Subscriptions
Dunning
The process of retrying failed subscription payments and notifying customers to update their card before churning them.
Dunning is the structured process of managing failed recurring payment attempts within a subscription model to mitigate involuntary churn. When an issuer declines a transaction due to insufficient funds, card expiry, or soft declines, the merchant or subscription billing platform initiates a series of automated retries and customer notifications. Sophisticated dunning strategies often leverage Mastercard and Visa Account Updater services to refresh expired credentials before the next billing cycle. Furthermore, merchants may use smart retry logic that considers payment schemes, currency, and time zones to optimise settlement success based on previous acquirer response codes. Failure to successfully execute dunning typically results in the cancellation of the subscriber's service once specific scheme thresholds or internal grace periods are reached. Effective dunning is essential for maintaining a stable merchant identification number (MID) standing by reducing the ratio of repeated technical failures.
Frequently asked
How many times should a merchant retry a failed subscription payment?
Most industry standards suggest between three and five retry attempts over a 14 to 21-day window. It is critical to follow card scheme rules, such as those from Visa or Mastercard, which may limit the number of retries per 24-hour period for certain decline codes to avoid excessive processing fees or penalties.
What is the difference between hard and soft declines in a dunning cycle?
Soft declines, such as insufficient funds or temporary technical errors, are suitable for automated retries as the issue may resolve shortly. Hard declines, including stolen cards or invalid accounts, should generally not be retried because they indicate the payment credential is permanently unusable and require immediate customer intervention.
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