Failed Payment Recovery and Dunning

Dunning is the process of communicating with customers about overdue payments — in subscription businesses, this usually means automated emails and payment retries triggered by a failed card charge.

Failed payments are one of the largest recoverable revenue leaks in subscription businesses. Typical causes:

• Card expired
• Insufficient funds (temporary)
• Bank fraud block (triggered by new or unusual charge)
• Card replaced after loss or theft
• Customer changed card without updating payment details

With a well-designed dunning process, 40–60% of failed payments can be recovered without any manual intervention.

Not all failed payments are equal. A bank block is best retried immediately or within a few hours. An expired card requires the customer to update their details before any retry will work.

Best-practice retry schedule:

• Day 0 (failure): immediate retry after a few hours (bank blocks often clear quickly)
• Day 3: second retry
• Day 5: third retry
• Day 7: final retry before sending dunning email

Stripe's built-in Smart Retries uses machine learning to select optimal retry times based on card issuer data — enable this in your Stripe settings if you haven't already.

Pair retries with customer-facing emails:

Email 1 (Day 1 after failure): friendly notification that payment failed. Include a direct link to update card details. No accusatory tone — most customers are unaware.

Email 2 (Day 4): gentle follow-up. Remind them of the value they get from the subscription. Emphasise that access will be maintained while they update details.

Email 3 (Day 7): urgent — access will be suspended in X days. Clear CTA to update card. Consider a phone call or SMS for high-value subscribers.

Email 4 (Day 10–14): access suspended. 'Your subscription is paused — here's how to reactivate.' Door left open for return.

AskBiz surfaces failed payment alerts in your Daily Brief and Intelligence dashboard — you can identify high-value subscribers with failed payments for manual outreach.

The best dunning is dunning that never needs to happen:

Pre-expiry reminders: send an email 30 days before a subscriber's card expires (Stripe provides expiry date data). 'Your card on file expires next month — update it to keep your subscription running smoothly.'

Annual plan invoices: send an invoice preview 7 days before annual renewal charges, so customers are not surprised by the charge and don't initiate a chargeback.

Account updater services: Stripe, Visa, and Mastercard all offer automatic card update services — when a subscriber gets a new card number, their payment details are updated automatically in the background without any customer action required. Enable this in Stripe under Settings → Billing.