Involuntary churn is when a customer unintentionally loses their subscription due to a technical issue, most often a failed payment. Unlike voluntary churn, the customer wants to continue paying for your service. These payment failures are silent killers of growth for subscription-based businesses.

Most recurring payment failures stem from outdated card details. Here’s a breakdown of common causes:

• Expired cards: The card has reached its expiration date.
• Lost or stolen cards: The issuing bank deactivates the old card number and issues a new one.
• Generic declines: Vague “Do Not Honor” messages from issuing banks can be triggered by fraud filters, insufficient funds, or system outages.
• Outdated billing information: The card-on-file (PAN) is no longer valid for one of the reasons above.

For businesses that rely on recurring revenue, these declines translate directly into lost customers, increased support costs, and stunted growth.

Network tokenization and multi-Payment Service Provider (PSP) routing are two powerful techniques that work together to directly combat payment failures. They create a more resilient and intelligent payment infrastructure.

A network token is a secure, unique identifier that replaces a customer’s primary account number (PAN). These tokens are generated and managed by the card networks themselves (like Visa and Mastercard).

Here’s the key difference:

• Standard (Processor) Tokens: When your payment processor saves a card, they create a token. This token is just a reference to the PAN they have stored. If the underlying card expires or is replaced, the token becomes useless.
• Network Tokens: A network token is linked to the customer’s account at the network level. When the bank issues a new physical card, the network automatically updates the token with the new details.

This means you can continue billing the network token without interruption, even when the customer’s physical card changes. It’s like having a permanent forwarding address for their payment details.

Multi-PSP routing is the practice of connecting your business to more than one payment processor. Instead of being locked into a single provider, you can dynamically route transactions to the PSP that is most likely to approve them.

This strategy has two main components:

1. Intelligent Routing: Your system can make smart decisions based on data. For example, you might route all American Express transactions in Europe through PSP A because it has higher approval rates, while sending Visa transactions in Australia to PSP B.
2. Failover Logic: If a payment fails on your primary PSP, the system can automatically and instantly retry the transaction on a secondary PSP. Often, a decline on one network is simply a temporary communication issue or a finicky fraud filter, and a second attempt elsewhere succeeds.

When combined, network tokens ensure the card details are always current, and multi-PSP routing ensures the transaction is sent down the most reliable path.

Implementing this payment strategy directly impacts your bottom line by reducing involuntary churn and improving the customer experience. For SaaS and other subscription models, even a small lift in authorization rates compounds into significant revenue over time.

Here are the primary benefits:

• Higher authorization rates: By keeping card details fresh and retrying failed payments, you successfully capture more revenue that would otherwise be lost. A 2-6% lift is a common benchmark.
• Reduced involuntary churn: Fewer failed payments mean fewer customers are unintentionally churned out of your service. This boosts retention and customer lifetime value (LTV).
• Lower support overhead: Your support team spends less time chasing customers for updated billing information or handling inquiries about failed payments.
• Improved customer experience: Customers avoid the frustration of service interruptions and the hassle of manually updating their credit card information.

Adopting network tokens and a multi-PSP setup requires a phased approach. Jumping in without a clear plan can add complexity without delivering the expected benefits.

Before making changes, you need a baseline. Dig into your payment data to understand:

• What is your current authorization rate for initial vs. recurring transactions?
• What are the most common decline codes you receive?
• Which card types, currencies, or regions have the highest failure rates?

This data will help you identify the biggest opportunities and measure the impact of your changes.

The first step is to ensure your payment processor supports network tokenization. Most modern, enterprise-grade PSPs offer this. Once enabled, they can work with the card networks to enroll your existing vault of saved credit cards and provision network tokens for them.

Start your multi-PSP journey by adding a second processor and implementing basic failover. The logic is simple: if a transaction on PSP A fails with a “soft decline” (like a temporary technical issue), immediately retry it on PSP B. This alone can recover a surprising number of transactions.

Once you have failover working, you can add more sophisticated routing logic. Use the data you gathered in the benchmarking phase to create rules based on:

• Card brand (e.g., Amex, Visa)
• Issuing country
• Transaction currency
• Historical PSP performance

Your authorization rate is now a key performance indicator (KPI). Continuously monitor it, along with transaction costs and latency. Your routing strategy shouldn’t be static; it should evolve as you gather more data on which PSP performs best for different types of transactions.

Building and maintaining a sophisticated payment routing and tokenization system can be complex and time-consuming. It requires significant engineering resources to integrate multiple PSPs, build logic, and manage reporting.

Kinde’s billing engine is designed to handle this complexity for you, allowing you to focus on your core product. By integrating with a powerful payment processor like Stripe on the backend, Kinde provides the foundation to manage subscriptions, plans, and invoicing effectively. This architecture allows you to benefit from the advanced payment optimization features that processors offer, such as network tokenization and automatic card updaters, without needing to build the infrastructure from scratch.

While Kinde abstracts the low-level routing logic, it provides the essential subscription management layer that sits on top. This lets you manage plans, handle upgrades and downgrades, and track subscribers, all while the underlying payment provider works to maximize your authorization rates.

• Connect to Stripe
• Create subscription plans
• Upgrade or downgrade a subscriber’s plan