Failed Payment Recovery
Failed payment recovery encompasses all methods used to collect revenue after a payment attempt fails. This includes smart retry logic (re-attempting charges at optimal times), account updater services (automatically updating expired card details), customer communication (emails/SMS requesting payment update), and fallback payment methods.
Why Failed Payment Recovery Matters for SaaS Companies
Every failed payment is revenue walking out the door from a customer who wants to keep paying. The difference between a 30% and 70% recovery rate on $500K in annual failed payments is $200K in saved revenue. For Seed to Series B companies, this is found money — no acquisition cost, no product changes, no pricing adjustments needed.
An Operator's Take
The biggest unlock I have found in payment recovery is understanding failure reason codes. Not all failures are equal. 'Insufficient funds' means the customer has the intent but not the balance — retry on paydays. 'Card expired' means the card details are stale — send an update link before retrying. 'Do not honor' from the bank is harder and often requires customer contact. When you stop treating all failures the same and customize your response by failure type, recovery rates jump 20-30 percentage points.
Common Mistakes
What I see go wrong at Seed to Series B companies.
Treating all payment failures identically. Different failure codes require different recovery strategies.
Not using account updater services. Visa Account Updater and Mastercard ABU automatically update expired card details for many customers — free revenue recovery.
Giving up after 2-3 retries. Persistent, well-timed retries over a 14-21 day period recover significantly more than quick attempts.
What to Do This Week
Concrete steps you can take right now.
Pull your last 90 days of payment failures. Categorize by failure reason code: insufficient funds, expired card, do not honor, other.
Enable account updater services (Visa/Mastercard) through your payment processor if not already active.
Build retry schedules specific to each failure type. Insufficient funds: retry on 1st and 15th. Expired: wait for account updater, then retry.
Related Resources
Try These Tools
Frequently Asked Questions
What causes payment failures in SaaS?
The top causes are: expired credit cards (30-40% of failures), insufficient funds (20-30%), bank declines/'do not honor' (15-20%), fraud prevention holds (5-10%), and incorrect card details (5%). Each requires a different recovery approach.
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