What is the difference between decline codes 01 and 02?

Both request a referral to the issuer, but 02 indicates a special condition on the account such as a fraud alert or hold. Code 02 is less likely to clear with a simple retry and almost always requires the cardholder to call their bank.

Does code 02 mean the card is flagged for fraud?

Often yes, though not always. It can also reflect an administrative hold or account status change. Either way, only the issuer can lift the condition, so direct the customer to their bank.

Decline code · Soft decline

Decline code 02: Refer to Card Issuer, Special Condition

A stricter variant of code 01. The issuer wants a referral before approving, and the account carries a special condition such as a fraud alert, a compliance hold, or an unusual account state. The transaction cannot be approved automatically until that condition is cleared.

Should you retry?

Retrying without cardholder involvement is pointless because the special condition persists until the issuer removes it. After the customer confirms with their bank, a single fresh attempt is worthwhile. Keep total attempts well under network retry caps since this code signals an account-level block.

Why code 02 happens

A fraud alert is active on the account, often because the cardholder reported suspicious activity or the issuer detected a compromise.
The account is under a temporary administrative hold, for example during a dispute investigation or an address change verification.
The issuer's system flagged the specific transaction pattern, such as a first-ever ecommerce purchase on a card used only in stores.
A recent card reissue left the old credentials in a referral state while the new card activates.

What to do about it

Tell the customer their bank has placed a condition on the account and they need to call the issuer before the payment can go through.
Capture an alternative payment method or a different card rather than looping on the flagged one.
If this appears on a recurring billing attempt, pause the subscription retry cycle and email the customer instead of dunning against a frozen account.
Watch for the same card returning 02 across multiple days, which usually means the condition is not going to clear on its own.

Frequently asked questions

What is the difference between decline codes 01 and 02?: Both request a referral to the issuer, but 02 indicates a special condition on the account such as a fraud alert or hold. Code 02 is less likely to clear with a simple retry and almost always requires the cardholder to call their bank.
Does code 02 mean the card is flagged for fraud?: Often yes, though not always. It can also reflect an administrative hold or account status change. Either way, only the issuer can lift the condition, so direct the customer to their bank.

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