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If a customer is willing to keep paying, stay out of the way!
Contracts end, customers outgrow a product; this happens. There is, however, a difference between those who choose to end their relationship (voluntary churn) from those who stumble into it (involuntary churn).
Voluntary churn is the purposeful cancellation of a subscription or contract. This is an explicit choice, and can happen when a customer feels like they aren’t getting the value they expected or once did.
Involuntary churn occurs when a failed payment leads to the cancellation of a customer’s subscription or membership
To optimize approval rates and reduce involuntary churn, merchants need three things: the ability to retry failed payments across multiple processors, automated card update tooling, and real-time BIN intelligence that can catch problematic card types before they fail. Each of these requires owning payment data, and not being locked to a single payment service provider (PSP).
What causes involuntary churn for a subscription merchant?
Involuntary churn causes havoc on the fundamental models that make subscription products work. Given that credit cards generally have a three-year lifespan between renewals, one-third of all subscribers may need to update their details each year. Failing to do so would result in failed transactions, and, if the correct processes aren’t in place on the merchant’s side, chargebacks and canceled subscriptions.
Besides expired credit cards being used, involuntary churn occurs with hard or soft declines, and cards reaching or exceeding their limit. Banks can also decline a card.
Why do payments fail, and how can I retry them?
When merchants are locked into a single full-service payment service provider (PSP), they are generally stuck with a single attempt to charge a customer. But in the case of, say, a soft decline because the customer is temporarily light on funds, taking another run at the charge a couple of days later may eliminate an involuntary churn event.
Retrying payments is Basis Theory’s bread and butter. Merchants using a programmable payments vault, connected with more than one PSP, are no longer locked into the constraints of a full-service PSP, so if a failed subscription payment is flagged, they can retry the transaction with another PSP or on another day.
Internal performance metrics show a 10%-25% increase in authorization rates after the failed transaction is immediately routed to another PSP.
How does Account Updater reduce involuntary churn?
Going back and asking a customer to re-enter their credit card information leads to higher churn and insult rates.
Basis Theory Account Updater can request updates to the tokenized credit cards being stored within the vault. Merchants can update cards under their own rules and send a list of tokens to be processed on demand. Pairing account updater with network tokens is a great strategy for reducing involuntary churn and improving authorization rates.
Can BIN data prevent a failed payment?
When a credit card is securely stored by Basis Theory, we can tell a merchant what type of card it is—credit, debit, prepaid, etc. If a merchant doesn’t want a prepaid card—because eventually it’s going to run out—those would be flagged during the checkout process.
Detect the card information using Token Intents, short-lived tokens that can help the merchant determine what card is being used before committing to long-term retention. Token Intents are particularly useful for applications where data authorization or validation is necessary before creating or updating a token.
Frequently Asked Questions
What is the difference between a hard decline and a soft decline?
A hard decline means the transaction was permanently rejected. Hard declines typically happen because the card is canceled, reported stolen, or the account is closed. There is no value in retrying a hard decline. A soft decline is temporary, meaning the card is valid but the transaction failed due to insufficient funds, a bank-side hold, or a fraud flag. Soft declines are strong candidates for payment retries, either immediately through a second payment service provider (PSP) or after a short delay.
What is an account updater in payments?
An account updater is a service that automatically requests updated card credentials from card networks when a stored card has expired or been reissued. Rather than asking a customer to re-enter their payment details—which increases churn—an account updater refreshes the token silently in the background. The Basis Theory Account Updater lets merchants run this process in real time or in batches against any list of stored tokens.
What is BIN data, and why does it matter to subscription payments?
BIN stands for Bank Identification Number, the first six to eight digits of a card that identify the issuing bank and card type (credit, debit, prepaid, etc.). For subscription merchants, BIN data matters because prepaid cards have a fixed balance and will eventually decline. Flagging and blocking prepaid cards at checkout before storing them prevents a class of payment failures that are otherwise difficult to predict.
What is a network token?
A network token is a payment credential issued directly by Visa or Mastercard that replaces a stored card number. Unlike a vault token, a network token is a network-recognized credential with its own lifecycle. If the underlying card is reissued or updated, a network token updates automatically. This makes network tokens particularly valuable for subscription businesses: stored card references stay current without requiring an account updater request. Pairing network tokens with account updater is one of the most effective strategies for keeping authorization rates high over time.
How to Start Reducing Involuntary Churn
Authorization rates are the North star metric for subscription payments. Being able to auto-ship products and capture the card payment each month is a massive trend for companies.
Subscription merchants can’t afford to lose customers who intended to keep paying. Payment retries, and card enrichments like Account Updater or BIN intelligence work best together.
All three require owning your payment data, rather than leasing access through a single processor.
The suggestions—and subsequent features—represent ways a payment vault can help reduce involuntary churn. Plug into Basis Theory and put these strategies into action.
Explore the subscription use case and start to better protect your recurring revenue.
