Do Not Honor Decline: Meaning, Stats, and How To Fix?

What Does Do Not Honor Mean?

"Do Not Honor" is a catch-all decline code used when a bank rejects a transaction without providing a specific reason. This rejection could stem from various issues, such as insufficient funds, approaching or exceeding withdrawal limits, or outdated credit card information, among others.

Key Takeaways

• Do not honor declines are vague messages from banks that stop payments
• These declines can happen for many reasons, from low funds to suspected fraud
• Businesses can take steps to reduce these declines and keep customers happy such as using a service like Churnkey.

Do Not Honor Is Notoriously Common

Despite efforts by major card networks like Visa and Mastercard to promote more specific decline codes, 'Do Not Honor' remains stubbornly prevalent.

The chart below, based on Churnkey's data from over $2 billion in subscription revenue, illustrates the consistent usage of this code over time. While our data is sampled, it serves as a reliable indicator of broader trends in the industry.

Overview of Decline Codes

The transmission of decline codes from banks to merchants involves a complex chain of communication with multiple intermediaries.

Each party in this process—including issuing banks, card networks, payment processors, and merchants—may have their own system for categorizing and interpreting these codes.

Analysis of Do Not Honor by Network, Country, and Card Type

Churnkey helps companies recover failed payments including do_not_honor transaction failures. This is data we've collected at Churnkey and it is sampled.

Monthly trends of "Do Not Honor" Declines (%)

The improvement during the summer months (April through July) can occur for various reasons, but without additional data, these explanations remain speculative. We have two primary hypotheses:

1. Seasonal spending patterns: Summer months often see increased consumer spending on travel, leisure activities, and vacations. This could lead to more successful transactions overall, reducing the rate of declines.
2. Improved financial standing: Some people may receive mid-year bonuses or tax refunds around this time, potentially improving their credit standing temporarily.

Proportion of Do Not Honor Decline Code for Visa, Amex, MasterCard

• Visa: Roughly 11% of all Visa decline codes returned are flagged as Do Not Honor.
• Amex: With Amex, we see it to be as high as 92%. Amex sends this code much more frequently as a % of all decline reasons.
• Mastercard: Only 4% of all Mastercard decline codes are Do Not Honor.
• Discover: 7% of all Discover decline codes are Do Not Honor.

Amex seems to be use Do Not Honor a lot. Whereas, Visa is more balanced with their proportions. It makes up the third highest decline code for Visa, after Insufficient Funds and Transaction Not Allowed. (Churnkey data is a sample of all global transactions and may have biases.)

Percentages of Do Not Honor Decline Codes by Country

This chart shows the geographic variations in percent of failures related to "Do Not Honor".

Middle Eastern countries see a much higher proportion of 'Do Not Honor' decline codes than other countries around the world. European countries have more sophisticated codes and don't use 'Do Not Honor' as frequently.

Do Not Honor makes up the 2nd highest decline code in the US at 10%, following 'Insufficient Funds'.

India follows a similar trend at 34%. Transaction Not Allowed was related to India’s e-mandate policies.

5% of all declines in Australia are due to ‘Do Not Honor’. The UK is at 7%.

Payment industry standards suggest that issuers should avoid using "Do Not Honor" and instead opt for more specific decline codes. This would help merchants better understand and potentially resolve it.

How to Fix 'Do Not Honor'?

Even with all the ambiguity around the 'Do Not Honor' decline code, there are multiple ways to manage it if you're a subscription business. Churnkey recovers up to 89% of the failed payments with its failed payment suite of products.

1. Retry The Payment

Context: Do Not Honor is a soft decline, which means that it can be retried. If it were a hard decline like 'fraud', you would not be allowed to retry the payment.

Caution: Be aware of retry limits—Mastercard allows 35 attempts and Visa 15 within 30 days. Exceeding these limits can lead to fines as high as $15,000.

