If you run a subscription business, you probably keep a close eye on your authorization rate—the percentage of payment attempts that get approved by card issuers. It’s one of the most commonly used metrics to assess how well your payment system is performing. But what if we told you that this number, on its own, might be giving you a false sense of success?
Let’s take a closer look.
Why Authorization Rate Seems Useful (But Isn’t Always)
For eCommerce businesses, authorization rate is a fairly straightforward and helpful metric. A customer shops, enters their card details, and if the payment is approved, the purchase goes through. If it’s declined, they may try a different card—or abandon the cart entirely. For eCommerce businesses, tracking how many attempts are successful is a solid way to gauge payment performance in that one-time transaction context.
But subscription companies operate differently.
In the subscription world, there are three key moments when a payment attempt can be made:
- When a customer first signs up
- During each renewal period
- When a failed payment is retried
It’s that third point—failed payment retries—that makes authorization rate a shaky foundation for measuring success. Because each retry counts as a new authorization attempt, it actually lowers your overall authorization rate even if you’re successfully recovering payments and increasing revenue. That means a business could recover more money—and still see its authorization rate go down.
Sound backward? It is. And it’s causing some companies to make the wrong strategic decisions.
Meet the Metric That Actually Matters: Payment Success Rate
To make better business decisions, subscription companies need a more accurate way to measure how well their payment systems are performing. That’s where the Payment Success Rate comes in.
Payment Success Rate = Revenue from Successful Payments ÷ Total Attempted Billings
This metric accounts for all payment attempts—including retries—and ties them directly to revenue generated. Instead of focusing on how many transactions were approved on the first try, it looks at how much revenue was actually captured. And that’s what really matters.
When you use Payment Success Rate, your KPIs are tied to outcomes, not activity. You’ll know whether your efforts are truly helping your business grow, and you’ll be able to align your team around what matters: more revenue, stronger retention, and a better customer experience.
Real-World Example: When Higher Revenue Leads to a Lower Authorization Rate
Here’s a quick example that brings this to life:
A company with 10,000 subscribers and a $50 average subscription fee had a failed payment rate of 15%. Before using any failed payment recovery solution, they were earning $450,000 in revenue with an authorization rate of 86%.
Then they implemented a specialized recovery tool that recovered 25% of those failed payments. Revenue increased to $468,750 in a single month—a 4% lift. But because the tool made multiple retry attempts, the authorization rate dropped to 66%.
Now imagine if the team’s KPI was to improve authorization rate. Despite the extra revenue, they might have viewed this as a failure. They might even stop using the recovery tool, simply to “protect the metric.”
That’s the danger of relying on the wrong KPI.
Why This Matters for Your Business
Relying on your authorization rate might push your team to avoid retry attempts or avoid fraud tools—choices that could result in lost revenue or missed opportunities.
On the other hand, using Payment Success Rate gives you a clearer picture of how your payment system is performing. It shows how well you’re turning potential revenue into actual revenue—especially when it comes to recovering failed payments.
If you’re serious about reducing churn, increasing subscriber lifetime value, and maximizing revenue, this is the metric that deserves your attention.
Learn More
Download the full eBook, Beyond Authorization Rates: A Smarter Way to Measure Payment Performance and learn how top subscription companies are rethinking their KPIs—and driving better results because of it.
