Although subscription-based business models have been around for quite some time, consumers traditionally mainly opted for subscriptions of mainly media and entertainment services. The concept became even more popular for physical goods such as food & beverages, beauty & personal care, supplies for pets and animals, and luxury items during the pandemic when consumers found it difficult to physically go to a store. According to data cited in our upcoming publication “Global Subscription and Recurring Payments Market 2022”, physical goods are estimated to account for nearly half the subscription revenue in 2022. Affordability, cost saving, and convenience became the top motivators for consumers to sign-up for subscriptions. Furthermore, this business model is also welcomed by merchants due to its resilience during difficult times and its ability to generate recurring profits and revenues. A rise in demand for subscription products and services has also fostered the growth of recurring payments that support the subscription economy. Consumers want fast and frictionless ways of payment and therefore, subscription companies have now introduced digital wallets, BNPL services, and biometric payments among other payment methods.
Amidst this shift in digital payments within the subscription market, some payment processors such as Square and PayPal dominate the U.S. recurring payment market. The giants in the payment industry are continuously upgrading their features and introducing new features to make payments easier for their customers. For instance, as mentioned in our upcoming publication “Global Subscription and Recurring Payments Market 2022”. Square provides some benefits for its customers such as free Android and iOS apps, automatic reminders as well as the possibility to see when the invoice was viewed. Apart from not charging chargeback and monthly fees, the company also accepts a variety of payment methods such as ACH, debit and credit cards, and digital wallets such as Apple Pay, Google Pay, and square pay.
Yet another payment method that companies are now introducing is one-click payment. The UK-based Neobank has introduced a one-click payment solution, Revolut Pay, and has signed on with Shopify and other companies. This facility is available for both customers and non-customers. Non-customers will be able to use the facility after their card details are saved. Other companies such as Amazon, Shopify, and PayPal have also introduced one-click payments to provide a seamless customer experience. To take advantage of one-click payments, customers need to fill out their information only once, which saves time and is often very convenient. For merchants, it leads to higher conversion rates as cart abandonment rates are reduced due to frictionless payment.
Thus, to sum up, with the expansion of the subscription and recurring payments market, payment processors are trying to come up with new methods of payment and new and better features of the already existing recurring payment gateways. This will go a long way in offering convenience to customers while check-out and foster further growth of the subscription market.