Subscription businesses are growing fast, with the global market expected to reach $1.5 trillion by 2025. But growth doesn’t guarantee retention. One major threat is failed payments. According to PYMNTS, 50% of subscription cancellations are caused by failed card transactions. Recurly estimates that involuntary churn could cost subscription companies over $129 billion in 2025.
These are not users who want to cancel. They are customers lost to avoidable errors in billing and payment processing.
What’s Driving Failed Payments?
Payment failures can happen anytime, not just at renewal. The main causes:
- Expired or lost cards
- Gateway failures
- Fraud-related false declines
- Insufficient funds (NSF)
Each failure creates friction. A single decline forces the customer to rethink their subscription, even if they didn’t want to cancel. It’s painful to lose customers who still want to pay. That’s why payment optimization is now a key retention lever.
The Business Cost of Involuntary Churn
Involuntary churn isn’t just a technical issue, it’s a revenue issue. According to Recurly’s analysis, the subscription industry could lose over $129 billion in 2025 from failed payments alone. It weakens LTV, reduces recurring revenue, and damages brand trust.
NSF Declines: One of the Most Preventable Causes
NSF (insufficient funds) related declines often reflect temporary issues. The customer wants the product, but doesn’t have available funds at the moment of billing.
With Kipp, merchants are addressing this by proactively approving low-risk NSF transactions. By paying a small premium to card issuers, they keep the charge flowing, avoiding friction and retaining the subscriber. Kipp’s approach avoids disruption, increases approval rates, reduces churn, and protects subscription revenue.
Learn how Kipp can help reduce NSF declines and keep your subscribers active.
