Authorize.net Direct Post hash validation failed

As defined in app/code/core/Mage/Authorizenet/Model/Directpost.php, this exception is thrown if any portion of the below evaluates as false:

if (!$this->getConfigData('trans_md5') || !$this->getConfigData('login') ||
    !$response->isValidHash($this->getConfigData('trans_md5'), $this->getConfigData('login'))
) {
    Mage::throwException(
        Mage::helper('authorizenet')->__('Response hash validation failed. Transaction declined.')
    );
}

So, it's one of three things:

• You have no trans_md5 defined in the config tree payment/authorizenet_directpost/trans_md5

• There is no login defined in payment/authorizenet_directpost/login

• The method isValidHash is returning false

The method isValidHash returns false because there is an issue with either the generated hash (e.g. your API Login/Key are wrong, generate a new one and re-enter) or the amount of the transaction somehow differs between Authorize and your system.

The latter is less likely, but because generateHash in Mage_Authorizenet_Model_Directpost_Response uses the transaction amount as part of the hash, it's a potential factor here.

The problem was that payment/authorizenet_directpost/trans_md5 configuration was NULL.

To fix this set an MD5-Hash in the Authorize.net merchant admin under Settings > Security Settings > General Security Settings > MD5-Hash.

Then enter that same value in the Magento Admin under System > Configuration > Payment Methods > Authorize.net Direct Post > Merchant MD5.