Understanding Dishonour Reasons

When Pay Advantage attempts to process a payment, the request is sent to the customer’s bank for approval. The bank will either approve the transaction or decline it and provide a reason for the failure.

Banks can return a wide range of response codes when declining a payment and many of these codes are quite general. Below are some of the most common dishonour reasons and an explanation of why they may occur.

Insufficient Funds

There are several common reasons why a payment returns “insufficient funds” even when the customer says they do have money in their account. This happens more often than people realise, and most causes are bank-side, not merchant-side.

Here are the most likely explanations:

1. The customer’s bank has placed a hold or reserved funds

Even if the available balance looks healthy, the bank may have placed a temporary hold, such as:

• pending transactions not yet visible
• pre-authorisations (hotels, subscriptions, fuel stations, car rentals)
• direct debits scheduled to come out
• security holds
• fraud-prevention temporary locks

Banks don’t always show these holds immediately in online banking.

2. Daily spending or card limits

Some cards have:

• daily purchase limits
• daily EFTPOS limits
• per-transaction limits

Even with plenty of balance, the transaction can fail due to a limit restriction, and the bank often returns it under “insufficient funds” as a generic fallback.

3. The bank’s fraud/risk engine is blocking it

If the bank suspects unusual activity (new merchant, unusual amount, rapid repeat attempts), the bank may block the transaction.

Banks often use “insufficient funds” as a generic decline code instead of revealing “blocked for fraud”.

Certain banks will also display an authorisation attempt as a temporary debit and then reverse it with a credit once the charge is declined. This is purely a display method and does not indicate that the transaction was ever approved.

The quickest fix is for your customer’s bank to verify the reason for the decline, as the error code comes directly from them.

Payment Stop

A payment may return as “payment stop” when the customer has instructed their bank or card issuer to block payments. This is a customer-initiated action and is controlled entirely by the bank.

This can occur even if the account or card is active and has available funds.

Here are the most common explanations:

1. The customer has placed a stop on the merchant or agreement

The customer may have:

• requested their bank to stop all payments to a specific merchant
• cancelled a recurring direct debit authority
• disputed a previous transaction and requested a block
• placed a stop on future recurring payments

Once a payment stop is in place, all future debit attempts will fail until the customer removes the stop with their bank.

2. A temporary or conditional payment stop

In some cases, banks apply temporary stops due to:

• account reviews
• disputes under investigation
• suspected fraud
• compliance or risk checks

These stops are not always visible to the customer in online banking.

The quickest resolution is for the customer to contact their bank directly and request the stop be removed.

Technically Invalid

A payment returns as “technically invalid” when the bank or card network determines that the payment details do not pass validation checks.

This is not related to account balance and usually indicates incorrect or incompatible details.

Here are the most likely causes:

1. Incorrect or incomplete payment details

Examples include:

• incorrect BSB or account number
• invalid card number
• incorrect expiry date
• incorrect CVV/security code
• formatting errors

Even a single digit entered incorrectly can cause the payment to fail validation.

2. Unsupported account or card type

Some account types cannot be debited, such as:

• certain savings or passbook accounts
• restricted or non-transactional accounts
• cards not enabled for online or recurring payments

Pick-Up Card

“Pick-up card” is a card-issuer decline response indicating that the card has been flagged and should no longer be used.

This response comes directly from the card issuer and is security-related.

Here are the most common reasons:

1. Card reported lost or stolen

The cardholder has reported the card as lost or stolen, and the issuer has permanently blocked it.

2. Suspected fraud or security concerns

The issuer has detected unusual or high-risk activity and has disabled the card to protect the customer.

3. Card permanently restricted

The card may be linked to:

• repeated declined transactions
• compliance concerns
• account closure or suspension

Once a “pick-up card” response is received, the card cannot be reused. The customer must contact their bank and provide a new card for future payments.

Other Common Dishonor & Decline Reasons

Below are additional common reasons a debit or card payment may fail, excluding insufficient funds.

Account Closed

The bank account or card has been permanently closed. A new payment method is required.

Expired Card

The card expiry date has passed. Updated card details are required.

Do Not Honour / Restricted Card

The card issuer has declined the transaction for risk or security reasons. The customer must contact their bank.

Exceeds Transaction Limits

The transaction exceeds daily or per-transaction limits set by the bank or card issuer.

If a customer is disputing a dishonour and believes the error is incorrect, we are more than happy to assist in resolving the matter. We can arrange a conference call with the customer and their bank to discuss the issue directly, provide clarity, and help ensure all parties have a clear understanding of the situation and next steps.