A subscription-based payment is a transaction where a business deducts an agreed-upon amount from a customer’s bank account in exchange for regular products or services delivered every month.
According to a poll by Paysafe, nearly 50 percent of customers worldwide have at least two monthly subscription plans, which they pay through their bank accounts.
And more findings show that number will increase. The study, titled Lost in Transaction, found 27 percent of the interviewed customers positive that they will make more monthly subscription payments by next year.
The multinational study investigated customers from different regions. Some of the countries involved include the United Kingdom, United States, Canada, Bulgaria, and Austria.
Cost and convenience as the primary drivers
So what are the primary driving factors behind this mode of payment? Why do customers prefer it over other methods?
Paysafe’s research found cost and convenience as the primary motivating factors behind subscription payments.
According to the investigators, 44 percent of the interviewees agree that these transactions are “better value” than other alternatives for the same item or service.
In comparison, 53 percent of customers cited that subscription plans are a convenient way to pay for everyday items or services.
Customers still have a few concerns
No matter how convenient they may be, subscription-based payments are not without setbacks, as the study finds.
Nearly half (46 percent) of the interviewed users say that these transactions are difficult to cancel and can tie someone to a prolonged commitment.
Consumers also cited forgetfulness as a problem; 35 percent of users said they’ve once funded a subscription service they’ve stopped using but forgot to cancel.
“The flourishing subscription space is pushing the old school pay-per-item businesses to shift to subscription-style models,” says Daniel Kornitzer, a senior officer at Paysafe.
“ Nevertheless, it is clear from our study that business already offering the best subscription-based payments must embrace a high level of flexibility and service honesty to their customers”
Like many other payment models, subscription plans have their pros and downsides. Business owners must now offer customers the much-needed freedom to join and cancel subscriptions as they wish.
Even more important, brands must be honest with their customers. This should include updating their systems to stop deducting payments as soon as a subscriber cancels a commitment.
Author Bio: Payment industry guru Taylor Cole is a passionate payments expert who understands the best subscription-based payments. He also writes non-fiction, on subjects ranging from personal finance to stocks to Cryptopay. He enjoys eating pie with ice cream on his backyard porch, as should all right-thinking people.