How to Win the Game of Subscription-Based Payments

 July 11th, 2019

With an average of 43 million views per episode, the final season of Game of Thrones has forced us to ask how subscription businesses can fully leverage their payments. 

In today’s subscription economy, customers are forgoing traditional product ownership for more freedom regarding how they purchase goods and services like video streaming or on-demand grocery delivery.  

Even though subscription-based business can create recurring revenue streams that can be easily planned around it is not always a smooth wagon ride. Further, it can bring about challenges in providing responsive customer care, maintaining a low churn rate, and creating adequate measures to indicate success.  

Regarding payments, there is an army of issues that subscription businesses must fend off. The following is a list of payment issues that these businesses can encounter and how to conquer them: 

A Lack of Global Coverage and Local Payment Method Data

Growing global businesses should know about the availability of connections to various payment methods in specific regions. There are payment providers who offer these connections, but their payment method portfolio is generally limited.

Planning and Collection

A growing subscription business should plan out its expansion strategy with attention to payments. It should adopt solutions that are flexible enough to connect to any global market and able to handle technical integrations to any preferred payment method

High Risk Markets

Before expanding into new territory, businesses would do well to know which countries or markets have higher levels of fraud or the charging of accounts with insufficient funds. 

Outsourcing Payment Market Research

Knowledge becomes more powerful as the level of complexity and risk increases. Selecting payment research experts can allow your business to comprehend, and effectively act on, the intricacies of a dynamic global payment market.

Diversifying Risk and the Lack of a Provider Fail-Over Strategy

Since customers today expect continual service, its best to have multiple providers as a fallback when selecting a continual payment methodLet’s say that one day one of your recurrent transactions no longer comes through. Since you don’t want to lose your monthly payments or subscribed users, an alternative provider should be in place to cover this risk. 

Payment Routing Engine

This allows for the connection to multiple providers, creating a fallback strategy and ensuring that there is always a payment provider in the backend to process a transaction.

Chargebacks

This is a situation otherwise known as friendly fraud or a return of funds to a customer after a disputed charge. Billing disputes can occur when customers cancel recurring transactions for a variety of reasons including being unaware of transactions to not recognizing the merchant on a billing statement. Companies would benefit from knowing how often these situations occur and how to surmount them.  

Preventative Measures

 In reality, chargebacks are often difficult for a merchant to win. Some preventative measures include the use of a recognizable brand name on a billing statement, having methods of direct contact on billing statements, monitoring customer behavior through analytical tools and providing an active, responsive, customercare environment.  

Fighting Denial Rates

Any business working on a subscription basis needs to keep customers in their subscription cycle and decrease their churn rate. This can be difficult when payments fail to process due to a customer having insufficient funds in an account or an expired card, or when your payment provider fails to function properly. 

Account Updater and Automated Denial Management

The account updater tool automatically updates the expiry dates of customer credit cards as they change. Meanwhile, the automated denial management tool is used for transaction denial and retries a charge on a pre-defined time pattern until a transaction can be processed. Both of these tools are useful to help a transaction go through and ensure that a customer pays for their subscription. 

Attracting New Customers with Your Subscription Model

Customers may want to flexibly upgrade, downgrade or pause their payment plans. In addition, your business may want to make pricing changes. Most payment gateways are not able to offer advanced subscription management options in this regard. 

Subscription Management Software

Your business needs a software that can provide flexible subscriptions policies and management options while being able to integrate with a subscription billing platform and your payment gateway.

Disconnect Between Relevant Platforms

For global subscription businesses, the chain of events from services rendered to revenue recognized can be very complex. Without effective communication between the systems which handle different business components, this can be a nightmare. 

Systems Interconnectivity

Comprehensive integration between the areas of subscription management, billing and payment could mean the difference between a headache and a simple click of a button. This would allow for payment automation, revenue recognition, accounting services, discount management, referral marketing, compliance management and more.

As you can probably tell, the game of payments within subscription-based business is only going to get more and more complex.  

To the initial question, global subscription-based businesses can effectively process vast amounts of recurring payments with a combination of market knowledge, risk diversification, and systems interconnectivity.

Although payments may seem like a small piece of the castle that is a subscriptionbased business, it is a keystone. Without it, the structure of a company is vulnerable and prone to crumbling. 

To stay ahead of the game, speak with one of our payment experts.

Image Source: HBO

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