How to solve declined and pending payments in your subscription business?

The ultimate solution to recover failed and pending payments, improving your approval rate and revenue for your business.
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The subscription model offers many benefits to your business, such as more revenue predictability – with more stable customers over time – and greater user loyalty (65% of subscription customers usually remain subscribed after a year).

However, these advantages only come true if you have a recovery strategy for declined or failed payments, to prevent involuntary subscription cancellations and, in turn, improve your revenue and payment approval rate over time.

If you sell on a large scale and in multiple countries, the challenge is even bigger: how to automatically solve failed payments? What should you do if the solution requires customer action?

And also, what does it mean that payments remain in "pending" status , and how to drive a solution?

In this article, you will find the definitive guide that your business needs.

Why can a payment get declined?

First and foremost, it’s necessary to review the possible states that payments can go through: 

  • Approved: successful payment. 
  • Pending: payment in the approval process, which can lead to a successful or failed transaction.
  • Declined: failed payment.

A payment, to be approved, requires the successful connection between the 3 main actors of the collection scenario: the payment method (with its respective issuer), the gateway, and the customer.

However, anti-fraud engines act in this process to evaluate the legitimacy of the transaction, or also other errors may happen on the customer side (error in the payment information), or on the payment method (insufficient funds, disabled card, etc.).

As a result, more than 50 types of errors can occur in failed payments, which always requires a proactive solution from your business.

The 3 golden rules to solve failed payments

Learn how to recover declined payments, improve your revenue, and payment approval rate, also reducing the number of failed collections in the future.

1. Understand the error message

At first, it will be necessary to check the reason for payment failure reported by the gateway, to understand its possible solution. The question is: what are the possible error messages and how to handle more than 50 different failure scenarios?

In addition, error messages may vary depending on the payment gateway, so having prior knowledge – especially for providing a quick solution – becomes essential.

Access our guides for declined payments to learn all of the error messages, their reasons, and solutions:

With these guides, you will be able to act quickly and efficiently to prevent subscription cancellations and “rescue” a greater number of customers.

2. Send a message to the customer with the solution

The solution will require, in many cases, an action from the customer, whether it be modifying the payment method, calling the card issuer, or simply retrying the transaction. For this reason, clear and transparent communication is another key factor in this process.

It should be noted that in our guides (previously mentioned) you will find recommendations of messages to send to your customers in each case, which you can easily adapt to the communication tone of your company.

Then, with Rebill, you can automate communications with your customers via email and SMS, to send the ideal message at the right time and to a large number of users at the same time (a useful feature if you sell on a large scale).

3. Perform automatic payment retries

There’s another strategy that you can carry out in addition to the two previous steps. The good news: it’s 100% automatic! Having a payment retry system will allow you to switch up to 60% of failed payments into successful.

After these retries, and with a lower number of declined payments (only those that require a specific action from the customer will remain), you can follow the two previous steps to customize the solution that each case requires.

Rebill allows you to create and execute this automatic retry strategy, with your own frequency rules, and also define the total number of retries (for example, 6 payment retries to be made every 2 hours).

How to handle pending payments?

Another question that may you ask is: what happens if a payment remains in a "pending" status for a couple of hours or even days? In principle, there’s nothing specific that you need to do before a payment gets approved or failed.

Keep in mind that approval time limits for a transaction may vary depending on the payment method and, in certain cases – for subscription payments –, this process may take up to 2 business days.

However, you can prepare your support team with the necessary resources and information to handle these payment scenarios, as customers’ queries are not going to take long to arrive.

If you optimize your process for recovering failed payments (communication + automatic retries) and have a support team prepared for these cases, your approval and customer retention rate will increase substantially.

The result: more revenue and more loyal customers for your business.

Nicolas Scannone
Head of Content at Rebill
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