Ecommerce businesses are losing customers because their payment infrastructure is silently pushing subscribers towards cancellation, according to new analysis by inclusive global payments platform, Ecommpay.
Ecommpay’s research identified that, across recurring billing, 7% of charges fail on the first attempt, and subscription businesses lose an average of 9% of revenue to failed payments.
As wider research indicates that a high proportion of customers are now actively auditing their subscriptions, a single failed-payment email can inadvertently become a cancellation prompt, causing customers to reevaluate whether they actually need that subscription and whether it’s adding value for them.
Roy Blokker, head of strategic sales at Ecommpay, says businesses aren’t addressing the customer leakage through failed payments. “It is, of course, right that consumers are given the facility to cancel a subscription if they no longer want the product or service,” he said. “But the reality is that many do not cancel because the product disappoints them. Sometimes they leave because the payment layer gives them a reason to reconsider.”
Invisible retention
He added: “The next subscription growth advantage won’t come from another discount or win-back campaign. It will come from payment infrastructure that keeps customers connected when billing fails in the background. We call this invisible retention.”
Invisible retention ensures that customers who intend to stay are not lost to avoidable payment failures such as expired card details, temporary funding shortfalls or network timeouts. The idea is not to keep consumers trapped in a payment cycle for a product they no longer want – something which upcoming new legislation in the form of the Digital Markets, Competition and Consumers Act has been designed to prevent. Instead, Ecommpay sees payments, not as a backend function, but a retention engine that plays a vital part in the customer journey and therefore needs to be as transparent, seamless and convenient as possible.
As subscription businesses face increasing pressure to improve retention and customer experience, payment performance is emerging as a critical factor in reducing avoidable churn.
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