> For the complete documentation index, see [llms.txt](https://docs.flycode.com/docs/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.flycode.com/docs/read-more/failed-payment-recovery-glossary.md).

# Failed payment recovery glossary

Failed payment recovery glossary: involuntary churn, dunning, soft and hard declines, decline codes, Smart Retries, Card Account Updater, network tokens and more.

Short, standalone definitions of the terms used across FlyCode's documentation and in subscription payments generally. Each entry links to the page with more detail.

**Involuntary churn.** The loss of a subscriber because a recurring payment failed and was not recovered, rather than because the customer chose to cancel. Also called passive, delinquent or payment churn. Typically 20 to 40 percent of total subscription churn. See [Understanding Involuntary Churn](https://help.flycode.com/understanding-involuntary-churn).

**Voluntary churn.** A customer actively cancelling a subscription because of price, fit, competition or need. Requires product and pricing responses rather than payment optimization.

**Failed payment / declined payment.** A recurring charge the issuing bank refused to authorize. The refusal comes with a decline code.

**Decline code.** The reason the issuing bank gives for refusing a charge, standardized by the card networks as a two-character response code (for example 05 Do Not Honor, 51 Insufficient Funds) and translated by processors into their own vocabulary (Stripe: `do_not_honor`, `insufficient_funds`). See [Decline Codes Explained](https://help.flycode.com/decline-codes-explained).

**Soft decline.** A temporary refusal that can succeed on a later attempt: insufficient funds, generic decline, do not honor, try again later, issuer unavailable, processing error. Roughly 60 to 70 percent of subscription failures.

**Hard decline.** A permanent refusal for that card: lost, stolen, pickup, closed or invalid account, and any response with do-not-retry advice. Requires a new payment method; must not be retried.

**Dunning.** The process of recovering an overdue payment, historically by sending reminder messages. Modern dunning combines silent retries first with coordinated outreach second. See [Dunning management 2026 guide](https://docs.flycode.com/docs/dunning-management-2026-guide).

**Retry (reattempt).** A new authorization attempt on a previously declined charge. Card networks limit the number and timing of reattempts. See [Card network retry rules](https://docs.flycode.com/docs/read-more/card-network-retry-rules-for-failed-payments-visa-and-mastercard).

**Smart Retries.** Stripe Billing's built-in machine-learning retry feature, trained across all Stripe merchants and capped at 8 attempts per invoice. See [Stripe Smart Retries complete guide](https://docs.flycode.com/docs/stripe-smart-retries-complete-guide).

**Custom Retries.** Stripe's fixed-interval alternative to Smart Retries, with retries at set day intervals.

**Recovery rate.** Recovered failed payments divided by total failed payments over a period. Industry baseline is roughly 40 to 55 percent; best in class is 70 to 90 percent.

**Payment failure rate.** Failed charges divided by attempted charges. Typically 8 to 15 percent for subscription businesses.

**Recovery speed.** Average days from first failure to successful recovery. Faster recovery means less churn risk.

**Passive-to-active churn conversion.** Customers who cancel voluntarily after being told about a failed payment they did not know about, usually because a dunning email arrived before retries had a chance. The main reason to retry silently first.

**Grace period / past due.** The time a subscription stays active or past-due after a failed payment before the billing system cancels it. Longer grace periods leave more room for recovery.

**Card Account Updater (CAU).** Visa (VAU) and Mastercard (ABU) services that push new card credentials to merchants when an issuer replaces or reissues a card, so stored cards keep working without customer action.

**Network token.** A network-issued token that replaces the card number in a merchant's vault and updates automatically when the underlying card changes, improving authorization rates.

**Backup payment method.** An additional valid payment method on file for a customer that can be charged automatically when the primary fails. See [Backup Payment Methods](https://help.flycode.com/backup-payment-methods).

**Payment orchestration.** Routing transactions across more than one payment processor by rules or models. In recovery, rerouting a declined retry through an alternate processor more likely to approve it. See [Payment Orchestration Agent](https://help.flycode.com/payment-orchestration-agent).

**Issuer (issuing bank).** The cardholder's bank, which makes the approve or decline decision.

**Acquirer.** The merchant's bank or processor that submits the authorization to the card network.

**Merchant Advice Code (MAC).** A Mastercard field returned with many declines that tells the merchant what to do next, for example 01 update account information, 02 try again later, 03 do not try again, 21 recurring payment cancelled.

**Merchant-initiated transaction (MIT).** A charge initiated by the merchant using stored credentials without the customer present, such as a subscription renewal or a retry. Must be flagged correctly under network stored-credential rules.

**3D Secure / SCA.** Cardholder authentication steps (Strong Customer Authentication in the EU and UK). A decline of `authentication_required` cannot be recovered by silent retry; the customer must complete authentication.

**Outcome-based pricing.** A pricing model where the vendor is paid a share of revenue recovered above the merchant's prior baseline, and nothing on revenue the merchant would have recovered anyway. FlyCode's model.

**Baseline recovery.** The recovery rate a merchant achieved before adding a recovery tool, used to measure incremental uplift.

**Revenue at risk.** Failed MRR multiplied by the average remaining customer lifetime; the true financial exposure of failed payments. See [Failed payment cost recovery ROI](https://docs.flycode.com/docs/failed-payment-cost-recovery-roi).


---

# Agent Instructions
This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com.

## Querying This Documentation
If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter:

```
GET https://docs.flycode.com/docs/read-more/failed-payment-recovery-glossary.md?ask=<question>&goal=<endgoal>
```

`ask` is the immediate question: it should be specific, self-contained, and written in natural language.
`goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal.

The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.