It’s been exciting to work with digital goods merchants over the last year, with changing consumer behavior propelling this industry to greater and greater heights. One area that’s seen particular growth is subscription billing.
In the US, for example, online and box subscriptions together have jumped 66 percent year on year, creating a market worth $28 billion. Between February and July 2020, subscriptions for services such as online streaming, education, and grocery deliveries rose by 9 percent, reaching 535 million subscriptions.
Subscriptions appeal to customers because they make their lives easier, and for merchants the advantages are many. Subscription billing provides a steady stream of revenue that can be predicted and accounted for, helping with planning and inventory. Recurring payments optimize onboarding, presenting less of a barrier to entry for hesitant customers by allowing them to pay in smaller amounts over a long time. In addition, this payment option helps with retention and upselling, providing long-term data with which personalized services can be offered, saving on customer acquisition costs.
In this article, we’ll look at how optimizing your subscription payment process can help you overcome pain points, reduce cart abandonment, and ultimately increase conversions and revenue.
How to secure subscription customers
Merchants know that with recurring payments, the important thing is securing that first transaction. Ideally, they want to be able to focus on their core product secure in the knowledge that their customers aren’t going to come up against unnecessary obstacles in the payment process.
Conversely, weaknesses in your subscription payment systems can lead to dissatisfied customers, a higher risk of fraud, and lost sales – research has found that 57 percent of consumers will stop using an online merchant after a negative payment experience. So your payment experience should be one of the central pillars of any business strategy.
However, seamless payment experiences aren’t a simple thing to achieve. Here are just a few of the pain points that need to be considered, and how they can be overcome:
How to achieve seamless subscription payments
- Flexibility
Customers expect convenience with subscriptions – meaning not having to repeatedly enter payment details, being able to easily alter their subscription amounts, and being presented with a user-friendly interface. This can be achieved with an auto account updater, which recognizes changes to customer card details and acquires the new information from the issuer without bothering the customer, a centralized back office enabling subscription alterations, and transparent currency conversion that makes cross-border payments more understandable.
- Payment methods
Customers want to be able to pay with the methods they know and trust, which differ depending on industry and location. There are hundreds of alternative payment methods in the market, from eWallets to local payment cards to bank transfer apps, and if these aren’t offered, a potential customer may look elsewhere. Payment technology providers can connect an eCommerce business to a wide selection of APMs, allowing them to offer the correct ones for their target market. Localizing the user experience is a good way of optimizing conversions.
- Transaction approval rates
One of the biggest pain points for online merchants is transaction declines. Nobody likes being told that their payment was declined, and in such cases a customer may blame the merchant despite the fact that it was the acquiring bank that rejected the payment. Fair or not, it’s likely that they’ll take their business elsewhere. One of the most effective ways of avoiding unnecessary transaction declines is by maintaining a relationship with more than one local acquirer. This allows you to retry a declined transaction with a different acquirer, avoiding unnecessary inconvenience to the customer. Another innovative tool is AI conversion boosting technology. It performs risk analysis and makes smart decisions as to which transactions should be retried, again without bothering the customer.
- Security
Today’s tech-savvy consumer needs to feel that their payment details are secure before they trust you with them. Fraud and security issues can destroy your reputation, and there are plenty of other merchants waiting to snap up those lost customers. Unfortunately, cases of fraud have grown along with the eCommerce ecosystem. The key word when trying to combat this is compliance. 3DS2-compliant eKYC and other identity management services not only protect merchants from fraud, but also support transaction approval rates and reputation score.
Use cases
Subscription billing has become an integral part of the eCommerce landscape. From online marketplaces to club memberships and utility bills, from data cloud services to food delivery apps, from eBooks to dating services, these segments saw enormous growth during 2020.
It’s vital that merchants ensure that their subscription processes are up to date, because with the right technology they can avoid interruptions to their revenue flow and even boost conversions. As such, they should partner with a payment technology provider that offers subscription billing technology as an integral part of its payment orchestration layer.
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