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5 min read

Why Good Customers Get Declined, and What False Declines Really Cost You

By Yan Payments

Are false declines actually costing merchants more than fraud?

By most industry estimates, yes, by a wide margin. The Nilson Report, generally considered the most independent source on card fraud, put global card fraud losses at $33.4 billion in 2024. Compare that to projections from Datos Insights, cited by Signifyd, that false declines (legitimate transactions wrongly rejected) will cost merchants more than $231 billion globally in 2026. Those figures use different methodologies and shouldn’t be read as directly subtracted from one another, but the gap is the point: the industry consistently finds that blocking good customers costs far more than the fraud those same filters are trying to stop.

A 2025 PYMNTS and Spreedly report, describing 2023 transaction data, put it more concretely for the US alone: $157 billion in ecommerce sales were put at risk by false declines, and $81 billion of that was permanently lost even after merchants tried to recover it. In the same research, 58% of small and mid-size businesses said false declines have a high impact on their operations. This isn’t just a big-ecommerce problem.

What actually causes a legitimate card to get declined?

A handful of common culprits show up again and again:

  • AVS mismatches. Address Verification Service checks the billing address against what the issuer has on file, but it’s a weak signal on its own. A recent move, a typo, browser autofill pulling an old address, or a corporate card billed to a headquarters address can all trigger a mismatch on a completely legitimate purchase. Plenty of international issuers don’t even support AVS, which can make it worse for customers using foreign-issued cards.
  • CVV mismatches, usually from a typo rather than an actual stolen card.
  • Outdated card-on-file data. If you run recurring billing and a customer’s card expired or got reissued with a new number, the charge fails even though the customer is fine with being charged.
  • Overly strict risk rules set by the merchant or processor, with auto-declining on an AVS mismatch alone being one of the more common ways businesses accidentally reject their own good customers.
  • The card issuer’s own risk model being cautious about a bigger ticket than normal, a new shipping address, or a purchase made while the customer is traveling.
  • 3D Secure data not matching cleanly, which can trigger a decline instead of the extra verification step it’s meant to support.

How often does this happen, and what does it cost in lost customers?

The Merchant Risk Council’s 2026 report found that roughly two-thirds of merchants see false decline rates between 2 and 10 percent of orders, with the rate generally increasing as a merchant’s volume grows. On the customer side, estimates vary but land in a similar range across several independent surveys: Forter found 40% of shoppers declined on a first visit never come back, and research from Checkout.com and Oxford Economics found 45% of customers don’t even retry the purchase after a false decline, abandoning it outright. Different survey, different number, same basic story: a declined card often doesn’t get a second attempt, and a meaningful share of those customers don’t come back at all.

What can you actually do about it?

Start with your processor, not with your own willpower to watch it more closely.

Fix What it addresses
Don’t hard-decline on AVS/CVV mismatch alone Legitimate customers with a typo or outdated address on file
Enroll in Visa Account Updater / Mastercard Automatic Billing Updater Expired or reissued cards on recurring billing
Ask about 3D Secure 2.0 Card-not-present risk, shifts fraud liability to the issuer
Separate soft declines from hard declines in retry logic Avoids penalty fees for retrying a closed or reported-stolen account

Don’t hard-decline on an AVS or CVV mismatch alone; most processors can configure a mismatch to trigger extra verification instead of an automatic rejection. Ask whether you’re enrolled in Visa Account Updater or Mastercard Automatic Billing Updater, real network services that automatically refresh expired or reissued card numbers for merchants with recurring billing, cutting down on the single most avoidable cause of false declines. If you take card-not-present payments, ask about 3D Secure 2.0, which shifts fraud liability to the card issuer and runs a smoother, more frictionless verification than the older version, generally triggering fewer unnecessary declines. And know the difference between a soft decline and a hard decline: a soft decline (insufficient funds, a temporary issuer system issue) can often be retried later with the right timing, while a hard decline (a closed or reported-stolen account) shouldn’t be retried at all. Visa and Mastercard now charge penalty fees for retrying hard declines, so blind retry logic can actually cost you money.

None of this requires replacing your whole setup. It’s mostly about asking your processor what’s actually configured on your account today, since a lot of these settings get left on factory defaults and nobody revisits them until a regular customer complains that their card doesn’t work here anymore.

If you want someone to actually audit your current decline settings rather than guess, that’s worth a conversation with a payments specialist.

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