Article
What does “Do Not Honor” mean? Causes and solutions
Understand “Do Not Honor,” “Insufficient Funds,” and “Suspected Fraud” declines and learn how to turn them into successful payments.
Payment decline codes can be confusing and common. The 05 "Do Not Honor" response can account for 10% to 60% of your declined payments. But what does it mean, and what can you do about it? Unfortunately, there's no simple answer. However, our experience in analyzing authorization rates, partnering with card schemes, and building our own issuing bank has given us some insights.
What is a Do Not Honor response code?
When you process a customer’s card payment, your acquirer sends the payment request via the card schemes (Visa/Mastercard) to your customer’s issuing bank. The bank then evaluates the data it’s received and makes a decision on whether or not to approve the transaction.When processing a customer's card payment, your acquirer sends the payment request through card schemes like Visa or Mastercard to the customer's issuing bank. The bank then reviews the data and decides whether to approve the transaction.
Most transactions are approved, but there are times when the issuer declines the transaction. This decline is communicated through a two or three-character response code sent back to you. Often, your payment service provider (PSP) will provide a translation of this code to help you understand the reason.
This entire process occurs while your customer is waiting for approval. It's crucial to have a plan for handling declines, tailored to the specific code received.
Why banks use the Do Not Honor code
The "05 Do Not Honor" code means the customer's issuing bank refuses to authorize the transaction. In the past, banks used this code for every decline reason, from insufficient funds to suspected fraud or canceled cards. This could account for up to 60% of your declined payments.
Recently, card networks like Mastercard and Visa have worked to improve visibility into the reasons for declines. This is beneficial because it provides more information to manage reattempts, improve customer interactions, and increase conversions. As part of this effort, Mastercard and Visa have set limits on the use of the "Do Not Honor" response by issuers, so you may have noticed a greater variety of decline responses.
How the Do Not Honor process works
As the name suggests, "51 Insufficient Funds" indicates that a customer doesn’t have enough funds in their account to complete the purchase. This is the most common decline response and can be particularly challenging for card-on-file "subscription businesses" that can't prompt customers to use an alternative payment method.
While you can’t do much if a customer doesn’t have enough money in their account, you can improve your chances by strategically timing your retries.
Optimize your billing around paydays
For subscription businesses, it's tempting to use the initial payment day as the reference for future billing. However, this might result in billing just before payday when accounts are low. Paydays vary by country; for example, people in the UK are usually paid at the end of the month, while in the US, they are often paid bi-weekly. By analyzing transaction success rates in different markets, you can make data-driven decisions about the best billing times.
Evaluate your checkout experience
For non-subscription payments, consider the message customers receive when they encounter an insufficient funds decline. A poorly handled message can lose the customer, while a well-crafted one can save the sale. Best practice is to suggest an alternative payment method.
Use partial authorizations
Partial authorizations, offered by Mastercard and Visa, allow you to collect the available balance in a customer's account and then guide them to use another payment method. This is commonly used for in-person payments, electric vehicle charging, and automated fuel dispenser payments but can also be applied to ecommerce or subscription payments to reduce insufficient funds issues.
Leverage network response information (Mastercard)
Sometimes, acquirers receive additional information from Mastercard indicating when to retry a "51 Insufficient Funds" decline. Your PSP should provide this as part of the Mastercard Merchant Advice Codes, helping you optimize your retry strategy.
Strategies to reduce Do Not Honor declines
You can lower the frequency of these declines by improving the data you send to banks. High-quality data helps issuing banks trust the transaction.
Use 3D Secure 2
Implementing 3D Secure 2 adds a layer of authentication. When a bank sees that a shopper has passed a security challenge or provided biometric data, they are less likely to issue a generic decline.
Provide accurate billing information
Ensure the billing address and CVV match the bank’s records. Small discrepancies in address verification service (AVS) checks often trigger a Do Not Honor code.
Analyze your decline patterns
Review your payment data to see if specific banks or regions trigger this code more often. If you notice a trend, you can adjust your risk settings or reach out to your payment partner to optimize your routing.
