It is the start of the week, and you are ready to get your small business through another new week full of customers, orders, and sales.
Your cashier checks the till and makes sure all lines are operating, the credit card machine is working, and there is enough petty cash. A customer walks in, browses around your store, and picks up something they need. They head over to the counter to pay only to find that their credit card is declined.
Your cashier suggests trying again, and is denied yet again! Both your cashier and customer experience different emotions. The customer, frustrated and maybe a little embarrassed and worried. The cashier, wanting to make things less awkward and reassure the customer.
As a small business owner, what do you do in situations like this? Truth be told, there’s nothing that you can do to make situations like this never happen at all. However, you can take steps to do other things to help deal with the situation.
Remember that not all credit card declines are because of a card problem or with the client’s credit. It can happen because of decisions by the issuing bank and their risk protocols. Having a plan to deal with this is crucial because maintaining good customer relationships is prudent. It also helps you avoid potential fraudulent transactions.
How to Deal with Credit Card Declines
A decline strategy needs to be put in place to help staff navigate good customer relationships and turn away troublesome and unprofitable risks gracefully. Here are some of the ways you can do this:
Get to know your credit card codes
Credit card codes appear on the credit card terminal if a transaction is declined- these codes tell you why. There could be many reasons from fraud to insufficient funds, which is mostly the case. But it could also be other errors related to the bank. Knowing your credit card transaction response codes is the first step towards mitigating any awkwardness, risks or, frustration. By identifying these codes, you can plan your next course of action. If the credit card machine displayed 54, this means that the card used has reached its expiry date. Knowing the reason can help you and your customer move towards the next steps, such as alternative payment methods.
Offering multiple payment options
In this day and age, there are plenty of options to pay for your purchase. From cash to credit cards, customers have plenty of payment options to choose from. They can also pay using e-wallets or digital wallets such as Apple Pay and Walmart Pay. For some transactions, an instant bank transfer is an ideal option too. Some merchants even offer points or even store credit for customers, especially if they are long-term customers. It’s a great way to keep customers happy and returning to your business, especially if the credit card was refused for non-fraud purposes.
Recharge your customer
If the card was rejected due to insufficient funds, payment will not go through no matter how many times you swipe the card through the machine. And if it is due to insufficient funds, this is an easy problem to solve. If there are no other payment options apart from debit, credit, and cash, then you can suggest recharging your customer when funds are in their card. This action is advisable only if you are comfortable with it and the conditions are worthwhile. Some merchants do this if the amount to recharge is small, or if they know the customer.
Keep declined payments personal
It’s an embarrassing situation to be in when, as a customer, your credit card is declined. It’s even more embarrassing when there’s a long line of customers waiting to get their purchase out the door. This encounter is tenfold if the purchase in question is an expensive item or if it’s a restaurant after you’re done eating. Customer loyalty is on the line in situations like this and dealing with the right way will make them feel that you care about them. Dealing with it on a personal level with them will make them more likely to become a repeat customer.
Have a backup merchant account
Some merchants have separate merchant accounts with another provider where they direct declined payments to that account. If payments are declined by the primary processor, the likelihood of the backup account approval is high.
Fixing regular issues
Of course, there are times when the problem is due to your credit card terminal or machine. If you end up having a day full of credit card decline issues, then contacting your payment processor is the best approach. Not all payment processors give adequate information on why a payment has failed. Merchants and business owners need to understand why such things happen and what kind of approval process is set up by the processor to prevent these issues from happening again. For small business owners, you want to reduce credit card transaction rejections as much as possible. This is because it will incur authorization fees. While it is only a few cents per translation, this will accumulate to a hefty amount if you have plenty of declines and, re-submissions for approval will eat into your bottom line.
Read up on your payment processor’s system to know what you are signing up for when it comes to the payment channels you are using whether it is PayPal, debit or credit card, e-wallets, or any other system you are using, such as Stripe. They all come with their terms and conditions. Reading up on the process and knowing the fees will help you reduce your card or payment rejections.
Good business relations work both ways. For small business owners making a mark in commerce, it is essential to maintain good relations with multiple stakeholders from the payment processors, suppliers, and of course, your customers. Making your customers feel happy to do business with you. It will ensure a more profitable future for your business to grow. Knowing your codes, providing alternative payments, and keeping things professional yet personal are great ways to keep your business and customers happy.