The subscription and recurring payments era has undoubtedly come into its own amid COVID-19. The pandemic created the perfect opportunity for Ecommerce whether it was purchasing dog food on Chewy, binge-watching on Netflix, or grocery shopping with Instacart. Consumers have realized the benefits and convenience of subscription payments and are adopting them into every facet of their lives. The North America Subscriptions and Recurring Payments Market 2021 report reveals that online purchasing methods are here to stay.
“Globally, after the onset of the COVID-19 pandemic, around two-fifths of consumers subscribed to new products and services to adapt to the changing situation. Despite the economic downturn, a low percentage of consumers canceled or downgraded their existing subscriptions. Moreover, consumer spending on the top one hundred subscription applications rose by at least 30% globally, and by over 25% in the United States.”
Recurring payments provide companies significant benefits, including revenue predictability, an uninterrupted revenue stream, stronger consumer relationships, and customer data on what sells, which improves future business planning. UBS predicts that this “subscription economy” will grow to $1.5 trillion by 2025, more than double the current $650 billion estimate.
Utilizing subscription services is a win-win scenario for consumers and companies. Consumers enter their payment credentials one time – and don’t think about it again until they cancel their subscription – and their favorite products and services are delivered to their doorstep or laptop. As a result, subscriptions have been key drivers of revenue growth for companies like Amazon, Netflix and Apple Pay, as well as industries including healthcare, higher education and utilities.
Challenges with Recurring Payments
Opportunities can also bring challenges, and subscription and recurring payments have their fair share. Merchants using a recurring-based business model are tasked with the arduous job of keeping their customer’s payment information up to date. Events like account closures, cards reported lost or stolen, expiration date changes, and re-issuance of cards due to a data breach could cause disruptions in payments and also contribute to passive churn.
Card changes can be time-consuming, complex and costly for companies, leading to high rates of authorization declines, lost sales, and ultimately, the risk of dissatisfaction and service cancellation by the customer.
Bluefin’s Account Updater for Card-on-File Payments
Bluefin has partnered with industry-leader Card Sync to provide Account Updater, an automated service fully integrated with our PayConex™ payment gateway that retrieves updated card information from Visa, MasterCard, Discover and, in Phase II, American Express, when a customer’s card is expired, lost, reissued, or reported stolen. This functionality facilitates a faster turnaround in payments and provides significant benefits, including:
- An increase in authorization rates
- Improved cash flow
- Prevention of service disruption
- Increase in customer satisfaction
- Seamless implementation
Our solution is processor agnostic and works seamlessly behind the scenes. Once a Bluefin client is enrolled in the service and is leveraging recurring billing inside PayConex, Account Updater automatically submits card/tokens associated with recurring payment plans to the card issuers ten days before the scheduled recurring billing. PayConex will then update the payment plan with the most current card credentials on file, reducing the number of interrupted bill payments while supporting continuous incoming revenue for our clients.
Account Updater automates the burdensome process of refreshing stale payment card information, reduces passive churn, and eliminates the time and resource-intensive process of reaching out to customers to update their payment details manually.
Learn more about the savings you can gain from using Account Updater and sign up today. Or see a demo of how Account Updater works on June 15th at 2 pm EST during our product webinar.