Subscription Benchmarks:
Top Payment Decline Reasons
There are over 2,000 things that can go wrong with a credit card transaction: out-of-date or inaccurate card information, insufficient funds or temporary hold, gateway issues, and fraudulent activity, to name just a few. When payments are declined, subscription businesses can lose subscribers to involuntary churn.
To reduce this risk, you need an effective decline management strategy. Recurly Research has compiled comprehensive benchmark data on the top reasons for payment declines and how these impact transaction success rates. This research provides actionable insights on:
- Top reasons for payment declines
- Transaction recovery timeframes
- Percentage of transactions recovered
To view the research so you can benchmark your decline management strategy, please complete the form.
Top Payment Decline Reasons
B2B and B2C businesses experience similar reasons for payment declines. Four of the top decline reasons are 'soft' declines which can be repaired by retrying the card. "Invalid Card Number" is the only 'hard' decline in the top five, meaning retries will not be effective. Instead, recovery may require contacting the cardholder.
Time to Recovery by Payment Decline Reason
Regardless of the decline reason, the greatest recovery rate for transactions occurs within a short time frame ranging from two to 12 days in this study. For transactions that aren't repaired through retries, it's necessary to employ a dunning strategy which involves contacting the subscriber directly.
- FAILURE TYPE
- Declined
- Insufficient Funds
- Temporary Hold
- Restricted Card
- Invalid Card Number
NUMBER OF DAYS
2-11 days
3-10 days
3-12 days
2-9 days
2-10 days
Recovery Rate by Payment Decline Reason
Of the top five decline reasons, "Insufficient Funds" had the highest recovery rate. B2B businesses had higher recovery rates across all decline reasons. B2B businesses often benefit from a subscriber base that consider the service to be mission-critical and will not let it lapse.
- Overall
- B2B
- B2C
- Overall
- B2B
- B2C
- 80%
- 70%
- 60%
- 50%
- 40%
- 30%
- 20%
- 10%
- 0%
Declined
Insufficient Funds
Temporary Hold
Restricted Card
Invalid Card Number
FAILURE TYPE
Median recovery rates.
Understanding the different reasons for payment declines is the first step, taking action is the next.
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Recurly Research is a team of data scientists and analysts who use an objective approach to analyzing subscription metrics and statistics, using aggregated, anonymized transaction data processed by Recurly.
Methodology
Study examined a sample of over 1,300 subscription commerce sites which used the Recurly platform in Q1 and Q2 2018. The data is aggregated and anonymized. The study normalized decline reasons across numerous gateways.
