How to Scale Subscription Payments with NMI Without Payment Failures

Scaling subscription businesses face multiple challenges. Payment failure is one of them. Companies aiming to grow can’t rely on their acquisition rates alone, as they can be misleading. Acquisition truly matters when customers are retained as well. Otherwise, revenue is lost just as fast as it is gained.

Payment failures are a leading cause of customer drop-offs. Therefore, businesses need to fix these failures as fast as possible to fill the revenue gaps they create. NMI is a popular payment gateway that merchants rely on for secure and flexible payments. This gateway easily handles payment volume at scale.

However, NMI can’t actively work against payment failures on its own. So businesses need to pair it with a subscription management layer. That’s precisely where SubscriptionFlow fits into the picture. SubscriptionFlow and NMI together help scale recurring payments without persistent revenue loss through failures.

Why Payments Fail at Scale?

Subscription businesses encounter increased payment failures as they grow. That is not because of poor systems, but because recurring billing needs more proactive management when it scales. A high customer volume means a great number of recurring billing cycles working automatically. Higher payment volume also means more payment failure possibility.

These are some common reasons why subscription payments fail:

Card expirations: When cards expire, they can no longer be used for transactions. If a customer signs up using a card that expires after two months, the merchant can’t bill them in the third month. The customer has to either update their card or provide an alternative payment method to continue subscription.

Lack of funds in customer’s account: Sometimes, there are no issues with the cards themselves but payments still fail. That’s likely because of the customer’s insufficient account balance. Payment methods get declined when they lack funds to cover the payment being charged.

Network timeouts: Network timeouts are beyond the customer’s or merchant’s control. They occur when the communication between the payment gateway and the processor gets interrupted, and response takes too long. The gateway declines such transactions by default to avoid uncertainty.

Gateway downtime: At times, gateways experience downtime too. They happen when gateways are undergoing maintenance, or are over-loaded. When a gateway is down, it doesn’t let transactions pass through.

Failed payments are the biggest cause of customer drop-offs. Drop-offs are worse than cancellations because they are involuntary. When a customer cancels subscription, they do that intentionally. They also often provide feedback through exit survey forms so that the business knows their exact reason of cancellation.

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However, churn caused by payment failures is involuntary. Repeated failures call for subscription suspension, and customers are dropped off without notice. This creates confusion for customers, and damages their subscription experience with the merchant.

What NMI Does Well for Subscription Payments & Retries

NMI is a great choice for processing subscription transactions. It shines in these ways:

It supports multiple processors

NMI’s unique trait is its ability to connect with a number of payment processors. Traditional gateways are often attached to one processor only, and can only be used with their specific processors. But NMI doesn’t lock merchants in with any one processor. It can be integrated with any, without disrupting your current billing setup.

It enables multi-processor retry infrastructure

Just like NMI can connect with different processors, it can direct retries across different processors too. It’s possible when merchants have NMI already integrated with other processors. You just need to configure the routing logic, and NMI automatically re-routes retry attempts through another processor when your current one fails.

It supports flexible charges

There is no rigid gateway logic that restricts diverse payments. Whether charges are in the form of renewals, retries, proration, or late payment fees, NMI lets merchants process all of them without fail. Also, the gateway doesn’t falter when payment volume increases.

It tokenizes payment data

One reason why NMI is a safe choice for recurring payments is its data tokenization capability. The gateway encrypts customer’s card data so that merchants aren’t able to access it themselves. This data is securely stored by NMI for charging the customer in the future.

Where NMI Needs Subscription Management Support

NMI only directs payment retries across different processors. It’s not NMI’s job to initiate retry attempts, or schedule retries itself. This is the job of the merchant, and it can only be done with a smart subscription management software.

Software like SubscriptionFlow assists NMI with the much-needed subscription management layer. This layer takes care of your billing logic that determines how and when payment retries should take place.

Without such software, merchants can’t fix payment failures through flexible retries. There is:

No intelligent dunning: Intelligent dunning means orchestrating payment recovery workflows in a way that maximizes recovery chances. Good software helps merchants set up automated dunning processes. For example, sending failure notification to the customer first to let them know, then retrying payment, then sending an email when the first retry fails, and so on. Dunning processes escalate the longer recovery takes.

No plan-level billing rules: Each plan cannot automatically be billed like the merchant desires. Legacy software only supports limited billing rules. It may allow only monthly or only yearly payments, not both. So merchants have to bill for different plans manually and monitor payment failures manually too.

Manual failed payment management: When a payment fails, merchants can’t know about it instantly. This already delays its recovery. When they get to know, they have no automatic way to retry payment, so they rely on customer communication to do the job. Traditional software might allow automatic retries, but doesn’t support complex retry rules. This restricts merchants from retrying payment more strategically.

Poor visibility into churn caused by failures: Merchants have no sure way of knowing how many customers they lost due to failures. That’s because they aren’t informed about failures instantly, and may easily lose track of payments when there is a high customer volume.

End Stubborn Payment Failures with Dual Power of SubscriptionFlow & NMI

To address payment failures effectively, leverage SubscriptionFlow and NMI for what they specialize in. SubscriptionFlow takes care of your subscription management and billing rules, while NMI’s job is to process payments with top-notch security. Both platforms integrate to provide merchants with a strong payment retry infrastructure.

When payments fail, retries are started by SubscriptionFlow as per the merchant’s billing settings. The retries are then routed through NMI to charge the customer’s account. As a merchant you can:

Route normal transactions + retries through NMI

If you want to use NMI as your sole payment gateway, that’s possible. If you want to use it alongside other gateways, that’s also possible. No matter which transaction type it is (recurring or retry), NMI can be used to process it seamlessly.

Automate dunning emails

SubscriptionFlow handles subscriber communication for you as well. It can send payment reminders and dunning emails to notify customers of payment failure. These emails nudge customers to update their payment method or provide alternative payment options so that payment can be processed successfully.

Use agentic AI to optimize retries

Agentic AI is SubscriptionFlow’s standout characteristic. AI agents assist merchants by optimizing their payment retries so that NMI processes them only at optimal timings. These agents are basically a core part of the billing system, and they enhance billing processes by learning through historical data. They can analyze which retry timings work best for which customer, and modify retry schedule accordingly.

Access plan-based billing logic

Assign different billing rules to each plan, such as billing schedule, bill amount, invoice format and retry strategy. All billing rules are automatically applied to your plans by SubscriptionFlow. For payment retries, it means that the software conducts retry attempts using NMI following the retry policies you lay out for each plan. So if you have set 1 retry per 3 days for monthly subscriptions, and 1 retry per 15 days for yearly subscriptions, it is exactly what the software will follow.

Activate grace periods before cancellation

Even if recovery takes longer than expected, customers aren’t dropped off without notice. They are informed multiple times via emails and follow-ups. You can also set up grace periods for them, and cancel subscription only when the grace period expires. This gives your customers more time to resolve their payment issues, and gives you a stronger chance of retaining them.

These features actually reduce payment failures, plugging up revenue leakage holes for scaling businesses.

Are you also a scaling business worried about persistent revenue loss? Use NMI and SubscriptionFlow together to eliminate payment failures. Book a demo now.