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How Frictionless Payments Improve the Subscriber Experience (Even Amidst a Global Pandemic)

Michaela Leblanc Weber
Vice President of Global Strategic Partnerships, Worldpay
12.21.2020

As consumers continue to expect an always-on, intuitive experience, new ways to purchase and pay are popping up in everything from meal deliveries to smart homes, B2B technology, and more.

Subscriptions in particular are growing in popularity: according to the Wall Street Journal, 50% of adults will have access to at least four digital subscriptions by the end of 2020, a 50% increase from 2018.

As a result, companies around the world have seen exponential growth in subscription sales, representing a 400% growth rate in the last eight years alone, according to the Subscription Economy Index. The significant increase is being driven by consumers who are looking for more control over their purchase experience. The resulting evolution in payments and payment-related technology has created new buyer behaviours and payment options that are driving growth in the subscription realm and so much more.

A major factor in this push for more control? Consumers and companies are focused on the right payment solutions for a more streamlined and “subscriber-centric” experience.

How new payment options are impacting growth

According to Zuora’s Subscription Economy Index, successful companies are moving toward consumer-driven payments, with a laser focus on driving growth by strengthening customer relationships.

Not only do businesses benefit from increased revenue growth when they introduce more simplified payment methods, but consumers also get great value from these enhanced and varied payment options, including access to products and services at a great value, personalized service that makes them feel heard, and the financial flexibility of recurring payments that make budgeting simpler.

These shifts are boosting the subscription market too: McKinsey & Company says that 42% of users stay subscribed beyond the first month. This retention rate is less about the subscriptions in particular and more about value that consumers perceive they’re receiving from the services. That value is increasingly being determined by ease of payment as consumers continue to look for simpler, more streamlined ways to purchase goods and services.

42% of users stay subscribed beyond the first month.

McKinsey

Digital payments are leading the way

Consumers want to buy when and how they want, and they prioritize payment options that deliver flexibility and convenience.

So, what payment options are consumers and businesses focused on?

In 2019, 42% of online purchases came from mobile payments, according to Power Your Payments research. And consumers will continue to prioritize payment options that deliver flexibility and convenience. One key path to that convenience is in mobile and digital wallets.

Mobile wallets are transforming payments at the point of sale. This means more and more consumers can use their mobile phones to safely and securely store their credit and debit cards. Similarly, digital wallets offer a method of payment through other devices including phones, laptops, tablets, and more. According to the FIS Performance Against Consumer Expectations survey, 45% of consumers have a mobile payment wallet and 16% of consumers are actively moving away from cash and checks, which will likely lead to increasing digital payments adoption.

Among Power Your Payments respondents, 65% were open to paying for subscriptions with digital wallets. Growth-focused companies offering digital wallet payments can benefit from the convenience of a payment method customers prefer, which is good news for business since 33% of Power Your Payments respondents agreed that convenience is their first priority when it comes to payments and more than a billion shoppers made digital/mobile wallet payments in 2020, according to Worldpay’s Global Payments report.

Increasingly, businesses are investing in digital technology and adapting their businesses to support the changing buying behaviours of consumers. Digital and mobile payments are more relevant than ever as the market continues to change and consumers look for better, easier ways to spend. In my view, this is a prime example of technology enabling consumers to leverage the payment methods that suit their needs. Among so many payment options, technology has given consumers the power to choose quick, secure payment methods for everything they need.

Payment preferences are as diverse as the people that use them

From Los Angeles to Tokyo, Milan to Cairo, consumers are looking for payments that make the purchase experience feel intuitive while keeping their information—and their money—safer. Payments are evolving to meet the needs of consumers across diverse cultures, habits, and levels of technology. Simultaneously, I see consumers becoming increasingly savvy when it comes to payments and the move to digital.

Consumers are adapting to market shifts and looking for a seamless payments experience whether they’re making a payment for a recurring subscription service or making an online/mobile retail payment. As we begin to move beyond the early days of the COVID-19 pandemic and look toward the future of payments, I predict that consumer expectations and habits will continue to evolve and the path forward will change along with them.

What comes next?

The COVID-19 pandemic has been a one-two punch for a lot of businesses, but subscription services have continued to see tremendous growth.

With everything from groceries and medication to health and fitness, entertainment, and news available on subscription, consumers are relying more and more on these non-traditional options.

According to the Subscription Impact Report: COVID Edition, the pandemic has accelerated subscription growth rates for 22.5% of companies.

Businesses that are focusing their investment dollars on the necessary digital technology to support the change in consumer behaviour could continue to see advantages as market research shows many subscribers intend to increase subscriptions into the future.

Merchants who want to ride the subscription wave should be focused on payment solutions that support a seamless, frictionless subscription model that keeps consumers happy for the long-term.

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