Stop Losing Recurring Revenue to Failed Payments
tessera perspective
Recurring programmes are meant to deliver predictability, yet many organisations experience a persistent gap between what is pledged and what is realised. Benchmarks suggest that monthly giving now accounts for roughly 31% of online revenue (Blackbaud Institute, 2024), but studies also show that up to one quarter of scheduled payments fail before they settle (Recurly, 2023). These losses occur because the systems are fragile. Cards expire, banks decline, issuers reset credentials.
Recognize the Nature of Attrition
Attrition in recurring programmes is too often interpreted as a failure of loyalty. In reality, much of it is involuntary churn: revenue lost because of broken transactions rather than broken relationships. Subscription businesses have long treated involuntary churn as a systems problem. Nonprofits, by contrast, still approach it as a communications problem, launching campaigns to win donors back when the real task is ensuring payments clear in the first place. Misdiagnosis perpetuates inefficiency, because resources are directed at storytelling when the losses are coming from infrastructure.
Anticipate the Points of Failure
Payment failures follow patterns. Expired cards are a primary cause, and when issuers reissue cards after fraud events, entire cohorts of recurring transactions fail at once (Stripe, 2024). Timing matters too: charges made just before deposits arrive are more likely to meet empty accounts. These breakdowns are predictable, yet too few organisations study them or adjust their processes. Dependence on cards compounds the issue. While bank transfers and digital wallets offer more resilience, they are often not made available. By ignoring these alternatives, nonprofits build unnecessary fragility into their most strategic revenue stream.
Treat Flow Integrity as a Strategic Priority
The tools to reduce failure already exist. Card-network tokenisation improves approval rates by keeping credentials valid even after a reissue (Visa, 2023). Account updater services refresh expired details without donor intervention (Mastercard, 2023). Alternative rails such as ACH or FedNow reduce exposure to the idiosyncrasies of the card rails. None of these require invention, they require attention. The sector continues to treat payments as administrative, rather than as a lever for revenue support.
What Leaders Should Do Next
Leadership teams should begin by demanding accurate reporting on failure and recovery rates, so that forecasts are anchored in realised revenue rather than assumptions. Press processors and platforms to enable features such as account updaters, tokenisation, and alternative payment methods that materially lift success rates. Set explicit targets for reducing involuntary churn, making payment stability a measurable component of financial strategy.