> For the complete documentation index, see [llms.txt](https://developer.paddle.com/llms.txt).

# Configure Payment Recovery and dunning options

Choose what happens when payment fails for an automatically-collected subscription. You can turn on Tactical Retries, send optimized email notifications, and show retry payment forms in your app or website.

---

When payment fails for an automatically-collected subscription, the subscription status changes to past due and [Payment Recovery](https://developer.paddle.com/concepts/retain/payment-recovery-dunning.md), part of [Paddle Retain](https://developer.paddle.com/concepts/retain/overview.md), gets to work to automatically recover the payment for you. This process is called dunning.

You can configure how Payment Recovery notifies customers about failed payments, turn on Tactical Retries, and choose what happens to past due subscriptions when the payment isn't recovered.

## How it works

[Paddle Retain](https://developer.paddle.com/concepts/retain/overview.md) combines world-class subscription expertise with algorithms that use billions of data points to automatically reduce churn. Paddle Billing is fully integrated with Retain, meaning it automatically handles dunning and retention for you.

[Payment Recovery](https://developer.paddle.com/concepts/retain/payment-recovery-dunning.md), part of Paddle Retain, automatically recovers subscriptions that are at risk of churning because of payment failure and expired payment methods.

If you use Paddle Billing without integrating with Paddle Retain, failed payments for automatically-collected subscriptions are retried up to seven times over a 30-day window before they're canceled. Turn on Paddle Retain for more comprehensive payment recovery options and control over the customer experience.

To learn more about Payment Recovery, see [Payment Recovery](https://developer.paddle.com/concepts/retain/payment-recovery-dunning.md)

## Before you begin

{% callout type="info" %}
Paddle Retain works with live data for your billing platform. This means you can't integrate or test with sandbox accounts.
{% /callout %}

- **Set up Paddle Retain**  
  If you haven't already, connect Paddle Retain to your billing platform and [set up Paddle Retain](https://developer.paddle.com/build/retain/set-up-retain-profitwell.md).
- **Make sure you've installed Paddle.js**  
  Paddle.js must be installed and verified as installed on a public page on your site. [Follow the instructions during setup](https://developer.paddle.com/build/retain/set-up-retain-profitwell#initial-setup-install.md), click **Edit** under **Paddle.js is not installed**, or click **Install** under **Paddle.js is not installed in web app**.
- **Check your Retain email settings**  
  Emails sent from Paddle Retain are designed to look like they come from you or someone on your team. Review the email sender and reply-to addresses for your email addresses in **Paddle > Retain > Settings** under **Email sender details**.

{% callout type="note" %}
Use Paddle Billing? Billing automatically [integrates with Retain](https://developer.paddle.com/paddlejs/include-paddlejs#manual-initialize-paddlejs-retain.md), so you're ready to get started. Go to **Paddle > Retain > Settings** and review your setup.
{% /callout %}

## Pause or cancel past due subscriptions

When all payment recovery attempts are exhausted, Paddle Retain can automatically pause or cancel subscriptions for you. You can choose whether subscriptions should [pause](https://developer.paddle.com/build/subscriptions/pause-subscriptions.md) or [cancel](https://developer.paddle.com/build/subscriptions/cancel-subscriptions.md).

{% callout type="danger" %}
In Paddle Billing, canceled subscriptions can't be reinstated. Create a new subscription for customers who have canceled if they want to return.
{% /callout %}

{% instruction-steps %}

1. Go to **Paddle > Retain > Payment recovery**.
2. Select the amount of days in which payment recovery is attempted from the first dropdown under **Subscription status**.
3. Choose "Pause subscription" or "Cancel subscription" from the second dropdown under **Subscription status**.
4. Click {% mock-button %}Save when you're done.
{% /instruction-steps %}

{% /dashboard-instructions %}

## Send optimized payment recovery emails

Paddle Retain sends emails to customers to let them know that their renewal wasn't processed successfully.

You can preview messages, but we handle the content for you. Our team of experts have sent millions of messages, testing and optimizing the content and cadence across hundreds of thousands of transactions. We found that [plaintext, personal emails work best](https://www.profitwell.com/recur/all/lessons-from-sending-millions-of-delinquent-churn-emails).

{% collapsible title="When are emails sent?" %}

Retain sends up to four payment recovery emails. The exact timing of the Retain emails depends on some algorithmic work that we do behind the scenes, but this is when emails tend to be sent:

<!-- vale off -->

| # | Subject                                                                  | Day sent |
|:-:|--------------------------------------------------------------------------|----------|
| 1 | Your 💳 payment for [your product] failed                                | Day 1    |
| 2 | 2nd notice: Another unsuccessful payment for your [your product] account | Day 3    |
| 3 | 3rd attempt: Unsuccessful payment for [your product]                     | Day 5    |
| 4 | Final notice: Need updated [your product] billing information            | Day 7    |

We've A/B tested thousands of emails and their cadence to optimize recovery rates.

{% /collapsible %}

{% instruction-steps %}

1. Go to **Paddle > Retain > Payment Recovery**.
2. Toggle **Payment recovery emails** on to send notifications by email.
3. Click {% mock-button %}Preview to show a preview of the email that sends.
{% /instruction-steps %}

{% /dashboard-instructions %}

## Turn on payment recovery notifications

Payment recovery notifications reach customers when they're using your product, maximizing the likelihood of payment recovery. They prompt customers to update expired credit cards in your web app or on your commercial website with an unobtrusive notification.

When customers click the link to update, they're presented with a secure form to enter their details there and then — no need to go to another page.

{% instruction-steps %}

1. Go to **Paddle > Retain > Payment recovery**.
2. Toggle **Payment recovery notifications** on to prompt customers to update their payment details in-app.
3. Click {% mock-button %}Preview to show a preview of the notification that sends.
{% /instruction-steps %}

{% /dashboard-instructions %}

## Turn on Tactical Retries

You only have so many chances to retry a credit card payment. Tactical Retries analyzes billions of credit card transactions across the Retain network and uses algorithms to retry payments at the best time for success. We look at product type, card type, customer location, and more than fifteen other factors to [boost payment recovery by an additional 10 to 15 percent](https://www.profitwell.com/recur/all/introducing-retain-tacical-retries).

{% instruction-steps %}

1. Go to **Paddle > Retain > Payment recovery**.
2. Toggle **Tactical retries** on.

{% /dashboard-instructions %}

## Send payment recovery messages by SMS

SMS is a reliable way of reaching customers, with 90% of text messages being read within three minutes of receipt. Retain can send text messages to customers to further boost payment recovery, targeting customers at the right time in a highly personalized way.

Messages include a link to update payment information — all handled by [Paddle.js](https://developer.paddle.com/paddlejs/overview.md) on your website, with no sign in required.

1. Grab a copy of the [Retain SMS phone number template](https://docs.google.com/spreadsheets/d/10HsgmjFnxcNCA7mzEd-NsDKZRmvevTmgCzcCHzUiy1k/edit#gid=0) and fill it in. Send it to us at [sellers@paddle.com](mailto:sellers@paddle.com?subject=RETAIN%20Payment%20recovery%20SMS).
2. Fill out the [Retain SMS recovery form](https://docs.google.com/forms/d/133Fvd-O_Tx4Re7zEIyLEQ6EMxeXMePr7nLRSMi0-4TI/viewform). We use this information to register your details with Twilio, our SMS provider.
3. We'll take care of the rest and reach out when you're ready. This may take fifteen business days.

## Simulate a payment recovery attempt

Now you've set up Payment Recovery, [simulate a payment recovery attempt](https://developer.paddle.com/paddlejs/test-retain.md) to see how it looks to customers.