Encourage shopper contact
When a Do Not Honor message appears, ask the shopper to contact their bank. The bank can then whitelist your business or confirm the transaction is legitimate, allowing the next attempt to succeed.
Data errors
Sometimes transactions fail because of an issue with the data that’s sent to the issuer. For example, an address verification service (AVS) or card verification value (CVV) mismatch. Or the lack of 3DS2 authentication performed on a transaction in scope of PSD2. The key with these is to find the data point that’s triggering the decline and then retry the transaction with the correct information.
CVV failure
The CVV2 or CVC2 is the three digit code on your customer’s card. If the code doesn’t match the one the issuer has on file, the transaction will be declined. It can even occur with in-person payments if the terminal has issues reading the CVV code embedded into the chip.
In many cases this is still returned as a 05 Do Not Honor but Visa uses a dedicated N7 Decline for CVV2 failure.
Keep a close eye on the codes in combination with the CVV results provided by your PSP. If these indicate a CVV failure, prompt your customer to enter their card details again or re-initiate the payment at the terminal.
Address verification service (AVS) mismatch
AVS compares the address data provided at checkout to the one on the card issuer’s database and is especially common in the UK and the US.
AVS mismatches usually have an accompanying AVS response code indicating if the issue was with the post or zip code, street address, or both.
In the event of an AVS mismatch decline, prompt the customer to re-enter their address details.
Authentication required (soft decline)
1A Authentication Required and 65 Authentication Required decline codes occur when a transaction is rejected due to the lack of authentication. This is referred to as a ‘soft decline’ and is usually returned by issuers that are bound to enforce strong customer authentication (SCA), for example in the EEA due to PSD2.
The retry strategy for a soft decline is to authenticate the customer and retry the transaction.
In the cases when your customer is not in-session (such as a subscription), you’ll need to bring your cardholder back to authenticate again.
Tools such as Pay By Link, sent via email, are handy in these scenarios.
Expired and closed card accounts
This occurs when a card has expired or been canceled. These can be painful, especially if you process subscription payments and your customer isn’t in-session.
The way to recover these transactions is to retry with the customer’s up-to-date card details. Account Updater and network tokenization services can help reduce these types of declines by ensuring you always have the right card details on file in the first place.
Format errors
12 Invalid Transaction and 30 Format Error indicate there’s something wrong with the transaction data received by the issuer.
Don’t retry this transaction. Instead, ask the customer to provide an alternative payment method.
Restrictions on card usage
57 Transaction Not Permitted and 62 Restricted Card decline codes occur when that specific card can’t be used. This can happen if the card is restricted by geography or channel (i.e. only in the US or in-person payments only).
Inform the customer of the restriction and recommend they contact their bank to have it removed. Only when this has been done, should you retry the transaction.
Technical outages
Sometimes a payment fails because of a temporary outage in the system. In this case, a 96 System malfunction or 91 Issuer Unavailable or 05 Do Not Honor code might be issued.
In this instance, payments can be retried automatically. But this comes with a health warning:
Repeatedly retrying failed transactions can lead to issues with the card networks. You may make incremental gains by retrying over long periods of time, but the success rate inevitably decreases. The best approach is to see what you can save while staying compliant with the card networks.
Manage Do Not Honor (and other card refusals) with Adyen
All issuers will have fraud detection systems to identify suspicious activity and they naturally tend to err on the side of caution. Unfortunately, they also have no way of communicating to you why they refused the transaction beyond issuing a Suspected Fraud decline code.
In addition to declining the transaction, the issuer is also likely to put a (usually temporary) block on the card. In that case, the best approach is to ask the customer to contact their bank. These days, this can be as simple as clicking on a button in their banking app. We don’t recommend retrying until the bank has been contacted and the card unblocked.
Key summaries
Do Not Honor is a catch-all decline code used by banks for unspecified reasons.
The code often stems from a bank's internal risk assessment or suspected fraud.
Improving data quality and using 3D Secure 2 can reduce these declines.
Shoppers must usually contact their bank to resolve the underlying issue.
FAQ
The 05 code is a standard ISO 8583 response that means the issuing bank has declined the transaction without providing a specific reason. It is the most common generic decline code in the payments industry.