The coronavirus pandemic accelerated the growth of the subscription economy. Multiple lockdowns forced businesses and consumers alike to seek more flexible and convenient ways to procure goods and services. And it’s a trend that looks set to stay.
Rise of Subscription Payments
Whether it’s meal kits from companies like Hello Fresh or digital streaming options from the likes of Spotify and Netflix, subscriptions are becoming the new normal when it comes to purchasing goods and services.
Industries that weren’t already in the subscription game had to evolve quickly in response to physical stores being closed for most of last year. The automotive industry, for example, accelerated into the digital age with great success, despite being one of the sectors that overwhelmingly relied on physical showrooms..
Gone are the days of spending hours in a car dealership, negotiating on price and having to pick up the car in person. In its place are easy, all-in-one online marketplaces and dedicated car subscriptions, including all-electric options from companies such as Onto.
In a year full of uncertainty and economic challenges, customers have valued the flexibility offered by the subscription model of car ownership, where they pay monthly for their cars and go online for aftersales and add-ons.
And it’s not just big business signing up to subscriptions as a new revenue stream. Small and medium-sized companies have made the switch too, from local fruit and vegetable markets to art class providers and beauty stores.
Benefit to Businesses
The benefits of a subscription service extend beyond consumers to merchants themselves. The model provides them with rich data points and greater customer insights to better track consumer habits and product interests.
This is a sector poised for growth. Currently, 65% of UK households are signed up to a regular subscription service, with the UK subscription industry worth an estimated £323 million annually.
For consumers, subscriptions are also much easier to manage – especially when those payments are made using a card. Features like Account Updater ensure that expired or changed card details are automatically updated. This shift to network tokenization means customers don’t need to re-enter their information and sellers don’t miss out on payments.
Companies can also take this further by teaming up with the right technology and payment partners, to simplify their backend processes. For example, all-in-one platform providers can enable firms to split monthly payment transactions internally within departments.
Changing Consumer Expectations
The payments industry is getting more sophisticated, and consumers want a fast and easy online experience, so it’s important that businesses offer solutions that meet this demand.
The Mercedes app, for instance, offers customers real-time traffic information, remote car lock, remote diagnostic tests, and much more. The app acts as a wallet for all things car-related. To remain competitive and cater to customer needs, businesses must provide these types of innovative and easy-to-use payment services. And it’s vital that we equip merchants with the right all-in-one payment solutions that can support online sales, subscriptions and marketplaces, via a virtual terminal.
The Future of Payments
Like most payments innovation, consumer demand lies at the center of the shift to a subscription economy. With everyone leading increasingly busy lives, time is a valuable commodity. As such, convenience and flexibility are the two most important drivers in the purchase journey. And, merchants will have to evolve quickly to meet these expectations.
The surge in subscription payments over the last 12 months is just the beginning, as industries that have been slower to adapt look to make up for the lost time. Thankfully, the payment technology to help is already out there. All-in-one payment providers can help brands get a slice of this new revenue stream for themselves. By harnessing third-party platforms and paytech expertise, businesses can easily utilize existing subscription integrations or build their own subscription engine from the ground up – with the speed required to capture this emerging market demand.