Why it matters
Most failed subscription payments begin with a card decline, so this rate shows how often the issuing bank is turning your charges away. It is the closest measure to the cause of the problem.
The split matters more than the total. A soft decline is temporary, for example an account short of funds or a bank that could not be reached, and a later attempt may succeed. A hard decline means the card is closed, lost or invalid, and only a new card will work. The two call for different responses, so a single combined rate hides the next step.
The formula
In words: declined attempts divided by card attempts over the same period, then multiplied by 100. Report soft and hard declines as two parts of the total.
In symbols:
card_decline_rate = declined_attempts / card_attempts x 100
soft_rate + hard_rate = card_decline_rate- Count attempts, not customers. One customer can generate several attempts in a month.
- Use the decline category your payment processor returns to separate soft from hard.
- Exclude payment types that are not cards if you want a pure card figure.
A worked example
Example numbers (made up for illustration): 8,000 card charges were attempted in a month, and the issuers declined some of them.
| Outcome | Attempts | Share of all attempts |
|---|---|---|
| Soft declines | 400 | 5.0% |
| Hard declines | 160 | 2.0% |
| All declines | 560 | 7.0% |
560 declines from 8,000 attempts is a card decline rate of 7.0%. Of that, 5.0% is soft declines that may succeed on a later try and 2.0% is hard declines that need a new card.
- Soft declines: 5.0%
- Hard declines: 2.0%
How to improve it
The two kinds of decline need different handling, so improvement starts with sorting them.
- Retry soft declines on a schedule that spreads attempts over days, and do not retry hard declines at all.
- Ask for a new card straight away after a hard decline, with a link that makes the update quick.
- Compare decline rates by card brand and by country, since a pattern there points to a specific fix.
- Keep the name on the statement recognisable, so customers do not dispute a charge they do not remember.
Common mistakes
- Lumping every decline together, so retries are wasted on cards that can never succeed.
- Counting customers instead of attempts, which understates the rate for customers who are retried often.
- Treating a bank’s suspected fraud block like a low balance. The first needs the customer to act, and the second may clear by itself.
- Reading the rate without a time period, so a quiet week and a busy week look alike.
Work it out with your own numbers
The failed payment recovery calculator turns your declines into a recovery estimate. Open the failed payment recovery calculator and enter your own figures. It runs in your browser and shows each step of the sum.
Read next
- Failed payment rate: the wider measure that includes errors other than declines.
- Payment recovery rate: how many declined payments are collected later.
- Involuntary churn: what happens when declines are never resolved.
Questions
What is the difference between a soft and a hard decline?
A soft decline is temporary, such as a short balance, and may succeed on a later attempt. A hard decline means the card cannot be used again, for example because it is closed, so the customer must supply a new one.
Should I retry a hard decline?
No. A retry cannot succeed and only adds noise. Ask the customer for a new card instead.
Where do I find the decline category?
Your payment processor returns a reason with each declined attempt. Group those reasons into soft and hard and keep the grouping fixed.