How dunning works
When an automatic charge fails, a recovery run opens against the unpaid invoice. What happens next depends on why the charge failed.
A soft decline, such as insufficient funds or a processing error, is temporary and often clears by itself, so the charge is retried on a schedule. A hard decline, such as an expired, lost or stolen card, will fail every time, so the right move is to ask the customer for a new card instead of retrying. Some payments fail because the bank wants the customer to confirm them (3D Secure, also called SCA); those need the customer to click a link, not a retry.
Alongside the retries, the customer receives emails that say what failed and link to a page where they can update their card. The run ends when the invoice is paid or the schedule runs out. At that point you decide what happens: keep the invoice open, pause the subscription, write the invoice off or cancel.
Worked example
A $99 renewal fails on March 1 with insufficient funds. The retry schedule waits 2 days, then 3 more, then 4 more.
- March 1: charge fails, email with an update card link
- $99 owed
- March 3: retry 1 fails
- $99 owed
- March 6: retry 2 fails
- $99 owed
- March 10: retry 3 succeeds
- Paid
Each wait is counted from the previous failure, so three retries cover nine days.
Why dunning matters
Customers whose payments fail usually did not decide to leave. Their card expired, or the balance was low on the wrong day. Without dunning, each of those becomes a cancellation nobody chose: involuntary churn.
Good dunning recovers that revenue without annoying the customer: retries timed for when they are likely to work, a clear message, and a quick way to fix the card.
Common mistakes
- Retrying hard declines A stolen or closed card will not start working. Retrying wastes attempts; ask for a new card instead.
- Retrying too fast Four retries in one day usually hit the same empty account four times. Spread retries over days.
- Canceling on the first failure Most failures are temporary. Give the schedule time before you cut access.
- Emails that scold A plain note with the amount, the reason and a link is easier to act on than a warning.