Failed payment recovery
DEFINITION
Failed payment recovery is the combination of automated retries and dunning campaigns Recurly uses to win back revenue from a declined charge before it becomes lost, involuntary churn.
RELATED TERMS
Failed payment recovery is the set of tools and processes a subscription business uses to win back revenue after a charge fails, rather than simply losing the customer to a declined card. In Recurly, that work is split between two independent tools that activate automatically the moment a payment fails.
When a payment fails, both tools start without waiting on each other. Payment retries automatically re-attempt the charge on a schedule the merchant has configured, either Intelligent Retries or a custom schedule, while a dunning campaign sends email notifications to the subscriber at the day offsets the merchant has defined. Both tools stop the moment the payment is recovered, no matter which one succeeds first. If the retries run out before the dunning campaign's final email goes out, the retries simply stop while the dunning campaign keeps running. The terminal action only happens once the campaign completes its final notification, not the moment retries are exhausted, and what that action can be depends on the product: Recurly Subscriptions allows canceling the subscription or leaving it active, and Recurly Commerce adds the option to pause it as well.
Why it matters
A failed payment isn't automatically a lost customer. Many declines are temporary, caused by a soft decline like insufficient funds or an expired card the customer hasn't gotten around to updating. Failed payment recovery gives that revenue a real chance to come back through automated retries and timely reminders, rather than losing the subscriber to inaction alone. This kind of involuntary churn, where the customer didn't choose to leave but the payment simply stopped working, is often addressable with the right combination of retry timing and clear customer communication, which is why it gets treated as its own discipline rather than folded into general customer support.
Recurly runs payment retries and dunning campaigns as independent tools that both watch for recovery, rather than a single linear sequence where one has to finish before the other starts. A fast retry success and a customer responding to an email both lead to the same outcome, recovered revenue, without the two processes stepping on each other.
How to use
Recovering a failed payment generally follows this sequence once a charge fails:
The payment retry schedule begins automatically, re-attempting the charge based on the merchant's configuration, either an intelligent, data-informed schedule or a custom one.
In parallel, the dunning campaign starts sending scheduled emails to the subscriber at the day offsets the merchant has set up, prompting them to update their payment method if needed.
If either the retry succeeds or the customer updates their billing information and the charge goes through, both processes stop immediately.
If retries are exhausted first, they stop, but the dunning campaign continues running until its final scheduled email.
Only after the dunning campaign completes does the terminal action take effect: Recurly Subscriptions allows canceling the subscription or leaving it active, and Recurly Commerce adds the option to pause it as well.
Some subscription businesses also add a layer on top of their existing billing infrastructure that receives failed transactions through an API, applies retry logic informed by broader payment network data, and returns the outcome through a webhook. This approach keeps the original billing platform intact, keeps the customer experience under the merchant's control, and avoids duplicate charges or conflicting recovery attempts running across two systems at once.
Benefits and examples
Consider a subscriber whose card is declined for insufficient funds on renewal day. The payment retry schedule attempts the charge again a few days later, by which point payday may have resolved the balance issue, while a dunning email in parallel lets the subscriber know there's an issue and gives them a way to update their card directly. If the retry succeeds first, the dunning campaign stops without ever needing to threaten cancellation. If the customer instead updates their card after reading the second dunning email, that successful charge stops the retry schedule the same way.
The retry schedule itself can use Recurly's Intelligent Retries, which adapts timing to the type of decline instead of applying one fixed cadence for every failure.
Frequently asked questions
What's the difference between payment retries and a dunning campaign? Payment retries automatically re-attempt the failed charge on a schedule. A dunning campaign sends email notifications to the subscriber at set day offsets, asking them to take action like updating their card. They run independently, and both stop as soon as the payment is recovered.
Does a subscription get canceled the moment retries run out? No. If retries are exhausted before the dunning campaign's final email, the retries stop, but the campaign keeps running. The subscription's terminal action, canceling or pausing, only happens once the dunning campaign completes.
Can failed payment recovery work without replacing my existing billing system? Yes. An additive approach can sit on top of existing billing infrastructure, receiving failed transactions through an API, applying retry logic, and returning results through a webhook, without requiring a rebuild of the underlying system.
Why treat failed payments differently from voluntary cancellations? A failed payment is often a technical or temporary issue, like a soft decline, rather than a decision to leave. Because the customer didn't actively choose to cancel, there's a real opportunity to recover the payment through retries and clear communication before it turns into actual churn.
How much revenue can failed payment recovery typically recover? Across Recurly's platform, failed payment recovery accounts for $1.7 billion in revenue recovered annually, with a 49% average dunning recovery rate and 72% of at-risk subscribers saved.
