Recurring payment models offer a reliable stream of revenue and help foster long-term customer loyalty—if managed correctly. 

The key to success lies in effectively balancing automated recurring billing technologies with deep payment expertise. Without the right systems in place, merchants can face a host of challenges, from billing errors to churn, which can disrupt cash flow and customer satisfaction. To ensure a smooth and profitable recurring billing operation, it’s crucial to build a robust payment infrastructure capable of handling the complexities of subscription payments and maintaining seamless transactions

Below are six of the most common problems impacting recurring payments today: 

Payment Declines & Failed Payments

​​A 2023 PYMNTS Intelligence report estimated that false declines could put $157 billion in U.S. payment revenue at risk, leading to losses exceeding $80 billion.

Payment declines can occur for several legitimate reasons, including expired cards or insufficient funds. However, false declines can also occur due to technical reasons, like outdated authorization techniques or payments processed in regions deemed geographically risky. 

Overcoming false declines in recurring payments often requires the implementation of more modern technologies that use real-time data and advanced risk-scoring processes.

Likewise, failed payments as a whole can require resource-intensive manual intervention that places a greater strain on your business finances and operational fluidity. Leveraging modern tools and larger datasets helps address these challenges more effectively and supports a smoother recurring billing experience.

Customer Churn Rates

Chargebee’s 2024 State of Subscriptions & Revenue Growth Report found that 47% of responding subscription professionals view customer retention as a “paramount goal” in 2024. Additionally, 50% of respondents are anticipated an increase in churn rates this year. 

A high customer churn rate (whether voluntary or involuntary)can be a true detriment to your business. More often than not, this high churn rate is being impacted by an unoptimized payment strategy. 

While we’ve already discussed payment declines, several additional payment-related issues can drive customer churn, including:

• Complicated cancellation processes that make it difficult for customers to end a subscription, leading to frustration that compels customers to choose a different service altogether.
• Outdated card information that is not regularly updated by an automated system. 
• Poor customer support for payment troubleshooting, leading customers to reach out to their banking providers or card networks rather than dealing with your business directly. 
• Inflexible billing terms that include rigid penalties and payment amounts—offering more flexible options like Buy Now, Pay Later (BNPL) can help keep customers loyal even through times of financial hardship. 

Your job as a payments professional is to identify if there is any friction within your payment process that is driving customers away. Doing so necessitates a comprehensive recurring payments strategy that allows you to monitor the performance of each transaction and determine where that performance may be falling short. 

Compliance & Security 

Handling one-time payments alone comes with challenges, much less managing recurring payments. 

Any business managing the payment process directly must contend with PCI DSS, a global payment regulation that precisely defines how to protect cardholder information and payment account data. The PCI Security Standards Council recently published version 4.0.1  of the standard, making it necessary to ensure your payment system is up-to-date on the latest changes. 

You may also have to comply with regulations like GDPR, PSD3/PSR, and the ASC 606 revenue recognition standard depending on where you operate globally.

Knowing what local, regional, and international regulations apply to your business is essential for maintaining compliance and upholding your recurring payment system’s security. Payment technology tools can help streamline your compliance process, and professional payment consultants can aid you in deciphering exactly which regulatory standards apply to your company. 

Billing Discrepancies & Complex Pricing

Inaccurate billing can be a tremendous source of customer frustration, leading to payment disputes and chargebacks. A simple pricing model where all recurring payments are the same amount can be easier to manage. Yet, many businesses engage with more complex pricing models, such as:

• Subscriptions with value-add services, leading to varied monthly costs per customer
• Utility services where the monthly bill varies based on usage
• SaaS products offering different pricing plans

Dealing with billing discrepancies is a two-fold issue. 

First, you need a system in place that can intelligently charge and track transactions, making it easy to monitor customer payments and ensure each customer is charged the correct amount. Second, you need seamless communication with your customers for simple and fast resolution of discrepancies when they occur, including the ability to instantly issue refunds when necessary. 

Solving this issue takes both technological innovation and interpersonal finesse — you need the technical recurring billing infrastructure to resolve the discrepancy quickly, as well as clear communication with customers to keep them satisfied with the experience and loyal to your business. 

Flexibility in Payment Methods 

Limiting payment options can hinder customer retention and negatively impact recurring payments.

According to a 2024 PYMNTS Intelligence report, 77% of customers will abandon a purchase if their preferred payment options are not available. Additionally, local payment methods are expected to account for 58% of global eCommerce transactions by 2028 and account-to-account (A2A) payments will account for 18% of all transaction volumes in the same timeframe. 

However, offering multiple payment methods is no simple task either. You need an optimised payment infrastructure that can integrate multiple different payment gateways, processors, and other tools to support these varied payment methods. 

This leads us directly to our final recurring payment challenge — system scalability.

System Scalability

Business growth is often accompanied by increased transaction volumes, which can place stress on your recurring payments infrastructure.

The ability to scale with the ebb and flow of your transaction volumes is imperative. 

For recurring billing use cases especially, you need the freedom to offer a personalized experience to each customer that matches their preferences and payment needs. Moreover, you need a system that can automatically charge customers the correct amounts, all while providing you with transaction transparency for tracking your payment performance.