How To Fix Failed Payments if You're Using Stripe

As a SaaS founder, you understand the importance of seamless transactions for the success of your business. However, the frustration of dealing with failed card payments can be a major roadblock in your journey to reducing churn and increasing revenue. That’s why we’re here to break down the nitty-gritty details of fixing card failures on Stripe, one of the most popular payment gateways for SaaS businesses. 

What are failed payments?

Payment failures, or failed payments, happen when a customer’s card transaction fails to complete because of an issue in the payment process. This failed payment then leads to the cancellation of the customer account, resulting in involuntary churn. Many payment gateways offer features specifically geared towards reducing failed payments. Stripe, for example, offers Smart Retries, automated failed payment emails, and automatic card account updates, resulting in an average recovery rate of approximately 38%. 

What are the most common reasons for cards failing?

There are many different reasons that payments fail and various failure codes that you might receive through your payment gateway. Let’s talk about a few of the most common reasons for cards failing on Stripe.

Insufficient funds decline code

If you receive a code 51, that means there are insufficient funds in the user's account to cover the transaction. Payment failures due to insufficient funds can be a huge problem for SaaS companies, especially if your customer base regularly uses prepaid debit cards as a method of payment.

Once the money on that prepaid card runs out, you’re going to start getting a code 51 when you try to charge it. If a significant amount of your customers are paying with prepaid card, try retrying  payments after typical paycheck deposit periods, such as the beginning or middle of the month.

Expired cards decline code

If you receive a code 54, that means the customer has left an expired card on their account, whether by accident or to purposefully allow their subscription to lapse. The majority of the time, it’s most likely that the customer simply forgot to update a card that was expiring.

It’s important to note that it’s no longer considered best practice warn customers about upcoming card expirations. Instead, it’s recommended that you proactively encourage customers to add backup payment methods.

Do not honor decline code

If you recieve a code 05, that means that the issuing bank has blocked the transaction, telling you to not honor the card as a form of payment. Sometimes this issue is as simple as having an inaccurate billing address. 

Stolen card decline code

If you receive a code 43, that means that the card being run has been reported as stolen and could be a case of attempted fraud. 

Incorrect card number decline code

If you receive a code 14, that means an incorrect card number has been entered. If a customer inputs even one number incorrectly when they’re adding their payment information (whether it’s the card number itself, the expiration date, or the CVV), then the payment will end up being declined. That’s why it’s so important to have a card verification system in place.

How can you fix cards failing for Stripe?

Now that we've identified the most common culprits, let’s talk about how you can use dunning management to minimize card failures on your Stripe account.

Native Stripe Features

Since you’re already using Stripe as your payment gateway, it’s not a bad idea to leverage the functionalities that are native to the Stripe platform in order to fix card failure issues. For instance, Stripe offers the ability to send Stripe-branded automated emails when a payment fails – you can include a link in the email for customers to update their payment information.

You can also use Stripe’s intelligent algorithm to retry failed payments at times when the payment is more likely to succeed. The pricing for this feature is typically between .5% and .8% per transaction. And Stripe allows customers to pay through a secure, Stripe-hosted invoice page when a payment fails due to expired cards or other issues. 

Precision Retries

One of the simplest methods for recovering customer accounts and reducing payments failures is to retry the failed payment method. But you have to use this method strategically, since there is a set number of retries you can run and excessive retries can cause the bank to reject your attempts and even trigger fraud detection.

That’s why we created the most elite payment retries in the industry. Using bespoke retry models tailored to your business, Churnkey resolves your customer's payment failure automatically and ensures future payments will clear. With Churnkey’s help, you could start recovering up to 89% of failed payments for your SaaS business.

Failed Payment Wall

Another simple method for handling payment failures is to set up a failed payment wall. This is where you block feature access while asking your customers to update their payment details directly inline. Using failed payment walls can prevent unpaid usage and increase failed payment recovery by 4% to 12%.

Send strategic messages

If precise retries and failed payment walls don’t work, then you’re going to have to reach out to the customer directly to resolve the payment failure. The most important element of this step is to message your customer strategically. Always try to message customers at opportune times in their own time zone. Don’t just reach out via email — try to connect with your customer through SMS messaging and even in-app notifications. 

And when you do send email campaigns, we recommend keeping them simple, rotating your messaging through different senders and addresses within your company, and using different subject lines to catch people's attention. You should also send these campaigns from your verified domain, using a card update flow that’s hosted on your domain using your branding. 

Make card updates simple

The simpler you make it for your customers to update their card info, the more likely they are to actually do it. For instance, it’s best if you can provide your customer with a way to make those updates without having to log in, call customer service, etc. 

Provide dunning offers

Sometimes all it takes to incentivize a customer to update their card is a little discount. That’s where dunning offers come in. The right offer can help you improve your failed payment recovery rates and re-engage at-risk customers.

Conclusion

In the world of SaaS, fixing card failures on Stripe is a crucial aspect of maintaining a healthy business. By understanding the common reasons behind these failures (like insufficient funds, expired cards, or fraud), along with the specific codes that accompany those card failures, you can more effectively implement strategies and tools (like precision retries, failed payment walls, and dunning offers) that will help you reduce failed payments.

And if you want to stop worrying about payment failures and recovering customer accounts permanently, then you need a payment recovery platform like Churnkey. We’ve helped customers, like VEED, recover 14,000 failed payments. By simply turning on Churnkey Failed Payment Recovery, you’ll see ROI immediately. You’ll start recovering payments as soon as you go live and you’ll watch your recovery rates go up without blinking an eye.

Schedule a demo or sign up for a free trial to start fixing failed payments today.