The Adyen guide to subscriptions
From movies to meal kits, people love the ease and delight of subscription services. And brands certainly don’t mind the consistent customer relationships. Here we explore the main ways merchants can make the most of this booming market.
Give your customers something to look forward to
Streaming services for movies and music have been the big standouts, and they’re certainly not alone. From software and razors to fresh produce, subscriptions services are everywhere – growing more than 300% in the last seven years alone.
It’s estimated that soon all entrants to the software market and 80% of historical vendors will offer subscription based models
Subscription business models result in customer lifetimes that are six times longer than single purchase models
An efficient and secure unified platform can unlock up to 6% more revenue for subscriptions
How to boost and secure subscription business with a unified payments platform
With built-in flexibility, agility, and security, the right payments platform can be a powerful business growth tool for this business model. We see these four recurring solutions across the subscription system.
Optimize the sign up process with local payment methods
Let your customers pay the way they want no matter where they are in the world. In North America, the UK, and Australia the majority of transactions are made by credit card. However, they only represent a fraction of global consumers, millions of whom don’t use cards.
In Germany and Russia, for example, credit cards are less common. Local services such as SEPA and QIWI are used for recurring and subscription payments. SEPA payments also account for a significant market share in Austria and the Netherlands.
“Adyen’s global reach is key for us to be able to increase our penetration with more payment methods.”
Patrik Falk ∙ Product Owner Payments, Spotify
Deliver uninterrupted access by adjusting your billing intervals
Factors such as the time of day and day of the month can have a significant impact on transaction success rates. In the US for example, most customers are paid bi-weekly, typically on a Friday, with an uplift of successful payments at the beginning and middle of each month. In the UK, people tend to be paid monthly, with one spike towards the end of the month.
By analyzing transaction success rates across individual markets, you can make data-driven decisions about optimal times to bill subscribers. Consider asking customers what intervals and times they prefer to be billed.
Adyen’s payment optimization tool is your key to effortless upgrades. By testing and optimizing at the gateway and acquiring level, this toolkit learns in real time.
Refusals due to insufficient funds
Apply smarter approaches to recovery with data-driven retries
When a transaction fails for technical reasons, the best practice is to retry immediately. If a transaction fails for non-technical reasons, such as insufficient funds, it may be better to retry over a longer-term period to allow time for the cardholder’s payday to come around.
Intelligent systems can sense when to retry and when to allow for more time, improving the customer experience while minding the busines
Retry success: two adyen features head-to-head
Protect against fraud with an individualized approach
The traditional approach to minimizing fraud is to stop all suspicious transactions. However, this blanket approach ignores the intricacies of a successful payment authorization and can also block legitimate customers.
One way of reducing blocks on genuine subscribers is to focus on identifying which transactions are most likely to be legitimate. When it comes to subscriptions, higher chargeback rates are typically associated with the initial setup and, as the subscription ages, the chance of a recurring transaction turning into a chargeback diminishes.
Most chargebacks will come through within six months of the subscription set-up. Therefore, it makes sense to whitelist recurring transactions where the subscription age is greater than six months so you can treat the payer as a loyal shopper.
Adyen’s built-in risk management system is designed to handle the high velocity, automated fraud common among subscription businesses.
$331 billion in genuine customer transactions are blocked each year.
About Adyen
Adyen is the payments platform of choice for many of the world’s leading companies, providing a modern end-to-end infrastructure connecting directly to Visa, Mastercard, and consumers’ globally preferred payment methods. Adyen delivers frictionless payments across online, mobile, and in-store channels. With offices across the world, Adyen serves customers including Facebook, Uber, Spotify, H&M, Casper, Bonobos, and L’Oréal.
Download the full guide to subscriptions