The real problem with failed payments is that those small, unnoticed failures add up over time to big losses. Recurly’s 2024 data shows healthy subscription businesses collect about 95.6% of renewal invoices—which implies 4.4% get unpaid. For a modest monthly recurring revenue, that’s thousands:
- $25,000 MRR × 4.4% is roughly $1,100/month
- $50,000 MRR × 4.4% is roughly $2,200/month
- $100,000 MRR × 4.4% is roughly $4,400/month
But don’t worry. When you treat failed payment recovery as part of your comprehensive customer service solution, that revenue doesn’t have to stay lost.
In this guide, we’ll show you the strategies and tools that make seamless recovery possible.
Common causes of payment failures in SaaS and eCommerce
Both SaaS and eCommerce relate to the concept of recurring revenue. So both industries know that payment failures can be very sneaky, random, and uncontrollable. Failed payments cost businesses around 10% of their revenue—which can be a lot.
But for a successful payment recovery, it’s crucial to understand why payments fail. Every decline has a reason and here are the common ones:
Bank-level declines
Sometimes it’s not your fault nor your payment processing systems. Sometimes, it’s not even the customer’s doing. It’s the bank.
Approximately one in four failed payments occurs because banks or card issuers block the charge using fraud-detection systems. If the payment looks even slightly off (a new location, a different device, an unusual amount), the bank will say no in a move to protect their customer.
Expired or replaced cards
Credit cards come with an expiration date which is typically every two to five years. That means every single card you have on file will eventually stop working. There are also customers who lose their cards, have them stolen, or get replacements after suspected fraud.
Insufficient funds
This is one of the most common reasons for a payment failure. Whatever the reason, this is when a customer’s balance dips too low, and your charge bounces. Sometimes this is a simple matter of bad timing. Perhaps the customer forgot to transfer funds or a paycheck hasn’t landed yet. Sometimes, it can also be an indicator of a customer’s financial situation.
Technical glitches
Your payment systems go down. A token doesn’t refresh. A configuration setting changes in your billing system. These aren’t customer problems—they’re your problems. Still, your customer feels the pain anyway. This doesn’t just affect customer satisfaction, it also affects your payment collection.
Unrecognized charges
When your billing name doesn’t match what customers know—or when a free trial flips to paid without warning—they see your charge and think fraud. Their next step? A chargeback dispute, cancellation, or block of the card.
Strategies for effective payment recovery
For your business’s benefit, think of it like this: When you recover failed payments, it’s part revenue strategy and part customer experience strategy. Yes, it protects your bottom line. But it also shapes how customers see you.
Early intervention
The earlier you reach out after a failed payment, the higher your chances of recovering it. Why? Because it’s fresh. The customer still expects the charge, their card info is top-of-mind, and your brand is showing up as proactive—not reactive. A quick, friendly nudge (usually via automated emails or in-app messages) right after the failed payments is where most recoveries happen. If all goes well, your customer retention won’t take a hit.
Empathy in communication
This isn’t about firing off “your card was declined” emails. Failed payment recovery is more about humans connecting with humans. This strategy works because it converts a transactional problem into a relationship-building opportunity. Failed payment recovery specialists can step in to reach customers personally and guide the customer to a solution, whether it’s updating a card, switching a payment method, or pausing a subscription.
Multichannel outreach
Some customers ignore emails. Some don’t check SMS. Some prefer a friendly call. (See our article about Payment Recovery Psychology to understand why.) So, use a smart mix—SMS, push notifications, email, and phone—to make sure every customer hears from a real human, in the way that works best for them. Quick note though: this doesn’t mean you have to sign up for all channels. Just make sure that you’re where your customers or subscribers are.
Leverage technology
Automated payment recovery is about timing and precision:
- AI-powered retries can predict when a charge is most likely to succeed.
- Dunning software automates the “nudge” emails and reminders.
- Automation handles the heavy lifting in the background so your team can step in only when a human touch is really needed.
Recovery works best when humans and tech collaborate. LTVplus combines intelligent automation with human oversight to maximize results. Thus, more payments are recovered, and a process that scales without losing the personal touch.
