What happens on a PayPal Payment Failure?

Question: If a PayPal payment fails due to any reasons like credit card decline, is the profile cancelled immediately or will it retry? If it will retry, what is the period between the retry attempts?

Answer: There is no cancellation on payment failure. After the initial failure PayPal will try to take payment again after 5 days. If that also fails that PayPal will try a third and final time after a further 5 days.

When you can set up the original PayPal Profile you have two options for dealing with failed charges. This is found in the Recurring Charges section for the subscription on SubscriptionBoss:

Auto Billing of Outstanding Amount

For this setting you have a choice of NoAutoBill or AddToNextBilling

This option allows you to decide whether you want to try and collected missed payments automatically by always trying to collect the outstanding amount. The default setting is the first option.

Your choice will be based on how long you want to give your non-paying subscribers to pay up. If you are willing give them more than one billing period then it probably makes sense to go for the second option. So, for example, if the subscription is $99 per month and there are 3 failures that month, then PayPal will try to collect $198 the following month.

Notification of Payment Failure

SubscriptionBoss receives notification of each payment failure by a PayPal IPN and can activate an action set defined in the Payment Event Actions section on SubscriptionBoss.

This action set might simply tag the subscriber with a tag that is an entry point to a “Subscription Payment Failure Campaign”. The campaign can track them through first, second and third payment failure and decide what emails to send the subscriber at each stage, whether or not to reduce or pause access to the service/membership site and also to decide if and when the subscription should be cancelled.

Notification of Payment Success

SubscriptionBoss receives notification of each payment success and can activate an action set defined in the Payment Event Actions section on SubscriptionBoss.

This action set needs to set a tag that is another entry point in “Subscription Payment Failure Campaign” that takes the contact out of “payment failure” and may need to renew the subscriber’s access to services if they had been reduced earlier and finally takes the contact out of that campaign.