Payments Blog

What are False Declines and Why are They More Damaging Than Fraud?

Creating something new can be a daunting task. For prospective online merchants, this is especially true. While a lot of people have ideas, putting one of them into action and executing it is an entirely different story. The process of transforming an idea into a full-blown online operation with products and loyal consumers often includes multiple convoluted steps.


When these merchants eventually realize their dream, and establish a long-lasting online presence, it can be extremely rewarding. The last thing they want, and the worst thing that could happen, is to upset their loyal consumers. But is fraud even the biggest and costliest problem for these merchants?

Unfortunately, the answer is no. False declines are a substantially larger issue for merchants in the digital commerce world. If merchants let them persist, false declines can have a damaging effect on their business.

When a legitimate consumer tries to purchase a certain product or service from a merchant but is wrongly turned away, it is referred to as a false decline. Often, in the early growth stages of an online business, merchants will prioritize sales growth and consumer acquisition at the expense of fraud protection. While this is harmful in the short-term, since it can create a fraud problem, it often reinforces the need for a viable solution.

This, however, is where mistakes are made. In trying to prevent fraud, merchants may overcompensate and implement fraud solutions with rigid rules that prevent their legitimate consumers from shopping and checking out with ease. This, in turn, can create frustration and resentment among their loyal consumers, the group they worked so hard to cultivate at the very beginning.

Additionally, fraudulent breaches or hacks are typically very painful and costly in the moment. On the other hand, if merchants falsely decline their consumers on a regular basis, those consumers will likely find somewhere else to shop, meaning that specific merchant will lose an incalculable amount of future sales.

In today’s world, where consumers are always moving around and transacting from different places and different devices, merchants can’t afford to settle for a solution with rigid rules that will flag their legitimate consumers as risky. Fortunately, Cardinal’s rules-based authentication solution, Cardinal Consumer Authentication (CCA), gives merchants control over their transactions by allowing them to create and adjust their own rules from several enhanced data fields. Additionally, by giving issuers access to better data, CCA empowers them to make smarter risk decisions, which helps them reduce false declines and authenticate more legitimate consumers. With One Connection to Cardinal, we can Drive your Digital Commerce.

Posted by CardinalCommerce

Welcome to the CardinalCommerce blog. Cardinal is a global leader in authenticating digital transactions, with One Connection to drive digital commerce. Our goal for this blog is to provide a platform that will inform and educate our Customers and partners on consumer authentication, payments, mobile commerce, solution design and big data.

Topics: Fraud, False Declines

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