Do not honor reject codes are common in credit card transactions (especially in eCommerce) and are often frustratingly vague. Merchants are left without a lot of information, and this can be a bit flustering — especially when you’re standing in front of a customer who’s trying to pay.

A Declined - Do not honour notification is a request status associated with the 005 response code, and it means that the customer’s bank has declined the payment. This is the most common message provided by banks when a payment fails their authorization process.

We’re going to cover what do not honor codes mean, the possible reasons your system may be firing one, and your best bet for resolving the issues.

What does do not honor mean?

“Do not honor” codes fired by card-issuing banks like Chase mean the customer’s bank will not validate the transaction and is refusing to send an authorization token back to your system.

In other words, the customer’s bank, for some reason, is saying no thank you to the transaction. The authorization is denied, meaning no funds will be transferred and that transaction cannot be completed.

“Do Not Honor” can represent anything from 10% to 60% of your refused payments.

But what does it actually mean? And what can you do about it? Should you ask the shopper for a new card? Should you retry it with the same card? If so, do you do this immediately or how long should you wait?

Unfortunately, there isn’t one easy answer. But, based on our experience analyzing authorization rates and working with card schemes, here are some plausible explanations.

Insufficient funds in disguise

In about half the cases, “Do Not Honor” is just another way of saying “Insufficient Funds”. This is because some issuers (or processors) aren’t very good at returning the correct refusal reason. This is partly due to the issuers’ legacy systems, and partly to the lack of mandates or monitoring by the schemes. So, for lack of a better reason, issuers will often default to “Do Not Honor” as the catch-all for all denials.

Credential mismatch

Sometimes transactions fail because of an AVS or CVC mismatch. But, since there’s no refusal reason for AVS mismatch, and only Visa has a response code for CVC mismatches, issuers tend to default to “Do Not Honor”. It’s worth checking other data points in the payment response, like CVC response, card expiry date, and AVS response, to learn more.

Possible fraud

The most appropriate use of “Do Not Honor” is because of suspicious activity on the card. It’s up to the issuer to decide what constitutes suspicious activity. So, even though a card hasn’t been reported lost or stolen, a combination of factors might prompt the issuer to err on the side of caution (such as a high-value transaction made cross-border at 3am without any additional authentication). Even if issuers can identify why they refused the transaction, they have no way of communicating this to you. Instead, they must pick a response from the available responses codes defined in the ISO 8583 standard.

If you’re really up to speed on your payments, you might point out that issuers should be able to use “59: Suspected fraud” in these cases. This is correct. But what you probably don’t know is that VisaNet remaps all “59: Suspected fraud” refusals to “05: Do Not Honor”. The likely reason for this is legacy. It avoids uncomfortable situations in-store when the shopper is standing in front of the sales associate.

Recent shopper activity

You’re probably not the only business that the shopper is interacting with at any one time. They might have just made a large purchase on a high-risk website or been on a huge shopping spree before coming to you. In that case, it doesn’t matter how clean your traffic is, the issuer may decide on a “Do Not Honor” as a byproduct of a shopper’s recent activity. In these cases, having the right billing and retry strategy can help you minimize your “Do Not Honors”.

Trigger scenarios

There are several possible scenarios that can trigger the 20005 (Declined - Do not honour) response code:

1. The bank’s fraud rules (which consider various factors that are not made public) have been triggered.
2. The bank may have placed a temporary hold on the customer’s card.
3. The purchase session may have been locked due to multiple declined payments.
4. The seller is located in a country different from that of the card issuing bank.

 Sometimes when a bank doesn’t have a clear reason why a charge is denied, it will opt for “Do Not Honor” as a sort of catch-all denial. This is especially true in older systems that aren’t as up to date as they should be. It’s just kind of the default bucket that issuing banks punt to when they can’t be more specific for any number of reasons.

And just because a card was marked with Do Not Honor does not mean it’s being marked as fraudulent. In fact, most declined transactions aren’t related to fraud at all and are more commonly related to a customer error.

Here’s how VISA explains it:

The vast majority of declined transactions have nothing to do with fraud. Usually, they have a good risk score, but get turned down because of much more basic checks and balances. Visa’s Global Declines Transaction Analysis in 2016 has shown that more than 76% of all global transaction volumes that Visa issuers declined are tagged either as ‘insufficient funds’ or ‘do not honor’. In addition, some US$8 billion in card not present declines are due to ‘expired card’ – Via VISA

And continuing on…

The issue is that, in many instances, these declines are the result of somewhat arbitrary authorization decisions. For example, the cardholder may have inadvertently ended-up on the wrong side of an authorization parameter (perhaps because, after a sudden spate of spending, they failed a velocity check); they may have forgotten to inform their issuer that they are traveling overseas (and stumbled into a geographical block); or, they may have reached the upper end of their credit limit (even though they have plenty of money sitting in their savings account).

In other words, you shouldn’t always accuse a customer of having made an error, but chances are it’s something on their end.

What to do with a Do Not Honor credit card transaction

Well. There are a few options. Typically employees will try the transaction again, which is fair, but it probably won’t have much of an effect on “do not honor” denials.

Assuming that doesn’t work, here are your basic options:

• Ask your customer to use an alternate card.
• Ask your customer to call or contact their bank and let them know about the transaction — especially if this transaction is happening outside of the country that the customer’s bank is located in.
• Ask the customer to wait a few hours and try again.

There aren’t many other options besides those, and unfortunately, you’ll probably never receive more information about why that transaction fired back a Do Not Honor code.

Using automation to mitigate Do Not Honor damage in eCommerce businesses

Just because a transaction fired a Do Not Honor in an online transaction doesn’t mean that revenue has to be lost forever. There are a few things you can build into your system to help reduce lost revenue due to failed transactions:

• Have automated emails for failed transactions that both notify the potential buyer of the failure and ways to remedy it.
• If a transaction fails, send a coupon to those people a day or two after the failed transaction with a similar message.

This is just scratching the surface, but having a comprehensive payment system that works for you in every possible customer situation goes a long way (especially at scale).

How to resolve

To resolve a 005 (Declined - Do not honour) response, try the following:

1. Ask the customer to contact their bank, explaining that they are trying to process a payment. The customer can ask the bank to allow the payment.
2. Ask the customer to try again at a later time. The issuing bank may have only placed a temporary hold on the card.
3. Ask the customer to use an alternative credit card.
4. Sometimes the payment may have been declined owing to failed CVV or AVS checks, so it’s worth checking these fields are correct before trying anything else.