Balance revenue protection with customer experience
Recovering a payment is both saving revenue and saving the customer relationship. So balancing revenue protection with customer experience means designing recovery strategies that are urgent and don’t shame the client for missing a payment. Instead, it’s more about reinforcing the value of staying.
Tools and automation for streamlined recovery
In payment recovery, leveraging technology will bring you far. By leveraging tools and automation, you can increase subscription revenue retention rates while reducing manual effort.
Card account updater services
One of the biggest silent killers of subscription revenue is expired or replaced cards. Instead of waiting for a charge to fail, these tools step in before the problem even happens.
When a customer’s card gets reissued or hits its expiration date, the card account updater automatically refreshes their payment details behind the scenes. No awkward decline. No “your payment didn’t go through” email. Just business as usual—for them and steady subscription revenue retention for you.
Dunning software
Dunning is the process of communicating with customers after a failed payment. So, the dunning software is an automated, optimized system for tracking failed payments, sending reminders, and retrying payments.
AI-powered smart retries
Smart retries powered by AI flip the script on failed charges. Instead of mindlessly retrying at fixed times (like old-school billing systems do), they actually learn from patterns—when customers usually have funds available, when banks are more likely to approve, what time zones they’re in. Then they pick the moment with the highest chance of success.
Integrated customer support tools
When your billing platform connects seamlessly with your helpdesk, agents don’t have to dig around in five different systems to figure out what happened. They see the whole picture: why the automated payment recovery failed, what attempts have been made, and where the customer is in the recovery journey. This context means they can step in with the right message at the right time.
Analytics & reporting tools
It’s not enough to know how many payments failed—you need to know why they failed, which recovery attempts worked, and where customers dropped off. Good reporting tools track the full journey, from the first decline to the final resolution (or cancellation). With that insight, you can spot patterns—like if a certain bank keeps flagging charges, or if retrying on weekends recovers fewer payments than weekdays.
LTVplus case studies: Recovering lost revenue
Okay. It’s one thing to talk about failed payment recovery. But does it really move the needle in real businesses? Here’s proof.
Pretty litter stopped revenue from slipping away
Pretty Litter is an eCommerce brand offering a subscription-based delivery service in pet care. But behind the growth, they were quietly losing money every month. Subscriptions would deactivate. Payments would fail. And every churned customer was one less pet parent relying on their brand.
The problem wasn’t a lack of automated retries. Customers got automated emails. Yet, failed payments slipped because nobody was stepping in with a real human touch.
The solution: That’s when LTVplus stepped in. Instead of relying on automation alone, LTVplus gave Pretty Litter a dedicated team of human recovery specialists. And it all ended with Pretty Litter stopping the loss of revenue to “silent churn.” That’s more than 8,000 payments amounting to more than $500,000.
Caseproof turns lost payments into found revenue
Caseproof specializes in producing WordPress plugins and services for online businesses. But like every subscription business, they were bleeding subscription revenue retention due to failed payments. The challenge is that there’s no failed payment recovery agent who will handle the payment recovery and ensure customers pay on time.
The solution: Enter LTVplus. With an out-staffed, trained, and reliable human recovery specialists, LTVplus recovered more than 640 payments—more than $117,000 recovered revenue in just 9 months.
Awesome motive protects revenue (And reputation)
Awesome Motive is a company behind WPBeginner, OptinMonster, MonsterInsights, WPForms, SeedProd, and more. But scaling comes with a problem: failed payments and risk of missing on-time payments.
The solution: LTVplus delivered exactly that. A dedicated recovery agent joined their team (another out-staffed specialist), bringing proactive outreach and full alignment with Awesome Motive’s brand tone and service standards. That’s how LTVplus helped them recover more than $17k in revenue in 5 months.
Don’t let payment failures become revenue losses
We talked about how even small failed payments add up. But you don’t have to accept that leakage as a cost of doing business—failed payment recovery is the way! And when you treat recovery as part of your customer service strategy, you protect your revenue while your customers receive positive brand experiences.
If you need help recovering your lost revenue, let our Recover Payments specialists strategize and execute failed payment recovery processes for you. With human experts and technology, you maximize monthly revenue and improve customer retention. Consult LTVplus for FREE and start recovering payment failures.
