A new report has predicted that recurring transactions processed on debit and credit cards in the United States will reach $473 billion by 2021. The report, “U.S. Recurring Payments Market Forecast, 2017–2021: Set It and Forget It,” has explored U.S. market size and reviewed service offerings from seven providers in the U.S. market.
Amazon, for example, has captured an estimated $7 billion to $10 billion in annual Amazon Prime subscription fees, enabling its one-click purchasing function that uses stored card and account data. Not only is storing card information for online or mobile purchases a convenience for consumers, but merchants can receive a predictable cash flow and a stronger tie with their buyers as a result.
“Buyers appreciate the convenience of entering their account information just once. Merchants appreciate the connectivity they achieve with their customer when recurring transactions are used, and the consistent cash flow they create. Similarly, issuers like the transaction volume that recurring transactions create when cards are used, but if not managed well, these transactions can result in loss of customers and financial losses,” according to a co-author of the report.
Recurring payments can cause headaches for customers, though, especially if they don't realize they're signed up for the feature. Just this month, it was reported that some customers of lingerie retailer Adore Me didn’t realize they had signed up for the company's monthly subscription plan. As a result, they faced overdrafts and other consequences. One customer said she bought apparel from the retailer, but “didn’t realize she was automatically enrolled in a monthly subscription service, an increasingly common practice with online retailers that may catch shoppers off guard in the rush of holiday shopping this year.” She figured out what was going on when her debit card was declined at a coffee shop.
According to the report, “some online subscription companies employ confusing business tactics, such as opting customers in to recurring charges without their knowledge and making it very difficult for shoppers to opt out of the monthly fees.”
