Need advice on re-billing failed transactions (and input on why so many fail after validation)

[joelh]

Hello Authorize Dev Community, I need your input and advice on a topic that causes me much deliberation: failed transactions for a subscription based service, and the best approach to take for retrying failed transactions before giving up.

In short, the problem I’m encountering is that transactions might be declined one day (not due to a.net settings, but rather the ominous "card declined by card issuer bank"), but then go through just fine the next time when I retry. So now I’m trying to decide how many times I should re-attempt to charge failed subscribers before closing their accounts.

The background: I run a subscription-based website that offers a 7 day trial to begin with. At the time of trial signup, users provide their credit card which is validated (using the oldLivemode $0.01 auth and void approach). On the 8th day, if the trial members choose not to cancel their accounts, they are billed $49 for a full month of access to the website, and then $49 per month after that. We are not using ARB to do this, but rather populating the CIM, and then running a script to automate the monthly billing.

The first thing that is perplexing is that on day 8 when we attempt to charge the full $49 membership fee, about 15-20% of the transactions are declined (with the reason of “card declined by card issuer bank” which is not helpful at all). I don’t understand how such large percentage can fail when we have previously verified their card details to be correct. I’m guessing part of this is due to low account balance, gift card usage, or virtual/temporary CC numbers provided by groups like Citi. But does this explain the full 15-20% of failures? (also, does anyone know of a way to block the usage of gift cards?)

The more pressing issue is: what to do with the failed transactions, and how many times we should reattempt them before giving up and cancelling the accounts?

When we were using Chargify to handle our recurring billing, they would re-attempt to charge failed transactions every day for like two weeks before giving up. But that seemed like overkill, and ultimately cost us money in fees.

However, I have found that retrying failed transactions can ultimately re-coup about 10% of them. So I don’t want to leave that money on the table by giving up after the first try.

So I’m wondering if there are any best practices for implementing a dunning/reattempt process for failed subscription billing? Right now I’m leaning towards this formula: for those that fail on day 0, we retry on day 1, then retry one last time on day 5.

Any and all input is welcomed!

[Trevor]

I’m afraid that I can’t provide any specific details on your decline rate.  When the response received is “Declined by card issuer bank”, we simply don’t have any other information to provide.  As for your question on the number of re-attempts, the general advice is not to do any automated re-attempts.  There is no reason to think that a second attempt to process a transaction will be successful unless you are updating the cardholder information or being advised by the customer to try again.

I’m afraid that I can’t provide any specific details on your decline rate.  When the response received is “Declined by card issuer bank”, we simply don’t have any other information to provide.  As for your question on the number of re-attempts, the general advice is to do any automated re-attempts.  There is no reason to think that a second attempt to process a transaction will be successful unless you are updating the cardholder information or being advised by the customer to try again.

[joelh]

Thank you for getting back to me, Trevor. I am baffled as to why so many cards could fail, and even more baffled that we are able to successfully bill about 10% of fails when we try again automatically 5 days later.

You don't think time of day for billing matters does it? For example, could the fact that we process charges at midnight eastern time look fraudulent to some banks?

[Trevor]

I don't believe that time of day alone would be a significant factor in your declines.  It is concievable that a bank may block transaction based upon this and other factors such as transaction amount and card activity level, but I think that you would probably hear from your customers if this were happening.  The customers' banks would almost certainly advsise them if they were actively blocking suspicious transactions on a card.

[marshallc]

I apologize for reviving an old post, but did the OP ever find a solution?