Why Issuer Declines Still Sabotage Merchant Growth

JonCarlo Hernandez-Lopez
June 25, 2025

An issuer decline happens when a cardholder’s bank (the issuer) rejects a transaction during the authorization process. This response is typically triggered by the bank’s fraud systems, risk policies, or account limitations.

When a transaction is declined, the payment processor returns a decline code from the issuer. These codes help indicate the nature of the issue, but they’re often vague (e.g., “Do Not Honor”), requiring merchants to interpret them and decide whether to retry, prompt another payment method, or abandon the sale.

Even legitimate transactions can get declined. These are known as false declines, and they’re a multi-billion-dollar problem for merchants globally.

Key Takeaways

Decline rates remain stubbornly high: 10–15% of eCommerce transactions fail, costing merchants up to $300–$600 B/year in lost revenue.
Soft declines are recoverable: About 60–70% of declines can be recovered using smart retries.
New issuer decline codes: In 2025, Visa added codes 5C and 9G; Mastercard introduced recurring payment fees.
Real-world impact: A major US retailer lost $38 M/year in decline revenue; integrating a smart retry engine reclaimed $8 M in under three weeks.
Justt’s solutions: AI-driven retries, tokenization support, and issuer collaboration help mitigate declines by up to 70% recovery rates.

Issuer Decline Rates & E-Commerce Cost in 2025

Declines are still one of the biggest invisible revenue drains in digital commerce:

Global eCommerce decline rates are reaching as high as 15%, compared to just 3–4% for in-person transactions.
In the U.S. alone, merchants lose more than $300 billion annually due to declined transactions. Worldwide, that number exceeds $600 billion.
“False declines”—legitimate transactions mistakenly rejected—put approximately $157 billion at risk in the U.S. alone.
Around 42% of consumers abandon their cart after experiencing a failed payment.

Merchants must stop treating these declines as final. They’re a recoverable revenue opportunity.

Understanding Decline Categories & Codes

Soft Declines

Soft declines typically result from temporary issues, such as insufficient funds, AVS mismatch, CVV mismatch, or transaction velocity limits.

These declines can often be retried. Justt’s engine identifies optimal retry windows by analyzing issuer behavior and decline reason codes.

Hard Declines

On the other hand, hard declines stem from permanent issues, like an invalid card number, the card being reported stolen, or a blocked or flagged account.

These declines shouldn’t be retried. Merchants should prompt users for alternative payment methods.

What’s New in 2025: Updated Codes and Costs You Need to Know

New Decline Codes from Visa

Issuer and network changes this year directly impact how merchants should interpret declines and structure retry strategies.

Visa has introduced two new issuer response codes that merchants are seeing more frequently:

5C – “Transaction Not Supported”

Indicates that the cardholder’s bank does not support this type of transaction. This can happen with certain merchant categories (like digital goods), transaction types (e.g. cross-border, subscription), or unsupported card setups.

9G – “Blocked by Cardholder”
Means the cardholder has explicitly blocked the transaction, either through their banking app or by flagging past attempts. This is increasingly common with consumer controls like card-lock features and merchant-specific blocking.

Implication: These new codes are more precise than legacy “Do Not Honor” or “Generic Decline” codes. Merchants should not retry transactions with 9G, but 5C may warrant a retry through an alternate payment method (APM).

Mastercard’s Credential Continuity Fee

Mastercard has increased its Acquirer Credential Continuity (ACC) fee to $0.09 per recurring transaction when credentials are outdated or haven’t been refreshed through a proper token or account updater program.

This applies primarily to merchants with subscriptions, memberships, or installment billing models.

Implication: Failing to keep card data current now carries a direct cost, on top of elevated decline risk. Using network tokenization (e.g., Visa Token Service, Mastercard Digital Enablement Service) reduces both decline rates and fee exposure.

Why Authorization & Pre-Auth Still Matter

Authorization is about far more than just getting a transaction approved. It’s a critical safeguard for both merchants and cardholders. When used correctly, it protects against fraud, limits liability, and ensures that funds are actually available for capture.

When a merchant runs a transaction through the authorization flow, they’re checking that:

The card is valid and active
The billing information matches the cardholder profile
There are sufficient available funds or credit
The issuer has no reason to flag the transaction as risky

Transactions that skip or fail authorization are more likely to trigger chargebacks, fraud, and settlement issues where funds may be delayed or blocked entirely.

Pre-authorization adds an extra layer of control, letting merchants validate card details before placing a full charge, especially valuable for high-ticket or subscription transactions.

Industry Shifts Driving Smarter Decline Recovery

Several recent changes across card networks, banks, and payment infrastructure have begun to reshape how declines are handled. These updates give merchants more ways to prevent, recover from, and avoid failed transactions altogether.

Tokenization

Visa and Mastercard now support credential updates via tokenization, reducing declines from expired or reissued cards by 5–15%.

Smarter Fraud Engines

Legacy rules-based fraud filters often over-decline. AI-based systems are now better at distinguishing real risk from false positives.

Smart Routing

Some payment platforms reroute failed transactions to alternate gateways or acquirers. This is especially valuable for subscription merchants and cross-border scenarios.

Regulatory & Scheme Changes

ISO 20022 updates improve transaction transparency
PSD3 strengthens consumer protections in Europe
Pre-order tagging and network compliance reduce dispute risk

Together, these shifts make it easier for merchants to keep payments flowing, even when the first attempt fails.

Master Issuer Declines—Get Solutions Now!

How Justt Helps You Beat Declines

Justt helps merchants recover revenue from failed payments by turning decline management into a data-driven, automated process. Its platform combines an AI-powered retry engine, token lifecycle management, issuer-specific logic, fallback routing, and a real-time decline analytics dashboard, all working together to identify and recover soft declines that would otherwise be lost.

Real-World Case Study: Marley Spoon

Marley Spoon, a global meal-kit subscription service and partner of Martha Stewart, was overwhelmed by manual chargeback handling and lacked visibility into why transactions were being disputed. With Justt, they automated evidence collection, surfaced root causes like fulfillment mismatches, and dramatically improved recovery performance.

After implementing Justt’s automated chargeback solution, including real-time decline data analysis and adaptive evidence generation, the company increased its recovery rate to 36% and tripled win rates (from ~10% to 37%).

“It was a massive improvement to say the least.”

— Miguel Fernandes, Payments Specialist, Marley Spoon

By surfacing issuer-related patterns and automating the response, Justt helped Marley Spoon reduce operational load (now one person could handle chargeback volume previously handled by three people) and recover revenue.

Final Thoughts

Issuer declines are a massive, mostly hidden and underestimated source of revenue loss. With smart retry systems, tokenization, and real-time issuer intelligence, you can flip declines into a source of revenue growth.

To stop letting declines erode your margins, book a Justt demo today to see how we turn failed transactions into found revenue.