Digital Payments

Why Local Powers Global Recurring Payments

“Go West, young man,” or variations on that thought once served to point the way toward potential prosperity for workers and budding entrepreneurs. Now, in this digital era, the push to go international, and to engage in cross-border commerce, is an ideal that applies to all types of retail and transactions, including subscription commerce and recurring payments.

In a new PYMNTS interview, Pranav Sood, vice president, international expansion at GoCardless, discussed the landscape for international recurring payments, with an eye to the challenges that need to be overcome for those transactions to gain even more popularity in 2020.

The key to all this, as you can imagine, is having a robust payments program in place, one that is responsive to the challenges of cross-border transactions — not only local currency and payment options, but the regulations specific to each new market and country. And most businesses involved in the subscription space will likely need a helping hand to get that right. “Unless you are in the payments business, this might not be what you are best at,” Sood told PYMNTS.

Subscription Growth

Indeed, as PYMNTS research has documented, subscription businesses can get only so far serving their local customer bases. To stay competitive, merchants must be ready to expand their subscription offerings into new markets around the globe. Consumers worldwide appear increasingly receptive to subscription offerings, with a recent survey of those in 12 countries finding the share of adult respondents who have subscription services rose from 53 percent in 2014 to 71 percent in 2019.

Expanding operations to reach customers like these requires that businesses not only offer appealing products and services, but also provide payment experiences that are both convenient for consumers and easy for companies to manage.

Cross-border subscription businesses often struggle to deliver the payment experiences their customers expect. This is because cross-border payments are both more complex than domestic ones and tend to have more risks associated with them. Firms operating across borders can thus find themselves waiting for transactions to settle, struggling to pinpoint the status of their transfers or being required to handle FX changes. In the end, they are forced to wrestle with these and other challenges rather than focusing on their products or expanding their operations.

That’s not all the hard work that businesses face when it comes to cross-border recurring payments, Sood said. Cost challenges are always a force to be reckoned with. “You have to make sure you process payments in a way that is cost-effective,” he said. “It’s not only processing — it’s the total cost of ownership, too.”

As well, some parts of the cross-border recurring payments space are more developed and robust than others. “A lot has happened on the accounts payable side of the equation,” he told PYMNTS. “Not enough has happened on the accounts receivable side.” Fixing that will remain a main focus of work going into the 2020s.

Recurring Payments Developments

That said, work is happening in the B2B subscription and recurring payments space. Indeed, GoCardless recently announced that DocuSign will deploy its software as a subscription (SaaS)-based payments platform for its European customer base. The U.K.-based, direct debit company revealed that DocuSign customers will now be able to access the GoCardless platform through Zuora, enabling customers throughout the U.K. and Europe to select Bank/Direct Debit as an alternate payment option. DocuSign customers will also be able to fully automate its recurring billing, collections, quoting, revenue recognition and subscription metrics.

Current data shows that a quarter of DocuSign’s new customers in the U.K. and Europe choose to pay with direct debit through GoCardless. And in the U.S., research shows that direct debit is the second most popular payment method for B2B-based online subscriptions, regular business bills and invoices, and installment plans.

In addition, failure rates for direct debit are typically four times lower than that of credit cards, while automated payment structures through direct debit drastically reduce late customer payments.

The recurring payments and subscription commerce industries are growing fast, but many challenges remain, especially around the issue of cross-border payments.


New PYMNTS Report: The CFO’s Guide To Digitizing B2B Payments – August 2020 

The CFO’s Guide To Digitizing B2B Payments, a PYMNTS and Comdata collaboration, examines how companies are updating their AP approaches to protect their cash flows, support their vendors and enable their financial departments to operate remotely.