If you are in a subscription or membership business, you probably need no introduction to customer churn. It is already on your radar because of the effect it has on your bottom line. An average churn rate of 1 – 4% is considered par for the course for SaaS companies, but reducing it to the lower end of that range can have a massive impact on both growth and profitability.

Concerned firms tend to focus heavily on voluntary churn, where a subscriber leaves due to poor customer service. But another type of churn often gets overlooked — involuntary churn, where the customer loses access to a subscription without taking any deliberate steps to quit.

Also called “soft” or “unintentional” churn, involuntary churn can make up 20-40% of your overall churn rate. It is to your business what wood rot is to a home — a hidden menace that can cost you an arm and a leg in the long run if left untreated.

Payment failures are the main cause of unintentional churn. In this post, you will learn to identify 5 common payment issues, and how you can reduce involuntary churn by solving and preventing them.

Reason 1 – Credit Card Fraud

There has been a significant rise in the incidence of credit card fraud in the US in recent years. In 2019, over 271,000 cases were reported – a rise of 72% from 2018. Whenever a card is reported as stolen or lost, the customer’s bank will turn off that card.

Any subsequent payment request on that card is refused by the bank, even if it is a recurring transaction duly authorized by the card owner in the past. Card declines of this nature are called hard declines. Those are permanent – there is no point in retrying the payment request when a card has a hard decline.


You can counter hard declines due to fraud/stolen cards in two ways:

Preventive – many payment gateways offer online merchants an option to automatically update the card details of customers. A back-end service will periodically update your customer account if it detects a change in the status on the card issuer side. Chargent offers built-in integration for many major Salesforce payment gateways like Worldpay / Vantiv that supports this update feature.

Reactive – you can also set up automatic email requests to your customer in the event of a card decline. Politely inform the customer about the decline and ask them to update their account with alternate cards/payment methods. Chargent allows you to create custom Workflow Rules to send such alerts to customers.

Reason 2 – Maxed out Credit Limit

Even with the recent explosion in card thefts, they only account for a small fraction of failed payments in online transactions. The vast majority of failed transactions occur due to more innocuous reasons like a maxed-out credit card.

According to a 2019 Motley Fool report, an increasing number of customers are overspending on their credit cards – nearly 52% of Americans across multiple generations have reported this experience.

A maxed-out credit limit is bad news for everyone concerned. While the customer ends up with the embarrassment of declined transactions and the risk of poor credit scores, the merchant does not get paid on time.


The best you can do here is to retry the payment at a later date. Unlike in a hard decline, this option is available when a card is declined due to lack of credit, and there are different strategies for timing of retries, depending on your customer base. If the retry also fails, sending an automated email asking for another card is your best bet.

Reason 3 – Incorrect Billing Information

The most likely culprit here is an outdated customer address and zip code. Each year, over 36 million Americans relocate to new homes and neighborhoods – that’s nearly 10% of the total US population! Census Bureau stats indicate that the average American moves at least once every 5 years.

After moving, customers have a long list of entities who must be informed of the change in address – Social Security Administration, IRS, their employers, utilities, loan providers, banks, card companies, etc.

In the midst of all this, they will likely forget to update their billing address for your subscription service. This leads to a mismatch during the next payment – your gateway may not approve the transaction, if you have the wrong zip code in your system.


You can do two things to prevent/fix this. First, ensure that your customer billing portal is user-friendly and intuitive – make it easy for your customer base to update their billing details. This is also essential for improved customer retention. Second, set customized collection emails that remind them to update billing details with transactions that fail in this manner.

Reason 4 – Charges not flagged as Recurring Payments

Given the high risk of fraud and identity theft, all card-issuing banks take a very conservative and cautious approach when it comes to processing payments. When a recurring payment is not flagged as “recurring”, or is not using a previously approved token, they may err on the side of caution and opt to decline.

This is a “wait and watch” approach – the onus is on the merchant or customer to take steps to rectify the situation. Usually, an error of omission on the merchant side is the culprit here – if you forget to set the “recurring” flag on a transaction, there is no one else to blame!


The first thing you need to do is inform the customer – send an automated collections email through your dunning system alerting them about the failed payment. And before you make a repeat attempt, check your billing system configuration.

Secondly, ensure that you are sending the recurring flag on the transaction. For Salesforce payments, Chargent provides a simplified system – using Chargent Anywhere, you can easily configure a new customer billing as either “one-time” or “recurring.” It reduces the risk of an incorrect flag on transactions.

Reason 5 – Expired Cards

All cards have an expiry date – once this happens, customers have to update cards on all their subscription services. Often, they use this opportunity to shed unwanted accounts, by opting not to update the card info.

But on other occasions, they may simply have overlooked your subscription service. Either way, you end up with a payment failure on your hands. And like in the case of fraud, expired cards get a hard decline – retries will not work here.


The best option here is to take a proactive approach – email your customers early and ask them to update cards before they expire. The Chargent Account Updater is designed specifically to solve this – it looks for expired and expiring cards in Salesforce and sends emails to your clients asking them to update payment methods online.

Parting Thoughts

At Chargent, we have designed our products to manage each of these reasons for involuntary churn. Through our Account Updater product, you can have automated card update emails going out whenever a failed payment occurs.

Simultaneously, the Chargent Automated Collections product handles automatic retries for payment failures and collections emails on your behalf. We also offer tokenization for most Salesforce payment processors – fully integrated with many processor-side account updater features.Leveraging all of these features, you will experience dramatically lower involuntary churn rates, with improved revenues and better customer retention rates. Chargent gives you the tools for reducing churn!