declined, they can reduce the revenue impact of a high payment decline rate by recovering otherwise lost orders.
Calibrate your fraud controls to share clearer signals
Even when individual authorization requests are complete, issuers don’t evaluate transactions in isolation. They also react to the overall mix of traffic they see from a merchant. When fraud controls are too rigid or create unnecessary noise, legitimate orders can start to look riskier than they really are.
Filtering obvious fraud earlier in the flow helps prevent that. With ARO, high-risk transactions are held back before they reach the issuer, so the remaining traffic looks more consistent and easier to trust. Over time, that cleaner stream of transactions makes it easier for issuers to approve legitimate orders with confidence, reducing false declines by up to 59% and directly lowering your payment decline rate.
Turn declines into revenue gains
A high payment decline rate doesn’t have to be permanent. Once you understand where payments are breaking down, you can reduce the declines that are avoidable while keeping the ones that protect you in place. And with Signifyd, you can do just that.
See how Signifyd helped Mango lower declines and increase their revenue recovery by 6%.
FAQs
What is the payment decline rate in ecommerce?
The payment decline rate measures the percentage of payment attempts that fail at checkout before reaching the merchant for approval. Merchants can calculate their payment decline rate by dividing the number of declined transactions by the total number of payment attempts, then multiplying by 100.
What is the difference between a soft and hard decline?
The main difference between soft and hard declines is the permanence of failure:
- Soft decline: A temporary failure (i.e. a technical timeout or authentication issue) where the order may be recovered if the customer retries or completes a verification step.
- Hard decline: A final rejection by the issuer (i.e. expired card or insufficient funds) where the transaction cannot proceed unless the customer provides a different payment method.
What are common reasons for credit card payment declines during online transactions?
Common reasons for credit card payment declines fall into a few buckets:
- Insufficient funds or credit limits: The card doesn’t have enough available credit to cover the purchase.
- Expired, invalid or restricted card details: The card is expired, the number/CVV/ZIP doesn’t match or the account has restrictions that prevent the bank from authorizing the transaction.
- Suspected fraud or unusual activity: The issuer flags the transaction as risky (i.e. it’s a first-time purchase, cross-border order, unusual amount or from a new device/location) and declines it.
- Account status issues: The card has been reported lost or stolen, the account is frozen, closed or otherwise blocked.
- Authentication issues (when required): Additional verification like a 3D Secure (3DS) step-up challenge fails, times out or the customer abandons it.
Processor, network or technical constraints: The authorization request fails upstream due to missing required details, routing issues, timeouts or network rules.
