Dunning is the process of chasing a payment that has failed, by retrying the charge and reminding the customer, so that a subscriber is not lost because of an expired card or a low balance. The word is old. It once meant sending firm demands to people who owed money. In subscription billing, it means something gentler, because most failed payments are accidents, not refusals.
A recurring payment can fail for many reasons. The card may have expired or been replaced. The bank account may not have enough money on the day of the debit. The bank may decline the payment because it looks unusual. The customer may have cancelled the mandate by mistake. In each case, the customer usually still wants the service. Losing a customer in this way is called involuntary churn. Churn means customers leaving.
The dunning part of the billing engine follows a plan that the company sets. The plan decides when to retry, how many times, and which messages to send. Retries are timed for when they are most likely to succeed, for example just after the usual salary date. The messages go out by email, SMS or WhatsApp through a customer engagement platform, with a link to pay or to change the payment method. If every retry fails, the subscription is paused or cancelled.
Consider a language-learning app in Pune with a monthly plan of ₹499, paid by UPI AutoPay. On 5 March, the debit for one subscriber fails, because her account has only ₹320 in it. The engine waits. On 7 March, it retries through the payment gateway, and the debit fails again. That evening, she gets a WhatsApp message: "Your payment didn't go through. Tap here to pay or change your payment method." On 10 March, after her salary is credited, the third attempt succeeds. Her lessons were never interrupted.
India adds its own rules. Under the RBI's rules for recurring payments, the customer approves an e-mandate once, and must get a notice at least 24 hours before each debit. A debit above ₹15,000 usually needs a fresh approval each time: an OTP for a card, or the UPI PIN for UPI. A shop may not store a customer's card number, so it stores a token instead, a different number that represents the card. When a bank replaces a card, the token can often be updated to the new card, which avoids a failed payment altogether.
How many customers are saved depends on the plan. A company with no dunning loses every customer whose payment fails once. A good dunning plan recovers many of them. For a company with lakhs of small subscriptions, such as a subscription commerce store selling a monthly coffee pack, these recovered payments can be a noticeable share of its revenue.