Payments can decline for several reasons, ranging from bank-related issues to fraud reports or account-specific conditions. This article addresses the most common causes of declined payments and provides actionable steps to resolve them.
Common Reasons for Declined Payments
1. Issuing Bank Rejection
Occasionally, a client's payment fails because it is rejected by the card-issuing bank. This could happen even if the account appears to have sufficient funds. The bank may decline the payment due to suspected suspicious activity, limits on transactions, or other authorization issues. Clients are encouraged to contact their issuing bank directly to understand and resolve these rejections.
2. Fraud Reports Associated with the Card
Another common reason for declined payments is when the credit card has a fraud alert or report associated with it. Even if the card details are accurate and the client has sufficient funds, the payment system will decline the transaction until the fraud-related issues are addressed. Clients should work with their bank or card issuer to resolve the fraud alert. Alternatively, they can provide a different method of payment to continue with transactions.
Account-Specific Issues
Negative Balance in Canopy Payments
When using Canopy Payments, a temporary negative balance may occur in the account. Canopy advances funds for transactions even when client payments are pending. However, if a payment fails later (e.g., due to chargebacks, disputes, or insufficient client funds), this might result in a negative balance.
This situation typically resolves once successful payments are received, covering any outstanding negative amounts. Additionally, chargebacks can also contribute to negative balances. A chargeback occurs when a client disputes a payment or their bank fails to transfer the funds.
Even though the payment might initially appear as "paid," the associated funds may not be successfully collected. In such cases, Canopy’s system advances the funds to you but deducts the payment amount from a future payout if the issue is unresolved. Furthermore, a returned payment fee may apply, adding to the deduction.
Occasionally, negative balances may also arise from reversed transactions. These occur when previously settled payments are reversed by the payment processor, often due to uncollected client funds within 30 days. In such scenarios, the previously paid-out amount is deducted from future payouts, yet the related invoice remains marked as "paid."
Resolution Strategies
For Issuing Bank Rejections: - Encourage clients to contact their card-issuing bank. Banks can provide insight into why the payment failed and help resolve any restrictions or alerts.
For Fraud-Related Declines: - Advise clients to address any fraud reports or suspected fraudulent activity with their bank. - Offer the option to use an alternative payment method if resolving fraud issues will take time.
For Negative Balance Issues: - Keep clients informed about pending payments and possible impacts on their Canopy Payments balance. - Reassure clients that their account balance will automatically normalize once enough successful payments are processed.
For Chargebacks and Reversed Transactions: - Monitor your payouts carefully to identify any adjustments caused by these issues. - Be aware that ACH settlements can take up to 7 days to finalize. - Check for and address any returned fees that may apply.
Summary
Payment declines can occur for multiple reasons, including bank rejections, fraud alerts, and account-specific scenarios like chargebacks. Understanding the cause and taking appropriate corrective actions—such as contacting the issuing bank, addressing fraud concerns, or allowing time for pending payments—ensures a smoother payment experience.