Solution: Use Churnkey's Precision Retries, which recover up to 89% of failed payments without heavy engineering resources. We continuously improve Precision Retries to be more precise. It listens to the decline reason provided by the card issuer, and will only retry cards conditionally based on this reason. For instance, we'll retry on insufficient funds, do not honor, generic decline, or try again later, but if we get a decline code like stolen card or card velocity exceeded, Churnkey won't attempt further retries through either precision retries or email-attached auto retries.

2. Request Card Change

Context: Address expired cards or virtual cards by asking customers to enter a different card. This requires customer action but is most likely to succeed simply because a new card is added in.

Caution: Ensure the process is seamless with no logins or multi-step verifications.

Solution: Churnkey provides a frictionless dunning (email + SMS) platform that allows customers to update their cards easily, with options for advanced personalization (plan name, subscription age, trialing, etc.).

3. Leverage Offers and Partial Payments

Context: Sometimes customers will quietly let their cards expire on purpose. Offer discounts and partial payments that auto-apply to their account.

Caution: Manage potential system abuse when offering discounts.

Solution: Implement Churnkey's Dunning Offers to entice customers to update their cards with incentives like partial payments or automatic discount codes. Churnkey has anti-abuse built in.

4. Feature Blocking

Context: Blocked product access can prompt action. Users can escalate this issue to their billing manager.

Caution: Prevent unpaid usage when doing so. Depending on your settings, users may be prevented from accessing certain features.

Solution: With Churnkey, you can dynamically block feature access for past-due accounts. And customers can update their payment details directly inline without navigating elsewhere.

5. Monitor Metrics

Context: Since do_not_honor isn't clear why a payment fails, what you can rely on are metrics. Try different offers and keep a close eye on the metrics to see what changes. Use metrics to gauge the effectiveness of your strategies.

Solution: You don’t have time to parse overloaded charts and confusing terminology. Churnkey’s best-in-class analytics speak plainly—helping you and your team track boosted revenue, offer uptake, recovery rates, and more.

Case Studies

1. Veed.io

Veed.io successfully leveraged tailored discounts and pause options, saving nearly 5,000 canceling customers. Utilizing Churnkey's Precision Retries and Dunning Offers, they recovered over 14,000 failed payments, achieving a 35% increase in their save rate. Read Veed.io's case study.

2. Sudowrite

Sudowrite boosted revenue by over six figures within a year across various churn channels by integrating Churnkey voluntary and involuntary suite into their operations. Read Sudowrite's case study.

Common Errors and Misconceptions with Do Not Honor

Common errors or misconceptions when dealing with the do_not_honor decline code include:

1. Assuming it's a permanent block: Many believe the decline is final, but it can be due to temporary issues like insufficient funds or withdrawal limit exceeded.
2. Retrying the transaction repeatedly: This can trigger alerts and further declines. It’s better to stay under the limits, contact the card issuer, or use a different payment method.
3. Blaming the merchant: Customers often think the issue is with the merchant, but it's typically due to the card issuer's policies.
4. Ignoring the need to contact the bank: Some users don’t realize that contacting their bank can resolve the issue, especially if it's due to security concerns or a need for additional verification.
5. Misunderstanding the decline reason: "Do not honor" is a general code, and its exact cause isn't always clear, leading to confusion about the appropriate next steps.

FAQs

What does do not honor mean on credit card?

"Do Not Honor" is a catch-all decline code used by banks to indicate that a transaction has been rejected without specifying the exact reason. The bank could have rejected the transaction due to various issues like insufficient funds, exceeding the withdrawal limit, or outdated credit card information.

What does debit not available code 05 mean?

Typically, "Debit Not Available Code 05" refers to a declined transaction due to issues like insufficient funds or an authorization problem. This code usually means the card issuer did not approve the transaction, but the specific reason may vary.

What is 500 - declined-005?

This is an error code indicating that the transaction was declined by the card issuer. The number "500" often refers to a generic server error, and "005" could be a specific decline code from the issuer, likely indicating a problem similar to "Do Not Honor."

What is do not honor on debit card?

"Do Not Honor" on a debit card means that the bank rejected the transaction without providing a detailed reason. Similar to credit cards, this could be due to issues like insufficient funds, withdrawal limits, or outdated card information.