There are over 2,000 things that can go wrong with a credit card transaction: out-of-date or inaccurate card information, insufficient funds or temporary hold, gateway issues, and fraudulent activity, to name just a few.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:
To view the research so you can benchmark your decline management strategy, please complete the form.
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.
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.
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.
Median recovery rates.
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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.