GLOSSARY · 30 TERMS
Subscription billing and churn, defined.
Short, sourced definitions of the words you meet when payments fail, customers dispute a charge or someone clicks cancel.
Payments and declines
- Account updater An account updater is a card network service that refreshes stored card details when a card is reissued, so renewals keep charging the new card.
- Decline code A decline code is the reason a card issuer or processor returns when it refuses a payment, such as insufficient funds, expired card or suspected fraud.
- Dunning Dunning is the process of recovering a failed subscription payment by retrying the charge and contacting the customer until it is paid or cancelled.
- Grace period A grace period is the time after a failed renewal during which a subscriber keeps access while the payment is retried or the payment method is updated.
- Hard decline A hard decline is a card refusal that will not succeed on retry, such as a lost, stolen or closed card: the customer must give another payment method.
- Network tokenization Network tokenization replaces a stored card number with a token issued by the card network, which stays valid when the physical card is replaced.
- Payment retry A payment retry is a new attempt to charge a failed payment later, when the issuer is more likely to approve it, within the limits set by card networks.
- Soft decline A soft decline is a card refusal caused by a temporary issue, such as insufficient funds or an issuer outage, that may succeed if retried later.
- Strong Customer Authentication (SCA) Strong Customer Authentication (SCA) is a European rule, in effect since 2019 under PSD2, that requires extra verification for many online card payments.
Chargebacks and fraud
- Chargeback A chargeback is a card payment reversed by the cardholder’s bank after a dispute, with the amount and usually a fee taken back from the merchant.
- Chargeback ratio A chargeback ratio is the share of a merchant’s card transactions disputed in a month, the figure card networks use for their monitoring programs.
- Compelling Evidence 3.0 Compelling Evidence 3.0 is a Visa framework for defending card-absent fraud disputes with earlier undisputed purchases by the same customer.
- Early fraud warning An early fraud warning tells a merchant that the card issuer reported a payment as fraud (Visa TC40, Mastercard SAFE), often before any dispute.
- Friendly fraud Friendly fraud is when cardholders dispute a payment they or their household actually made, often claiming fraud or forgetting a subscription renewal.
- Pre-arbitration Pre-arbitration is the dispute stage where the issuer challenges a merchant’s chargeback response, the last step before card network arbitration.
- Representment Representment is the merchant’s formal response to a chargeback, sending evidence through the processor to show that the charge was valid.
- Retrieval request A retrieval request is an issuer’s request for details about a card payment, sent before or instead of a chargeback, with no funds taken from the merchant.
- Visa Acquirer Monitoring Program (VAMP) The Visa Acquirer Monitoring Program (VAMP) is Visa’s global program that flags merchants whose monthly fraud reports plus disputes are too high.
Cancellations and win-back
- Cancel flow A cancel flow is the sequence a subscriber goes through when cancelling: a reason question, sometimes a tailored offer, then a clear confirmation.
- Click to cancel Click to cancel is the principle that a subscription bought online can be cancelled online, as easily as it was bought, without calls or obstacles.
- Involuntary churn Involuntary churn is the loss of subscribers whose payment failed and was never recovered, even though they did not choose to cancel.
- Retention offer A retention offer is an incentive shown to a subscriber who is cancelling, such as a discount, a pause or a cheaper plan, chosen to match their reason.
- Voluntary churn Voluntary churn is the loss of subscribers who choose to cancel, for reasons such as price, low usage, missing features or switching to a competitor.
- Win-back campaign A win-back campaign is a series of messages or offers sent to customers who already cancelled, aimed at bringing them back as paying subscribers.
Churn metrics
- Churn rate Churn rate is the percentage of customers, or of recurring revenue, that a subscription business loses over a period, usually measured each month.
- Cohort retention Cohort retention tracks a group of customers who started in the same period and shows what share is still subscribed, or still paying, in each later month.
- Customer lifetime value (LTV) Customer lifetime value (LTV) is the revenue or gross profit a business expects from an average customer over the whole time they stay subscribed.
- Gross revenue retention (GRR) Gross revenue retention (GRR) is the share of recurring revenue kept from existing customers after churn and downgrades, without counting expansion.
- Monthly recurring revenue (MRR) Monthly recurring revenue (MRR) is the subscription revenue a business earns each month, with annual and other plans converted to a monthly amount.
- Net revenue retention (NRR) Net revenue retention (NRR) is the recurring revenue kept from existing customers over a period, including upgrades and minus churn and downgrades.
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