About 10-15% of subscription payments fail. Most aren't intentional—cards expire, banks flag unfamiliar charges, accounts have temporary holds. The difference between losing these customers and keeping them is how you handle the failure.
Why Payments Fail
Understanding the cause helps you respond appropriately:
- Expired card: The most common cause. Cards expire, customers forget to update.
- Insufficient funds: Temporary—often resolves within days.
- Bank declined: Fraud protection, international transaction flags, or bank policy.
- Technical issues: Network problems, processor issues. Usually transient.
The Dunning Process
"Dunning" is the process of recovering failed payments. A good dunning process:
Step 1: Retry the Payment
Don't immediately panic. Many failures resolve themselves. Retry after 24-48 hours—accounts get replenished, holds get released, temporary issues clear.
Step 2: Notify the Customer
Send a friendly email explaining the issue and providing a direct link to update their payment method. Keep the tone helpful, not alarming:
- "Your recent payment couldn't be processed"
- "Your subscription will continue—just update your payment info"
- Direct link to update payment method
Step 3: Retry Again
If the first retry fails, try again in 3-4 days. Card issues often resolve within a week.
Step 4: Final Notice
If multiple retries fail, send a final notice before suspending access. Be clear but not threatening: "Your subscription will pause on [date] unless we receive payment."
Step 5: Grace Period
Give customers a grace period before cutting access—5-7 days is reasonable. Many failures are resolved by customers who just needed time.
Best Practices
Don't Cut Off Immediately
Instant cancellation for failed payment is aggressive and loses customers who would have paid. A multi-day grace period costs you almost nothing.
Make Updates Easy
Every dunning email should include a one-click link to update payment details. Don't make customers log in, navigate menus, and hunt for settings.
Try Different Times
Retry payments at different times of day. Some banks have processing windows; paydays affect account balances.
Track Your Recovery Rate
Measure what percentage of failed payments you eventually recover. Industry benchmarks suggest 20-40% recovery is achievable with a good dunning process.
Tools for Dunning
Stripe has basic dunning features (Smart Retries), but for more control, a billing platform can automate the full process: retries, emails, grace periods, and customer updates.
Conto Billing shows failed payments in your dashboard and lets you retry with one click—or set up automatic dunning sequences.