Credit card expiry dates create challenges for subscription businesses. Every time a customer's card expires, you're at risk of a failed payment, a support ticket or a lost subscriber who didn't mean to leave. You need to build a system that can fix the problem before it becomes one. Below, we'll explain how expired cards can lead to payment failures and how to prevent them without giving your customers or team more work.

What's in this article?

• How do expired credit cards affect recurring payments?
  
• How can businesses handle expired cards for recurring billing?
  
• What is an automatic card account updater (CAU) and how does it work?
  
• How does dunning management help reduce failed payments?
  
• Should you notify customers when their cards are about to expire?
  
• Alternative payment methods
  

How do expired credit cards affect recurring payments?

If your business bills a customer on a recurring basis and their saved card expires, there is a risk that your next attempt to charge it will fail. Card expiry can trigger a hard decline from the issuing bank. Unlike with soft declines (e.g. insufficient funds), you can't resolve declines resulting from expired card errors by retrying the charge on that card. The card is invalid and the system stops there.

This creates an instant ripple effect:

• The customer doesn't get billed.
  
• Their access to your product or service might be interrupted.
  
• You lose expected revenue.
  
• If the issue isn't resolved quickly, the subscription could be cancelled entirely.
  

For subscription businesses, expired cards are often the cause of involuntary churn: this is when customers unintentionally drop off due to a payment issue, not because they chose to cancel. A 2023 study shows that 50% of subscriber churn stems from failed payments and expired cards contribute to those failures.

Credit cards typically expire every two to five years. That means any long-term subscriber will eventually need to update their payment method. Unless your billing system flags credit card expiries ahead of time or updates card information automatically, failed charges will happen. The resulting churn can decrease your recurring revenue and the cost to re-acquire that same customer later might be higher than it would've been to prevent the failure in the first place.

How can businesses handle expired cards for recurring billing?

Card expiry is inevitable, but there are effective ways to prevent it from disrupting your billing cycle. The businesses that stay ahead of payment failures tend to take a layered approach: monitor expiries, nudge customers at the right moment, use automation where it matters and offer backup payment methods.

Here's how that approach works.

Monitor upcoming expiries

Your billing system needs to be able to flag cards that are set to expire in the next 30–60 days. The sooner you spot the risk, the more time you have to fix it before a charge fails.

Notify customers in advance

A short, well-timed email (e.g. "Your card is about to expire. Here's how to update it.") can help prevent a failure before it happens. Even a single reminder sent each time a card is nearing its expiry might help decrease declines. Don't assume customers will notice the date on their cards or update them without a prompt.

Make updates easy

Give customers a direct, secure way to update their payment methods, ideally through your customer portal or a one-click link in your reminder emails. If it's too much work, they might ignore the call to action.

Prepare a solid dunning process

Even with automatic card account updaters (CAUs), some card details won't get updated in time. It can be helpful for your fallback to include a sequence of reminders (e.g. after three days, then again after five more), along with email prompts that clearly explain why the customer's payment failed and what they should do. This practice might help you recover many failed payments that would otherwise slip through.

Offer a backup payment method

Let customers add a secondary card or bank account to their profiles, explicitly stating that it will be used if their primary payment method fails. Then, if the primary card expires – or otherwise can't be charged – you can try the backup automatically. This gives you another layer of resilience, especially for high-value or important services.

Use an automatic card account updater (CAU)

Some payment providers can automatically refresh card information in the background when a customer's card expires or gets replaced. Stripe, for example, requests updated card details from the networks and issuing banks for users that have enabled Stripe's card account updater (CAU) feature. It applies these updates whenever they're available. That means the customer doesn't have to do anything to update their card details.

All of these tactics help keep billing running in the background where it belongs. Expired cards don't have to turn into failed payments and churn if you've built systems to catch problems early, fix them quickly or bypass them entirely.

What is an automatic card account updater (CAU) and how does it work?

An automatic CAU keeps your customers' card information current behind the scenes so that when a card expires or is replaced, billing keeps working without requiring you – or the customer – to do anything. It's a background sync between your billing system, your payment processor and the card networks.

Here's how it works:

• A customer's card expires or gets lost and the bank issues a new card: The card includes updated details such as a new expiry date and card verification value (CVV).
  
• The card network registers the update: Major card brands run update services – for example, Visa's Account Updater CAU and Mastercard's Automatic Billing Updater CAU – that collect and store updated card data from issuing banks.
  
• The payments platform looks for updated information: If your payments platform supports automatic card updates, it will ping the card networks regularly for any new information linked to the cards in your system.
  
