Subscription Benchmarks
Top Payment Decline Reasons for Subscription E-Commerce
E-commerce businesses rely on electronic payment methods such as credit and debit cards. That also means, they’ve seen a lot of credit card declines. Every credit card payment on an online transaction potentially can be declined.
There are over 2,000 factors that can cause a credit card transaction to return a credit card decline code, from out-of-date information or insufficient funds to payment gateway issues and suspicious activity.
When recurring online payments are declined, subscription e-commerce companies can lose subscribers to involuntary churn. Are you losing monthly revenue because one of your fans typed their debit card details incorrectly?
Soft declines can hit your customer service experience hard, threatening legitimate purchases because of a simple payment gateway glitch. Online merchants like you need an effective decline management strategy.
Recurly Research has compiled comprehensive benchmark data on the top reasons payment methods are declined, within the subscription e-commerce industry—and how these impact legitimate transaction success rates.
This research provides actionable insights on:
- Top reasons for payment declines
- Payment decline rates by industry
- Percentage of transactions recovered
To view the research and benchmark your business' decline management strategy, please complete the form.
Top Payment Decline Reasons
While there are many reasons e-commerce subscription businesses experience payment declines, these were the five most common reasons for payment failures. Four of the top five 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, payment recovery may require contacting the cardholder.
Payment Decline Rates by Industry
Physical goods merchants can expect to see a slightly higher decline rate compared to their digital counterparts. Box of the month in particular had the highest decline rate of any industry at 12.86%. The higher decline rate found in the Education industry may be due to seasonality in this industry.
In general, businesses that have higher decline rates tend to experience higher churn. These factors highlight the important role of a decline management strategy, including both transaction retries and dunning, to recover declined payments.
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Services Physical
Goods Consumer
Goods Box of the
Month Consumer
Services Education Healthcare IoT OTT Publishing &
Entertainment SaaS
Industry Segment
Payment Recovery Rates by Industry
Healthcare had the highest median payment recovery rate, followed by SaaS. Effective payment recovery techniques combat churn, and our data has shown that the industries with the highest payment recovery rates also tend to have the lowest churn rates. The fact that nearly all industries see recovery rates of 40% or above demonstrates the significant impact an effective decline management strategy can have in e-commerce subscription businesses.
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- 60%
- 50%
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Consumer
Goods
Box of
the Month
Consumer
Services
Education
Healthcare
IoT
OTT
Publishing &
Entertainment
SaaS
Industry Segment
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
We examined a sample of over 900 e-commerce sites which used the Recurly subscription management platform. The study encompassed a period of twenty-four months, from January 2017 to December 2018. All data was aggregated and anonymized. Our study uses median, 25th, and 75th percentile values to eliminate outliers and provide a more accurate representation of the data.
