Fix FAILED transactions in Stripe: Payment declined by customer’s bank

Watch the video, or read the Blog Post below.

What would become of eCommerce businesses without online payment options? In the past, customers can only pay for online shopping via credit cards, and in some cases, cash on delivery (COD). According to an article by The Nest,

Of Americans 35 and younger, 58.9 percent hold credit cards. The percentages gradually go up through the 65 to 74 age bracket, in which 79.5 percent hold credit cards. After 75, the percentage dips to 66 percent.

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But what if your target audience are those below 18 years old? What about the rest of the population that does not own a credit card? That's where platforms like PayPal and Stripe come in handy. With them, your customer would not need to have a credit or debit card in order to make online purchases -- literally anybody can set up a PayPal or Stripe account; all they need is a valid ID and they're good to go.

Now we know the importance of online payment platforms. But what if due to certain circumstances the platforms themselves restrict the sellers from accessing their account, or fail in doing their part on your online business? What happens then? In this video, I am going to talk about why Stripe refused to accept customer payments and how I was able to fix this issue.

Failed Transactions in Stripe

If you are having failed transactions in Stripe, you're most probably here because your business is not located in the United States; you are a foreign, international business that is accepting US dollars as payment, and only when you receive it will you convert it into your own local currency. So Stripe is declining your customers' transactions. Keep reading to find out how you can resolve this issue!

The image below shows transactions from my first website, which was registered to my Australian address. Payments were accepted via USD, which will then be converted into AUD. So Stripe will add their Forex rate in and thus convert my whole account into AUD.

The only problem I could see, from my understanding, is that when a customer pays using their credit card, its respective bank will look at where the money would go. If they see it as an international entity (e.g., Australian, etc.), they treat it as a high-risk business, and would therefore decline the transaction request.

According to an article by CreditCards.com, there are three major ways that you could trigger a "false fraud alarm" for yourself:

  • Location;
  • Big spending; and
  • Online shopping spree.

Notice that location is on top of their list.

Foreign vacations will often trigger alerts, but even travels within the good old U.S. of A can raise red flags. [...] There have been reports that even purchases in different areas of town can set off alarms with your credit card issuer.

When a customer's credit or debit card is declined, it does not necessarily mean that their card is a stolen one or a fraud; this is just the bank's special countermeasure against it, especially if they deem that the account holder has some pretty suspicious recent activities. So, it's not too much of a reason to be alarmed, though it can get really annoying and inconvenient for both you and your potential client.

The Big Problem

If you would look at the image below, you can see that I started scaling my business in January 2017. All throughout the scaling period, I was using my Australian business entity, accepting US dollars and having failed transactions just because US banks see me as a high-risk business. As per the statistics, on the whole of my account, I had 16,772 successful payments, which means I was able to successfully transact with customers and made a sale. Which sounds really good and all...

But upon closer inspection, you'll find that I actually had 7,752 failed transactions over the course of my scaling journey! That's over 30% of my total transactions.

And the worse part is that most of these failed transactions are due to banks declining my customers' transaction requests -- though there are some other reasons as to why the transactions failed:

  • Incorrect CVC;
  • Incorrect card number;
  • "Transaction not allowed";
  • Bank server errors; and more.

How to Fix Failed Stripe Transactions

The best solution to fixing failed transactions in Stripe is to go to MyUSACorporation and obtain an EIN (Entity Identification Number). What this company does is they register your foreign business into a US virtual address, so you can hook up a new Stripe account into said virtual address.

What I did is I registered to a Wyoming virtual address and set my default Stripe currency into USD. That way, when my customers pay using their credit cards, their banks would see that the payment would go into a US account, and would therefore approve their request!

Excerpt from NorthWest Registered Agent.

When I made this change, I no longer received "Failed Payment" transactions! The issue was quickly resolved, and I was able to continue my smooth transactions and make a sale hassle-free and worry-free.

Let’s Wrap It Up!

US payment options can definitely be problematic, especially if you are a foreign business trying to do business internationally. However, you should know that there will always be easy and quick solutions to these problems so long as you know where to look for them. If you are using Stripe for your foreign business, visit MyUSACorporation to avoid failed transactions due to US bank issues.

Before we end this post, I would like to invite you to my monthly membership group, The Pirate Club, where you can get everything you would need to build a successful online store. By joining in and becoming a pirate yourself, you gain access to the following:

  • The Pirate Academy;
  • The Pirate Product App;
  • The Pirate Community; and loads more!

Intrigued? The Pirate Club is now open with an early-bird pricing plan, so be sure to grab this super affordable deal before it expires!

If you have any more questions regarding Stripe or anything about this video, feel free to personally contact me via the Contact Form HERE. You can also leave your comments and feedback below, and our team over at WagePirate will definitely get back to you with a response. For more reviews, news and updates, don't forget to subscribe to our YouTube channel!

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