Three unexpected reasons to accept multiple payment types for subscriptions
Businesses using a subscription billing model might be reluctant to accept a wide variety of payment options, fearing the return on investment won't be worth it. However, a limited approach to accepting payments inconveniences customers and causes a business to lose out on new subscribers. Here are three unexpected arguments for why subscription services should accept multiple payment types:
1. Customer payment preferences are shifting
As more options such as PayPal, Apple Pay and Amazon Payments become available, consumers use older payment solutions less often. According to a 2015 study from TSYS, debit cards are slowly falling in popularity. They still take the top spot - 41 percent of respondents said debit is their preferred payment form - but fell 2 percent from the 2014 report and 8 percent from 2013's. Meanwhile, the number of consumers who prefer credit cards remained more or less consistent.
Other electronic payment forms like PayPal and mobile account for some of debit's decline. These are more convenient than cards but present their own privacy and security concerns. Numerous high-profile data breaches have occurred over the past few years, and consumers fear using mobile payments opens their sensitive information up to hackers.
Research from Pitney Bowes found 66 percent of global consumers buy from other countries. Consider the recent Korean beauty products trend where American consumers suddenly became interested in products they couldn't access before, such as oil cleansers and face masks. The novelty and quality of these items lead to a surge in demand. According to New York Magazine's The Cut, the value of Korean beauty products exported to the U.S. during the first half of 2015 rose 60 percent over the prior year.
This sudden demand no doubt affected beauty boxes, which typically operate on a subscription billing model. It's likely this trend will extend to other subscription industries like online media or software as a service. Accepting multiple payment types makes it easy for these businesses to expand internationally in preparation. As Entrepreneur's list of worldwide payment preferences pointed out, consumers from different countries are incredibly diverse in how they like to make purchases.
3. New payments force some customers away
It might seem beneficial to keep things simple and only accept modern payment services like PayPal or mobile. These services link to a customer's debit card or checking account, but an issue arises when potential subscribers haven't signed up for them already. These people are forced away from the subscription sign-up process and onto a separate webpage, which leads to what is essentially increased cart abandonment rates. According to research from VWO, having to create a new account stops 23 percent of online shoppers from completing a purchase.
Accepting multiple payment options seems like a considerable undertaking, but the right subscription management solution makes doing so easy and cost-efficient.
Kevin is an industry veteran with extensive experience in strategic marketing for enterprise software companies and SaaS-based businesses. His 15-plus-year track record includes developing integrated multi-channel marketing programs and partnerships that yield financial results, expand the customer base, increase market share, and build brand affinity. Prior to joining Vindicia, Kevin held senior marketing positions at STEALTHbits Technologies, Tripwire, Epicor, Baan, and Adobe Systems. He holds a BSBM degree in marketing and business management from the University of Phoenix.
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