What Is Subscription Recovery? How To Recover Fees

For subscription businesses, recurring payments create predictable revenue, but only when those payments go through. When a renewal charge fails due to an expired card or outdated billing information, subscription recovery is the process that helps you collect it before the customer cancels.

Failed payments are a routine part of subscription-based ecommerce businesses, but a declined charge doesn’t necessarily mean a customer wants to leave. In an analysis of 76 million subscriptions, Recurly found that while 9% of renewal charges are declined, 53% of failed payments are recovered on monthly plans. 

Discover what subscription recovery is, why failed payments happen, how failed payment recovery works, and which Shopify tools can help automate the recovery process.

What is subscription recovery?

Subscription recovery is the process of recovering failed recurring payments before a customer churns.

In a subscription-based ecommerce business, customers authorize recurring charges on a set schedule. Brands such as Dieux Skin and Graza allow customers to subscribe to regular product deliveries, with payments processed automatically on each renewal date. When a scheduled payment fails, you have an opportunity to recover the transaction before the customer’s subscription lapses, or they cancel their account.

Unlike debt collection or financial recovery in other industries, recoverable revenue in subscription-based businesses focuses on helping existing customers complete future renewals following a billing issue. The goals of subscription payment recovery are to reduce involuntary churn, recover lost revenue, improve customer satisfaction, improve customer retention, and protect monthly recurring revenue.

Technology plays an important role in failed payment recovery, but giving new customers a great experience also helps prevent subscription disruptions. 

“I’ve always been a firm believer that if your product is good enough and your service is good enough, you won’t need pesky contracts to get people coming back,” Divy Ojha, founder of Odd Bunch, says on an episode of Shopify Masters. “Why shouldn’t you think about and engineer your product in a way that they cannot live without it every week?”

Common causes of failed subscription payments

A failed payment does not necessarily mean a customer wants to cancel. The customer still may want the product or service but be unaware that the renewal charge was unsuccessful. Without a recovery process in place, you may lose otherwise valuable customers. 

Several factors can cause a recurring payment to fail, including:

• Expired or replaced payment cards. Customers receive new credit or debit cards and forget to update their payment details. Make it easy for customers to update payment information by sending automated reminders when their cards are about to expire, or it’s been a while since they last updated their information. 

• Insufficient funds. The customer’s account lacks enough available funds when the renewal charge occurs. Send clear renewal reminders in advance of the renewal date so customers can plan to budget for the charge or pause their subscription.

• Card declines. Banks may reject a transaction because of fraud screening, authorization issues, or spending limits. Platforms like Shopify automatically block card testing attacks and other scams that signal risk and negatively impact your store’s reputation with banks. 

• Payment processor interruptions. Temporary issues between banks, payment providers, and the payment processor can prevent transactions from being approved.

These issues are often temporary, making them strong candidates for failed payment recovery.

How subscription recovery works 

• Automatic retry attempts after failed charges
• Customer notifications requesting updated payment information
• Automated workflows for subscription management
• Ongoing monitoring and optimization

Most recovery systems follow a similar process after a renewal charge fails. Here’s how it works:

Automatic retry attempts after failed charges

The first step is to retry the transaction through your payment processor. You can use automated retry schedules that attempt to process the payment again after a short delay. You can configure how many times a payment is retried, how long to wait between attempts, and what happens after the final attempt fails.

For example, with Shopify Subscriptions, you can set the number of retry attempts after a failed payment. If a renewal charge fails because of a temporary issue, it can attempt the transaction again before the subscription is canceled, helping you recover revenue that might otherwise be lost.

Customer notifications requesting updated payment information

If retries are unsuccessful, notify customers that a renewal payment failed. These notifications may include:

• The failed renewal date

• Instructions for updating payment information

• Links to customer account settings and where to pay

• Information about the customer’s subscription status

Prompt communication helps ensure customers are aware of the issue before their subscription is paused or canceled. Ask customers when they initially sign up what their preferred communication channel is, since some customers prefer one channel over another. 

Automated workflows for subscription management

Depending on the rules established in your platform or software, a subscription may:

• Skip a billing cycle

• Pause temporarily

• Remain active during recovery attempts

• Cancel after repeated failures

These automated workflows help you manage failed payments consistently while allowing customers to update their payment information before losing access to their subscription.

Ongoing monitoring and optimization

Successful subscription recovery programs monitor performance over time, including:

• Recovery rate

• Failed renewal rate

• Churn rate

• Subscriber retention

• Revenue recovery from failed payments

This data helps you identify trends and evaluate whether recovery workflows are performing as expected.

Shopify tools that support subscription recovery

• Shopify Subscriptions
• Shopify Payments
• Shopify Flow

Several Shopify tools can help you automate portions of the subscription recovery process:

Shopify Subscriptions

Shopify Subscriptions allows you to offer recurring purchases directly through Shopify and lets you decide what happens after repeated failed billing attempts. 

Depending on your settings, a subscription can remain active while additional payment retries occur, skip a billing cycle, pause temporarily, or be canceled after all retry attempts fail. You can configure the number of retry attempts, define the time between retries, and determine what happens when all attempts fail.

Pricing: Shopify Subscriptions is available at no additional cost for eligible Shopify account holders.

Shopify Payments

Shopify Payments includes built-in payment processing features that help manage recurring transactions.

When eligible subscription payments fail because of temporary issues, Shopify Payments can automatically retry certain transactions. Shopify also provides tools for managing account balances and payment activity within the Shopify admin.

Pricing: Shopify Payments is included with Shopify plans, although standard payment processing fees apply.

Shopify Flow

Shopify Flow enables you to create automated workflows using triggers and actions.

You can use subscription billing failure triggers to create automated responses, such as:

• Sending notifications

• Creating internal tasks

• Tagging affected customers

• Triggering additional recovery workflows

Pricing: Shopify Flow is available on all Shopify plans.