Understanding Hard Declines vs Soft Declines

Transactions are classified into two decline categories based on whether they can be successfully retried.

Hard Decline vs Soft Decline

Hard Declines

Primary reasons for hard declines

1. Card Validity Issues

Expired Card:

• Card has passed its expiration date

• Card cannot be used until customer provides new card details

⚠️ Action Required: Customer must update payment method

Card Not Found:

• Payment method reference no longer exists

• Card may have been deleted from the issuer's system

⚠️ Action Required: Customer must add new payment method

2. Security & Fraud Issues

Lost or Stolen Card:

• Card has been reported lost or stolen by cardholder

• Issuer has blocked the card permanently

⚠️ Action Required: Customer must provide a different card

Suspected Fraud:

• Issuer's fraud detection flagged the transaction

• Card is blocked due to suspicious activity pattern

⚠️ Action Required: Customer must contact the issuer to resolve the issue and use a different card

Fraud/Risk Blocks:

• Merchant's or processor's fraud prevention system blocked the transaction

• Transaction characteristics match fraud patterns

⚠️ Action Required: Manual review or alternative payment method

3. Account Status Issues

Card Account Closed:

• The bank account linked to the card is closed

• Card cannot be used for any transactions

⚠️ Action Required: Customer must provide an active payment method

Authorization Issues:

• Previous authorization has expired and cannot be used

• Attempt to settle more than authorized

• Authorization was canceled/voided

⚠️ Action Required: New authorization or payment method needed

4. Payment Processor Rejections

Acquirer Rejected:

• Payment processor permanently rejected the transaction

• May be due to merchant account restrictions or card type incompatibility

⚠️ Action Required: Contact payment processor or use different payment method

5. Compliance Issues

SCA Required:

• Strong Customer Authentication (3D Secure) is required but wasn't completed

• Regulatory requirement (PSD2 in Europe) was not met

⚠️ Action Required: Customer must complete authentication or provide compliant payment method

How Frisbii handles hard declines

For Subscription Invoices:

1. Dunning retries are stopped - Hard declines won't succeed on retry

2. Customer notification - Must update payment method

3. Subscription at risk - May expire if issue is not resolved

4. Manual intervention needed

For One-Time/Charge Invoices:

1. Immediate failure - Transaction cannot be completed

2. Alternative payment required - New payment method must be provided

3. Manual follow-up needed

Best Practices for Hard Declines

1. Don't retry automatically

• Hard declines indicate permanent issues

• Retrying wastes processing fees and resources

• May trigger additional fraud alerts

2. Immediate Customer Communication

• Notify customer of the specific issue

• Request updated payment information

• Provide clear steps to resolve the issue

3. Update Payment Method workflows

• For expired cards, proactively request updates before expiration

• For fraud blocks, direct customer to contact their bank

• For lost/stolen cards, require new payment method immediately

4. Monitor Hard Decline Patterns

• High hard decline rates may indicate:

  • Outdated payment methods on file

  • Customer base with high fraud risk

  • Need for proactive payment method updates

5. Distinguish in Dunning Plans

• Configure dunning to recognize hard vs soft declines

• Skip retries for known hard decline error codes

• Focus recovery efforts on resolvable issues

Soft Decline Examples

• insufficient_funds - Temporary; customer may add funds

• declined_by_acquirer - May be temporary network/system issue

• acquirer_communication_error - Technical issue, retry may work

• processing_error - Transient technical problem

Summary

Transactions are hard declined when there's a permanent, unresolvable issue with the payment method or transaction that makes it impossible to succeed without customer intervention. Unlike soft declines (temporary issues), hard declines require the customer to take action, such as updating their card, resolving fraud blocks, or providing an alternative payment method, before any payment can be successfully processed.