How do you handle electronic payment failures and retries for your subscription customers?

1 Understand the reasons

To handle electronic payment failures, it is essential to understand the reasons behind them. Common causes include insufficient funds, expired cards, card errors, and technical issues. By recognizing the root causes of payment failures, you can effectively communicate with your customers and take preventative measures to avoid future failures.

2 Automate the retries

The second step to handle electronic payment failures is to automate the retries, which can save time and resources, as well as increase the chances of recovering the payment. When automating the retries, it is important to use a smart retry logic that adapts to the reason and timing of the failure, as well as follows payment method and regional rules and regulations. Additionally, it is beneficial to notify customers when a payment fails and when you will retry it, which can help prevent disputes and chargebacks. Furthermore, tracking the retry performance such as success rate, recovery rate, and time to recovery can assist in optimizing your retry strategy and identifying any gaps or opportunities for improvement.

3 Offer alternative payment methods

The third step to handle electronic payment failures is to offer alternative payment methods, such as PayPal, Stripe, Apple Pay, Google Pay, bank transfers, or mobile wallets. Doing so can reduce the dependency on cards and increase the conversion rate by providing convenience, security, and trust to your customers. Furthermore, alternative payment methods can help you expand your reach to new markets or segments where cards may not be the dominant or preferred payment method. For instance, some regions or countries may have higher penetration of mobile wallets, bank transfers, or local payment methods.

4 Manage the dunning process

The fourth step to handle electronic payment failures is to manage the dunning process. Dunning involves communicating with customers to collect overdue payments and prevent them from canceling their subscription or being involuntarily churned. This process can help you retain customers by reminding them of the value of your service, offering incentives or discounts, and providing them with support. It can also help you recover revenue by motivating customers to pay their outstanding balance, update their payment information, or switch to a different payment method or plan. Additionally, dunning can improve customer experience by using a friendly and professional tone, personalizing messages, and respecting customers' preferences and privacy.

5 Use a subscription management platform

The fifth step to handle electronic payment failures is to use a subscription management platform. This software solution can automate your workflows for handling payment failures, such as sending notifications and retrying payments. It can also integrate your systems for managing your subscription business, like your CRM, accounting, analytics, and marketing tools. Additionally, it can scale your business by supporting multiple currencies, languages, payment methods, and tax rules. This can save you time and resources, streamline your data and processes, gain insights into performance and customer behavior, help you grow your customer base, expand market reach, and comply with local regulations and standards.

6 Monitor your metrics

The sixth step to handle electronic payment failures is to monitor your metrics. Metrics are quantitative measures that help you evaluate and improve your subscription business performance. For instance, you should pay attention to the failed payment rate, recovery rate, involuntary churn rate, and revenue at risk. Monitoring these metrics can reveal any issues or opportunities for improvement, as well as allow you to benchmark and track your progress and goals.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?