The rise of ‘soft declines’: what they are and how to prevent them
‘Soft declines’ of card payments have become more common of late, causing a bit of a headache for businesses and frustration for customers. So, what is the reason for this rise in soft declines and how can you try to prevent them from happening?
‘Soft’ declines vs ‘hard’ declines
Hard declines of card payments occur due to a permanent authorisation failure. This could be because the bank account has been closed, the card stolen or an invalid card number has been entered. There is no point in retrying these payments as the failure cannot be rectified.
Soft declines, on the other hand, are those that have failed because of something that can be rectified. This could be insufficient funds, details not matching up, unusual activity or the card having expired. The good news is that these failures are usually temporary and can be reattempted for the payment to be processed, occasionally requiring some actions by the customer beforehand.
Why are soft declines on the rise?
Recently there has been rise in the number of soft declines taking place, particularly with recurring payments (also known as ‘continuous authority payments’). This is largely due to new Strong Customer Authentication (SCA) coming into force as of September 2021, applying new requirements across all electronic card payments made in the EEA and the UK. It adds extra layers of security, requiring banks to perform additional checks when consumers make card payments to confirm their identity, usually in the form of two of the following – something they know (such as a password or PIN), something they have (such as a mobile phone, card reader or other device that can generate a one-time passcode) or something they are (such as a fingerprint or facial recognition).
For recurring payments where the amount is always the same, for example monthly subscriptions, only the first payment is subject to SCA. However, if the amount or frequency of the recurring payment differs, then each transaction is subject to the authentication requirements. And this is causing the problem – as the recurring payment is processed, a red flag is waving at the issuing bank that SCA requirements haven’t been met leading to a soft decline.
How can you prevent soft declines?
Soft declines aren’t as problematic as hard declines – the payments generally make it through eventually. But they can be a bit of a pain and a drain on a business’ resources. So, what can be done to prevent them?
SCA is easy to implement on initial payments that are set up online, simply adding a step to the payment process. Added to that, card payments that are made over the phone are out of scope for the regulations. Recurring payments, however, will remain an issue for some businesses. The solution is to implement a means of authentication with the customer to avoid the payment being flagged with the issuing bank.
At PCI Telecom, our Paylink service offers a solution to this problem, enabling customers to confirm their identity when payments are due. This is achieved through a unique URL sent to the customer via email or SMS through which they can authenticate their identity, in the long run saving both the business and the customer the time and hassle of dealing with a soft decline.
The Paylink service forms part of our suite of card payment processing solutions for payments made over-the-phone, IVR, online and via webchat. Our solutions are cloud-based, built to meet the specific needs of your business and compliant with the very latest PCI standards. For more information, visit our Solutions page or get in touch to talk through your requirements.
