When a customer's subscription payment fails
What a SaaS business should do when a recurring card payment fails, from retries and customer e-mails to pay links and reminders for the open invoice.
By Achekam · · 4 min read · For Software (SaaS) businesses in South Africa, Nigeria, Kenya
A customer who stops paying a SaaS subscription has not always decided to leave. Their card expired, the bank declined a charge from an overseas processor, or a new card was issued after a fraud scare and nobody updated the payment details. The customer still wants the product. The business simply stopped getting paid.
This kind of loss is often called involuntary churn, and it is among the most preventable kinds, because the customer is on your side. What it takes is a clear process for the days after a payment fails, and a link between what the payment provider is doing and what the business's own books show. This article covers both.
A failed payment is not a cancelled customer
Stripe advises that when a recurring subscription payment fails, the business should notify the customer so they can update their payment method or pay the open invoice, and retry the failed payment on a configured schedule. It states that automatically retrying failed payments prevents involuntary churn caused by temporary issues, and describes retrying as one of the most effective ways to recover subscription revenue, needing no manual effort from the business or the customer.
Some causes of a failed charge are temporary: insufficient funds on the day, a bank's fraud check, a card limit. A retry later can succeed without anyone doing anything.
The recovery steps, in order
A sensible sequence when a subscription charge fails:
- Tell the customer at once. A short, friendly e-mail explaining that the payment did not go through and how to fix it.
- Retry automatically. On a schedule, or with smarter timing if your provider offers it.
- Prompt for a new card if the problem is an expired or replaced card.
- Escalate gradually. A second and third reminder, then a warning that access will be paused.
- Pause or end access only once the process has run its course.
Stripe's revenue recovery tools send customers automatic e-mails when a payment fails, a card expires or a payment method needs updating, and Stripe says many businesses use failed-payment and 3D Secure e-mails to help customers fix failing payments straight away. It also states that its Smart Retries use data points to find the best time to retry a failed payment and are more effective than scheduled retries. Stripe's page on revenue recovery explains how automated retries, reminder e-mails and recovery analytics reduce involuntary churn.
When the bank wants the customer to confirm
Some failures are not declines at all. Stripe states that whether a subscription card payment needs 3D Secure customer authentication depends on the merchant's fraud rules and on the card's issuing bank. When a bank asks for authentication on a recurring charge, the customer has to take an action, such as approving the payment in their banking app, before it can go through.
That changes the recovery e-mail. A message that says "your payment failed, we will retry" is wrong when the payment is waiting for the customer to confirm it; a retry will not help until they do. The e-mail should say plainly that the bank needs the customer to approve the payment, and give them the way to do it. For customers paying from abroad, see billing overseas customers.
Where Achekam stops, and where the gateway takes over
It is important to be clear about the division of labour. Achekam never charges a business's customer automatically: there are no saved cards or debit orders, and credit-control reminder e-mails carry no pay link. So card subscriptions, with their automatic charges and retries, run in the payment provider's own billing system, not in Achekam.
What Achekam handles is the invoice in the business's own books and the follow-up on any invoice the gateway did not collect.
| Task | Where it happens |
|---|---|
| Storing the card and charging it each period | The payment provider's subscription system |
| Automatic retries and failed-payment e-mails | The payment provider |
| The invoice as a debtor in the books | Achekam |
| Chasing an invoice the provider could not collect | Achekam, with a payment link and reminders |
Collecting what the gateway did not
When the provider's retries have run out and an invoice in the books is still unpaid, two tools help.
A payment link. A business can create a payment link for an issued customer invoice, copy it or e-mail it with the invoice, and the customer pays on a public page showing the business's name and branding. A link lasts 14 days by default, and an open link for the same amount is reused rather than duplicated. A business can take Stripe Checkout payments in ZAR, USD, EUR or GBP, with webhooks accepted only when their signature is valid and recent. For a customer whose card failed, sending a fresh link, which they complete with whichever card they now hold, is a simple fix.
Credit-control reminders. Credit control is on for new workspaces. Once a day it e-mails overdue reminders and a monthly statement to customers with a balance, never charges anyone, and records whether each e-mail went out. By default, reminders go at 7, 14 and 30 days overdue with the invoice PDF attached, provided the e-mail settings work. Because those reminders carry no pay link, send the payment link separately when you want the customer to pay online.
If recovery fails altogether and the customer cancels, the open invoices need a decision of their own; see unpaid invoices on a cancelled subscription.
Check this week that your payment provider's retry and failed-payment e-mail settings are switched on, and list every invoice in your books that the provider failed to collect last month so each one gets a payment link.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
