It's huge. Like "you'd never believe it if you couldn't see it with your own eyes" huge.
As a data point, one business I work with offers subscriptions, and sometimes the majority of its entire churn is caused by unexplained failed card charges from Stripe. For comparison, where Direct Debit schemes are available in Europe and used by that business, they essentially never exhibit unexplained charge failures.
To put that in terms of somewhat realistic numbers, say you have a 97% retention rate on a typical monthly subscription for some SAAS offering. After 12 months, just from attrition, you have lost more than 30% of the subscribers you had at the start of the year. This is why improving retention for subscription business models is such a big deal. Now suppose you have a 92% retention rate, because you're losing an additional 5% of subscribers each month due to failed charges. After a year, you have lost over 63% of the subscribers you started with. That's a devastating difference.
Now suppose you are also attracting new subscribers at a respectable 10% per month. In the first case, you have net 7% growth per month, meaning your business will be around 125% bigger at the end of the year. That's more than double its previous size -- yay for hockey stick growth charts! But in the second case, with just 2% net growth per month, your business is only 27% bigger at the end of the year. The 5% losses due to unclassified failed card charges have basically cost you as much as your entire business made last year in terms of lost growth.
Stripe do seem to be aware of the problem, because they have rolled out a number of systems over the years for retrying failed transactions and the like. Unfortunately, these systems have often been rather complicated, incompletely documented, and most importantly almost entirely untestable before deployment, which seriously undermines their value.
In our experience, shifting subscribers to other payment methods can be an effective solution if it's an option, but of course in places like the US card payments still dominate. If that's where your customers are, you could probably save a lot of lost business by handling those failure flows better. Just be aware that with Stripe in particular, you may have to read between the lines in the documentation, put your first integration into production largely untested, and then rely on monitoring your logs to pick up and deal with problems if you've done anything wrong.
As a data point, one business I work with offers subscriptions, and sometimes the majority of its entire churn is caused by unexplained failed card charges from Stripe. For comparison, where Direct Debit schemes are available in Europe and used by that business, they essentially never exhibit unexplained charge failures.
To put that in terms of somewhat realistic numbers, say you have a 97% retention rate on a typical monthly subscription for some SAAS offering. After 12 months, just from attrition, you have lost more than 30% of the subscribers you had at the start of the year. This is why improving retention for subscription business models is such a big deal. Now suppose you have a 92% retention rate, because you're losing an additional 5% of subscribers each month due to failed charges. After a year, you have lost over 63% of the subscribers you started with. That's a devastating difference.
Now suppose you are also attracting new subscribers at a respectable 10% per month. In the first case, you have net 7% growth per month, meaning your business will be around 125% bigger at the end of the year. That's more than double its previous size -- yay for hockey stick growth charts! But in the second case, with just 2% net growth per month, your business is only 27% bigger at the end of the year. The 5% losses due to unclassified failed card charges have basically cost you as much as your entire business made last year in terms of lost growth.
Stripe do seem to be aware of the problem, because they have rolled out a number of systems over the years for retrying failed transactions and the like. Unfortunately, these systems have often been rather complicated, incompletely documented, and most importantly almost entirely untestable before deployment, which seriously undermines their value.
In our experience, shifting subscribers to other payment methods can be an effective solution if it's an option, but of course in places like the US card payments still dominate. If that's where your customers are, you could probably save a lot of lost business by handling those failure flows better. Just be aware that with Stripe in particular, you may have to read between the lines in the documentation, put your first integration into production largely untested, and then rely on monitoring your logs to pick up and deal with problems if you've done anything wrong.