Recurring payment models and subscription services are becoming increasingly popular, in fact, if I had a nickel for every magazine subscription I’ve turned down, I’d easily have enough money to subscribe to one for life.
However I’d still have no desire to. I’ve always been critical of subscription models. They come across as gimmicky and wind up providing something I use frequently at first but ultimately very little.
Then I realized something: I am happily making recurring payments on several services. They just aren’t explicitly “subscriptions” like a magazine or gym membership.
They are services like Spotify, Blue Apron, Birchbox and Dollar Shave Club.
I even support platforms like Patreon, which allow for creators to collect monthly pledges for their content. A handful of my favorite podcasters earn a living this way, and it’s all possible due to recurring payment models.
Benefits of Subscription Services
As the Internet age expands and online shopping becomes more prevalent, millennials like myself are increasingly subscribing to services and products.
So it’s safe to say recurring payment models aren’t going anywhere. In fact they are only going to grow in popularity and scope.
For these reasons, it’s important to understand the benefits and dangers of these payment models from a merchant’s perspective.
The benefits are simple: Recurring payment plans appeal to millennials. Their age group is Internet savvy and shops online frequently. The plans offer lasting customer relationships with very little consumer stress.
The model also allows merchants the opportunity to test new products and offers on a recurring bill platform.
The Disadvantage to the Recurring Payment Model
There is only one disadvantage to the model, and it is rather concerning: card replacement. These occur when a credit card on file expires, is changed, or reported stolen. When this happens, it requires the merchant to contact the customer for a new payment card.
There are a few solutions to this problem but they are far from infallible. Most rely on communication between merchant and consumer.
This isn’t to say you should smother your customers with emails, but definitely send notifications for payments received, processed and due.
Furthermore, send special offers, sales, birthday and loyalty rewards to keep in constant contact with your customers.
How EMS Can Solve Recurring Payment Problems
Electronic Merchant Systems offers a feature to its merchants that automatically updates cards on file when a card issuer replaces them.
Services such as this would come close to eliminating the only downside of recurring payment models. So it’s important to jump on the trend now and start building lasting, low-stress relationships with your customers!
If you would like to get started today, Electronic Merchant Services can help your business! Click the button below now!