In recent years, there has been significant wide-spread adoption and growth of the subscription model. According to Mckinsey, the subscription e-commerce market has grown by more than 100% each year over the past five years.
In particular, the global pandemic has accelerated the growth of streaming in the UK, with many people turning to on-demand streaming as a source of entertainment. With an estimated 17.15 million households in the UK subscribing to Netflix, they are one of the most popular streaming services, alongside Disney Plus and Amazon Prime Video.
Many businesses are now embracing the subscription model across a wide range of categories including wine and coffee, meal kits, contact lenses, razors, video games, make-up and more.
How does a subscription model work?
Subscription-based services work by offering customers access to products, services or content on a recurring basis in exchange for regular payments. The payment structures typically involve a subscription fee that customers agree to pay at regular intervals, such as monthly, quarterly, or annually.
The growth of the subscription economy has been heavily influenced by the significance of convenience. With consumers increasingly seeking a seamless experience and tailored solutions, subscriptions provide a convenient and hassle-free way to access products and services, eliminating the need for repetitive purchases with a recurring payment model. By subscribing to goods or services, your customers are freeing up their valuable time by purchasing using a recurring payment model.
Consumers can enjoy your products and services without interruption, rather than having to make multiple purchases. Once customers set up their recurring payments, they can rely on the subscription model to handle their future transactions automatically, without re-inputting card details for every transaction.
What are the top payment challenges for merchants using a subscription model?
With subscription models comes a greater array of challenges for merchants, from failed transactions to security and inflexible payment options.
At the forefront is the issue of payment failures, as recurring billing relies on seamless transactions, and any friction can lead to customers leaving and revenue loss. Any disruption in this financial harmony can have negative consequences, potentially prompting customers to abandon their subscriptions or services, resulting in substantial revenue loss. The significance of payment failures does not only impact financial revenue, but also can impact customer relationships and reduce loyalty to your business.
Ensuring the security of stored customer payment data remains a constant concern for merchants utilising a subscription model. In an age where cyber threats loom large and data breaches can cause chaos on both trust and financial stability, it extends far beyond transactional convenience. The consequences of a security lapse can be devastating, not only in terms of regulatory penalties, but loss of reputation and erosion of customer confidence.
Operating in the global market comes with its unique set of challenges, from navigating local currencies, alternative payment methods and addressing cross-border regulations. Customers from different countries have their own preferred ways of paying for goods and services, so you need to adapt to these various payment methods. Additionally, there are rules and regulations that vary from one country to another, making it essential for you to understand and follow these guidelines when operating internationally.
These challenges emphasise the need for a robust payment solution to ensure you provide a seamless payment journey, in an ever-changing landscape.
How payment orchestration is empowering subscription-based businesses to thrive
Payment orchestration is a tool which empowers merchants to take back control of the payment journey by connecting to virtually any service through a single API integration.
Solutions such as BR-DGE, sits as a layer between your e-commerce platform and the payment processor, opening up a wealth of innovation. BR-DGE enables merchants to reach new markets, respond to customer preferences, control, and minimise payment transaction fees and ensure a continuous flow of payments; all through a centralised, independent platform that integrates seamlessly into existing processes.
So, what is the significance of payment orchestration in subscription payments?
- Reduction in fraud: Payment information used for subscription payments are often stored to allow for recurring transactions, but this can expose your customers to the risk of theft or compromise. By utilising our network tokenisation service, the risk of exposing customer’s sensitive card information is reduced because your customer’s card details are replaced with a token, which is stored in our PCI compliant vault, ensuring encryption for the entire, end-to-end payment journey.
- Enhanced payment experience: Providing a seamless and user-friendly payment experience is crucial for retaining your subscribers. Research suggests that 27% of subscribers have experienced a declined payment within the last year. This ongoing challenge not only frustrates your customers but can result in significant revenue loss. Payment orchestration platforms, like BR-DGE, ensure that payments are processed smoothly, reducing the likelihood of failed payments or declines. Solutions such as network tokenisation, further manage card lifecycle changes, not only reducing fraud but minimising the need for the customer to regularly update their card details.
- Greater global reach: Whether your customers are making one-time purchases or signing up for subscription-based delivery of your product or service, your customers want to pay how they want, in the currency of their choice, regardless of location. Utilising payment orchestration technology, like BR-DGE, you can quickly integrate with local payment methods to give your customers the freedom of choice at the checkout.
- Data insights: Payment orchestration platforms provide valuable insights into payment trends, customer behaviour and revenue forecasting. Your organisation can use this data to make informed decisions to support optimisation of your subscription offerings.
A seamless subscription experience
In this rapidly evolving subscription landscape, the need for a seamless payment journey has never been more crucial. From streaming services to gourmet meal kits, the subscription model has redefined how businesses connect with their customers.
At BR-DGE, we understand the array of payment challenges that comes with the convenience and growth of subscription models and that it is crucial that merchants have a flexible and agile solution to adapt to customer demand and deliver friction-free convenience.
For more information on how BR-DGE can support you in provide a streamlined payment experience for your subscription customers, contact us today.