The $100 billion problem of involuntary churn in subscriptions—and how to plug the leak

When a transaction fails, it feels like a broken promise. And broken promises don’t increase customer lifetime value—they destroy it.

The "repeat economy" is booming. Digital subscriptions are projected to grow at a 17% CAGR through 2026, according to Statista. But while consumer demand accelerates, the payment infrastructure powering subscriptions remains outdated.

In today’s era of instant gratification, customers expect uninterrupted access to their favourite services. When a transaction fails, it feels like a broken promise. And broken promises don’t increase customer lifetime value—they destroy it.

This is the crux of the $100 billion problem: involuntary churn. This occurs when customers don’t actively cancel, but their payments fail and access is revoked. According to PYMNTS, up to 50% of all subscription churn is involuntary. Data from Recurly estimates it will cost the global subscription economy over $100 billion in 2025.

It’s not that customers are walking away—it’s that the system is pushing them out.

Consumers expect seamless, secure, and reliable digital experiences. Whether they’re streaming a show, listening to music, or accessing software, any friction—especially in payments—erodes trust. Traditional recurring payment methods like direct debit and cards-on-file have attempted to adapt, but their legacy limitations remain.

To meet modern expectations, businesses must leverage data and new technology to deliver seamless, resilient payment experiences. Future-proofing your operations starts with rethinking payments—and your bottom line will thank you.

Cards aren’t always king

While preferences for recurring payment methods differ by country, cards remain a common choice. According to Appino research conducted for Trustly, 23% of UK consumers prefer cards for recurring payments. Yet, cards are often the weakest link in subscription models.

Cards were designed for one-off payments. With recurring subscriptions, however, they introduce failure points—such as expiration dates—that simply don’t belong.

Checkout.com reports that up to 15% of recurring card payments fail, compared to 10% for single-use transactions.

Top 3 reasons card payments fail

1. Card expiration & replacement: Cards expire every 3–5 years, get lost, stolen, or replaced—causing payment failures. Customers are expected to manually update their details, but often forget, or don’t bother.
   
2. Fraud triggers & false positives: Overzealous fraud detection systems sometimes block legitimate payments, denying access and damaging customer trust.
   
3. Manual updates: Even digital wallets can fail if users switch devices or reinstall apps. Manual input remains a common point of friction.
   

Many providers have attempted to patch these problems through tokenisation and card updater services. While helpful, these solutions add cost and still fall short of eliminating friction.

Standard direct debit: reliable but clunky

Direct debit is often more stable. It avoids expiry issues, increases customer lifetime value, and enjoys high success rates—making it the top choice for 62% of consumers paying for utilities, per Appino.

But it’s not perfect.

Key drawbacks of traditional direct debit

1. Cumbersome setup: Over 50% of users abandon recurring payments when the setup is too manual. Entering bank details like IBAN or account numbers by hand creates frustration and drop-off.
   
2. Setup errors: Trustly has observed a 12% setup failure rate for standard direct debit without a dedicated provider. These users churn before even making a payment.
   
3. Delayed activation: The multi-day authorisation process can result in customers accessing a product for days before any payment is confirmed—adding risk for the merchant.
   

Plug the leak: welcome more customers—and keep them longer

Open Banking and real-time data are transforming payment experiences. By using these tools, businesses can offer:

• Effortless sign-up that increases conversion
• Automated security that ensures close to zero onboarding payment failures
• Unbeatable collection again and again that extends lifetime value
  

By combining the dependable infrastructure of direct debit with real-time data intelligence, businesses can offer a seamless, nearly invisible payment experience. Not all providers deliver this, but data-enhanced solutions are available today—and can begin converting loyal customers as soon as tomorrow.

How data-enhanced direct debit drives customer lifetime value

To tackle involuntary churn effectively, merchants can adopt data-enhanced direct debit. This next-gen payment method uses Open Banking, predictive analytics, and automation to elevate conversions, reliability, and operational efficiency.

It starts with onboarding—and never stops

The foundation of customer LTV lies in a flawless onboarding process. Every new subscription needs to start with a successful first payment.

• ‍Automated, secure setup: Customers authenticate via their trusted banking app. No manual entry means fewer errors and a faster process. It’s mobile-optimised, seamless, and efficient.‍
• High conversion rates: Onboarding success can reach up to 99%, with processes three times faster than traditional methods.

Intelligent strategies for ongoing retention

The same data collected at onboarding fuels smarter decisions throughout the customer lifecycle:

• Intelligent charging: Algorithms predict potential failures and optimise charge timing using real-time financial insights. AI-powered automation combined with balance checks maximises retention.
  
• Lower operational costs: With fewer retries, no card update fees, and minimal gateway costs, businesses save money while improving reliability. Since bank accounts rarely change, stability is higher.
  
• Superior performance: Merchants using intelligent charging often see payment success rates between 97%–98%—a major leap over legacy systems.
  

Boosting efficiency and managing risk

Fraud and failed payments are two major cost centres. Automating payment management with the right tools can address both.

• Instant upfront payment: Pairing recurring payments with an immediate first instalment reduces fraud and confirms fund availability.
  
• Fund verification: Customers pay the first amount instantly during onboarding, confirming their legitimacy and reducing non-payment risk.
  
• Proactive fraud prevention: Real-time bank verification and data-driven setup can cut fraud by up to 33%, according to Trustly case studies. Customers stay in control of their data, and merchants benefit from verified identities from the first touchpoint.
  
• Operational simplicity: Fewer failures mean less manual cleanup. Integrated reporting and reconciliation streamline finance operations.
  

What this means for your business

A smart payments strategy can drive serious results:

• Reduced churn: Fewer failed payments means fewer lost customers.
  
• Higher LTV: More reliable payments mean longer relationships.
  
• Increased success rates: Trustly data shows intelligent charging achieves over 99% success.
  
• Faster onboarding: Setup is up to three times faster than traditional flows.
  

Every month is a moment of trust

Despite rapid digital innovation, many European merchants still face onboarding friction, generic user experiences, and involuntary churn.

In subscription models, every successful payment is more than a transaction—it’s a moment of trust.

When payments fail, that trust quietly erodes.

With data-enhanced direct debit, your payment experience becomes:

• A growth engine: Seamless payments drive retention.
  
• A retention tool: Hassle-free experiences keep customers around.
  
• An invisible extension of your brand: Payments just happen—without friction.
  

Data-enhanced direct debit doesn’t just prevent churn. It reinforces your brand promise—every month.

Ready to extend customer lifetime value

If your subscription business is losing customers to failed payments, it’s time to upgrade.

Direct debit offers less friction, fewer failures, and happier customers. And with data-enhanced direct debit, you can level up with intelligent retries, real-time monitoring, and automated optimisation.

Stop relying on outdated payment systems. Switch to a solution designed for subscription success.