Payments can decline for a variety of reasons, including bank rejections, fraud alerts, or account-level issues in Canopy Payments. This article explains the most common causes and outlines practical steps to resolve them.
Why This Matters
Declined payments slow down cash flow, create extra follow-up work, and can confuse clients. Understanding why a payment failed helps you respond quickly, set the right expectations, and avoid repeated declines.
Table of Contents
Issuing Bank Rejections
Sometimes a payment is declined by the client’s card-issuing bank, even when funds appear to be available.
Common reasons include:
Suspected suspicious activity
Transaction or spending limits
Authorization or verification issues on the card
What to know
These declines originate with the client’s bank, not Canopy.
Only the cardholder or issuing bank can resolve the restriction.
Fraud Reports on the Card
Payments will decline if a card has an active fraud alert or fraud report.
This can happen even when:
Card details are entered correctly
The client has sufficient funds
What to know
The transaction will continue to fail until the fraud alert is cleared.
Clients may need time to resolve this with their bank.
Account-Specific Issues in Canopy Payments
Negative Balance in Canopy Payments
A negative balance can occur because Canopy Payments advances funds before all client payments fully settle.
This may happen when:
A client payment later fails or is disputed
A chargeback is issued
Client funds are not successfully collected
Important details
The invoice may still show as Paid, even if funds are later reversed.
The advanced amount is deducted from a future payout if the issue is not resolved.
Returned payment or chargeback fees may also apply.
Reversed Transactions
In some cases, previously settled payments are reversed by the payment processor.
This typically occurs when:
Client funds are not collected within the settlement window (often up to 30 days)
The processor pulls back funds that were already paid out
What to know
The deduction appears in a future payout.
The related invoice usually remains marked as Paid.
Resolution Strategies
For Issuing Bank Rejections
Ask the client to contact their card-issuing bank.
Have them confirm why the transaction was declined.
Retry the payment once the bank clears the issue.
For Fraud-Related Declines
Advise the client to resolve the fraud alert with their bank.
Offer an alternative payment method if timing is critical.
For Negative Balances
Monitor pending and failed payments in Canopy Payments.
Inform clients if a payment needs to be retried.
Allow time for successful payments to offset the negative balance.
For Chargebacks and Reversed Transactions
Review payout reports for deductions or adjustments.
Remember that ACH payments can take up to 7 days to fully settle.
Watch for returned payment fees tied to failed transactions.
Summary
Client payments can be declined due to bank rejections, fraud alerts, or account-level issues such as chargebacks and reversed transactions. Identifying the root cause—whether it’s client-side or payment-processing related—helps you resolve issues faster, communicate clearly with clients, and keep payouts on track.
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