I've been reviewing merchant statements lately, and the same problem keeps showing up. Merchants are racking up thousands of dollars in fees they don't even know they're paying—all because their systems are retrying declined transactions when they shouldn't be.
These aren't small numbers. One client was hitting $0.10 fees on every retry attempt for cards that would never approve. Another was paying $0.30 per transaction after exceeding Mastercard's retry limits. The fees were buried in monthly statements, and nobody caught them until we did a deep audit.
The problem isn't that merchants are intentionally violating card network rules. Most don't even know the rules exist. Their payment systems are set to automatically retry declined transactions, and those retries are triggering compliance fees from Visa and Mastercard that add up fast.
Visa and Mastercard have specific rules about how many times you can retry a declined transaction. Too many retries look like fraud attempts. They also create unnecessary load on payment systems.
When your system ignores these rules and keeps retrying transactions that will never approve, the card networks charge fees. Those fees escalate quickly if you're retrying in bulk or using automated systems that don't check decline codes first.
The fees themselves aren't the biggest problem. The bigger issue is what happens if you routinely violate retry rules. Card networks can flag your merchant account for review. That review process is expensive, time-consuming, and can result in higher processing rates or even account termination in severe cases.
Most merchants violating retry rules don't realize it until the damage is done. By then, you've already paid thousands in avoidable fees and potentially triggered a compliance review that affects your entire payment operation.
Visa breaks decline response codes into four categories. Each category has different retry rules and different fee implications.
Category 1: Issuer Will Never Approve
These codes mean the card is invalid, never existed, or has been permanently blocked. Common codes include 04 (pick up card), 07 (pick up card, special conditions), 12 (invalid transaction), 14 (invalid account number), 41 (lost card), 43 (stolen card), and 57 (transaction not permitted).
Retry strategy: Don't. The issuer will never approve this transaction. Tell the cardholder to contact their bank.
Fee implication: $0.10 per retry for US domestic transactions. If your system retries a Category 1 decline ten times, that's a dollar in fees for a transaction that was never going to work.
Category 2: Issuer Cannot Approve at This Time
These codes indicate temporary issues. The transaction might succeed later. Codes include 51 (insufficient funds), 52 (no checking account), 53 (no savings account), 59 (suspected fraud), 61 (exceeds withdrawal limit), and others.
Retry strategy: You can retry these, but get updated information from the cardholder first. Retrying the same card without changes won't work.
Fee implication: $0.10 per retry after 20 retries in a 30-day period. If you're automatically retrying insufficient funds declines every day for a month, you're paying fees after the 20th attempt.
Category 3: Issuer Cannot Approve Based on Details Provided
These codes mean something about the transaction data is wrong—incorrect CVV, expired card, wrong ZIP code. Codes include 54 (expired card), 55 (incorrect PIN), and 82 (incorrect CVV).
Retry strategy: Fix the data problem first. Verify the correct information with the cardholder before retrying.
Fee implication: $0.10 per retry after 20 retries in 30 days. Same rule as Category 2.
Category 4: Generic Response Codes
Everything else falls here. These are often technical declines with limited merchant value. Follow the same retry limits as Categories 2 and 3.
Mastercard uses Merchant Advice Codes (MACs) to provide guidance on declined transactions. Two codes create immediate problems if you ignore them.
MAC 03: Invalid Merchant
This code means there's a problem with your merchant account or information. The transaction will not succeed no matter how many times you retry it.
Do not retry transactions with MAC 03. You'll pay fees and the transaction still won't work.
MAC 21: Recurring Payments Canceled
This code appears on recurring transactions when the cardholder has canceled all recurring payments for that card. This is a permanent stop order.
Do not retry transactions with MAC 21. The cardholder explicitly stopped these payments. Retrying creates compliance risk and generates fees.
Mastercard's Category 1 Declines
Similar to Visa, Mastercard has Category 1 codes that indicate a transaction will never approve. Common codes include 03 (invalid merchant), 04 (pickup card), 07 (pickup card, special conditions), 12 (invalid transaction), 14 (invalid account number), 41 (lost card), 43 (stolen card), and 57 (transaction not permitted to cardholder).
Do not retry Category 1 declines.
Excessive Retry Fees
Mastercard allows 10 retries in a 24-hour period. After that, fees start applying.
Current fee: $0.30 per transaction for more than 35 retries in a 30-day period.
Expected 2025 fee: $0.50 per transaction for the same violation.
If you're running automated retry systems without monitoring decline codes, you're likely hitting these limits regularly. The fees compound quickly when you're processing volume.
A merchant processing 1,000 declined transactions per month with a system that retries each one three times without checking decline codes first.
If 200 of those are Category 1 declines (cards that will never approve):
If you're retrying Category 2 and 3 declines more than 20 times in 30 days—which automated systems often do—the fees start at $0.10 for every retry after the 20th attempt.
For Mastercard, exceeding 35 retries in a 30-day period on even 100 transactions costs:
These examples assume relatively low violation rates. High-volume merchants with aggressive retry logic can hit thousands per month in compliance fees.
The bigger cost shows up when violations trigger a card network review. Network reviews are expensive, time-consuming, and can result in higher processing rates across your entire payment operation—not just the transactions generating retry fees.
Stop retrying transactions blindly. Your payment system should check decline codes before attempting any retry.
Category 1 declines: Never retry. Flag these transactions and notify the customer to contact their bank.
Category 2 and 3 declines: Retry only after getting updated information from the cardholder. Track total retries to stay under the 20-attempt limit in 30 days.
Mastercard MAC 03 and 21: Never retry. These are permanent blocks.
Monitor your statements. Retry fees show up in monthly processing statements, but they're often buried in line items that aren't clearly labeled. Request a detailed breakdown from your processor if you're not sure what fees you're paying.
Audit your retry logic. Most payment systems have configurable retry rules. Make sure yours respect card network decline codes instead of just retrying everything on a schedule.
Work with a processor who monitors this. Some processors actively monitor retry violations and alert merchants before fees accumulate. Others don't. If you're seeing unexpected compliance fees on your statements, ask your processor what's causing them.
Card network rules around retries have gotten stricter over the past few years. Fees have increased. Enforcement has increased. Networks are more aggressive about flagging merchants who violate retry rules regularly.
This isn't going away. If anything, it's getting more expensive. Mastercard is already raising retry fees in 2025. Other networks may follow.
The merchants who get ahead of this problem now avoid paying fees they shouldn't be paying and avoid compliance reviews that can disrupt their entire payment operation. The merchants who ignore it keep bleeding money on every statement until someone catches it.
Most merchants don't realize they have a retry problem until they see the audit results. By then, they've already paid thousands in avoidable fees.