Why not?

Submission of OTP is only part of Authentication process, which tells the Bank that you are who you say you are i.e. you’re the legitimate owner of the account to which the payment mode is linked.

It has nothing to do with Authorization.

Payments are approved / declined only after the Authorization process is completed. While you, as the Payer, can initiate the transaction, it’s the Bank that can authorize the transaction and let the payment go through or decline it and stop the payment.

With that preamble out of the way, there are several reasons why your Bank may have declined your transaction after you successfully submitted the OTP:

  1. Your transaction value exceeds your available credit limit, in case you’re paying with credit card.
  2. Your transaction value exceeds your bank balance, in case you’re paying with debit card or an A2A payment https://levitralab.com method (like UPI in India or FPS in UK).
  3. One or more of the dozen moving parts involved in a typical payment transaction has failed. More at Why Two Factor Authentication Is A “Conversion Killer” & “Blood Pressure Booster”.
  4. Your credit card has been “hotcarded” i.e. Bank has blocked you from using your credit card. This can happen when you have not paid the minimum amount due on your last credit card bill.
  5. KYC on your underlying bank account has expired, in case you’re paying with debit card or an A2A payment method.

I could go on and on but I hope you get my drift: OTP is a necessary, but not sufficient, condition for completion of a digital payment.

#FunFact: One step before OTP is CVV. A Bank may approve a credit or debit card payment even if you have entered a wrong CVV.