• When a match is found, the new card details are pulled in: The updated details are then applied to the customer's billing profile.
  

This process isn't perfect. For example, updates can fail if the customer switches banks or closes their account, and updates might be limited to certain geographies enabled by your payment processor. But in practice, automatic card updates can help you handle expiry-related issues quietly and effectively, including for high-volume or long-term subscriptions where chasing down each individual customer isn't possible at scale.

How does dunning management help reduce failed payments?

Dunning is the system you use to communicate with customers to collect accounts receivable (AR); this includes money you're owed due to failed payments. Dunning involves a mix of automated retries, customer reminders and grace periods, designed to turn a failed charge into a successful one without losing the customer in the process.

Dunning can help recover revenue and keep customers from dropping off because of fixable issues such as expired cards. Here's what's typically involved in a dunning system.

Payment retries

Not every failure is final. A card that failed yesterday might work today because the customer has paid off their balance or updated their information, or because the failure was due to a network glitch that has resolved itself. Smart dunning systems retry the charge automatically on the same card on a preset schedule (e.g. three days later, then again a few days after that). This alone can help recover a meaningful share of failed payments.

Customer notifications

When a payment fails, your system sends an email – or better, a short sequence of them – that explains what happened and how to fix it. For instance, "Your payment didn't go through. You can update your card here to keep your subscription active."

Grace periods

Instead of cutting off access immediately after a failed charge, some businesses might give customers a grace window (e.g. 7–14 days) while retries and reminders are in motion. This avoids disruption for customers who are willing to pay and simply missed the deadline.

With thoughtful dunning, businesses can help retain customers who might otherwise have been lost to churn.

Should you notify customers when their cards are about to expire?

It is best practice to notify customers when their cards are about to expire. A well-timed notification can help prevent avoidable payment failures and surprise disruptions to customers. It shows you're paying attention so they don't have to.

While every dunning management system should respond to the unique needs of the business using it, here are a few tips on how to provide effective notifications:

• Keep the message focused: Let the customer know their card is about to expire and give them a direct link to update it.
  
• Send the first reminder before the expiry date: This gives the customer time to update their details before the next billing cycle. Some businesses follow up with a second nudge a few days out if no update has been made.
  
• Automate these reminders, if possible: Stripe, for example, lets you automate this kind of reminder, sending an email one month before a customer's card expires.
  
• Remember to stop the reminders: Ensure your system stops sending reminders once the card has been updated.
  

Even if your billing system includes an automatic CAU, it's still worth sending a reminder. CAUs might miss things such as when a customer switches banks or upgrades to a different card product. A heads-up email can help fill in those gaps and add a layer of transparency.

Alternative payment methods

Credit cards are a common choice for recurring payments, but they're not always the most reliable. They expire, they get replaced and they can fail for reasons that have nothing to do with your customer's intent to pay. Offering additional payment methods gives customers more choice and might give you more stable revenue.

Here are some alternatives.

Direct debits

Pulling funds directly from a customer's bank account avoids card expiry altogether. Automated Clearing House (ACH) in the US, Bacs in the UK and Single Euro Payments Area (SEPA) in Europe are built for recurring payments. There are no expiry dates, which makes them ideal for long-term subscriptions and high-value plans.

Processing times are slower with this payment method and the customer has to explicitly authorise the debit. But once it's set up, it's highly reliable.

Digital wallets

Pass-through digital wallets like Apple Pay and Google Pay use digital versions of physical cards, but they also use tokenisation. That means when a customer gets a new card, the wallet token often continues to work without interruption. They're also convenient, familiar and preferred by many mobile users. While digital wallets aren't immune to all the issues of cards, they're less likely to fail due to expiry or reissuance.

Pay-by-bank and open banking

In regions where open banking is widely adopted (e.g. the UK), recurring pay-by-bank payments are becoming more common. With pay-by-bank, customers authorise payments directly from their bank accounts, usually through a redirect. Adoption is still growing, but for businesses with global footprints, it's worth watching.

Backup payment methods

Allowing customers to keep a second card or payment method on file can help prevent churn when the primary one fails. This is particularly useful for high-priority services where continuity matters.

Local payment methods

Depending on where your customers are, you might consider supporting region-specific methods like:

• iDEAL in the Netherlands
  
• GrabPay in Southeast Asia
  
• Pix in Brazil
  

These can open up access to customers who don't use credit cards at all.

Including additional payment methods can give customers meaningful options and reduce your dependence on any single channel – especially one with built-in failure points such as card expiry. More flexible payment methods at sign-up means fewer payment interruptions later on. And the more resilient your payment setup is, the less time you'll spend addressing preventable failures.