The subscription business model is growing sharply across the globe, and for good reason. Companies can bank on its recurring revenue stream to more confidently plan expansion, for example, and manage cash flow.
The subscription business is also contending with the twin challenges of fraud and subscriber churn, forcing companies to increasingly turn to high-tech fraud-busting solutions to entice and keep subscribers. The latest Global Recurring Payments Tracker highlights the various technologies powered by artificial intelligence (AI), advanced machine learning and biometrics that are allowing companies to strike the critical balance between safety and convenience in the onboarding and payment process. The Tracker also examines how the model is spreading to different sectors in the U.S. and abroad.
The subscription model continues to gain traction in the B2B sector. Dell Computer became the latest major player to join the B2B subscription eCommerce space. The firm launched a platform called Dell Technologies on Demand to enable business customers to use its software as they need it as a service or as a subscription.
Subscription providers are also looking to expand into new regions. United Kingdom-based FinTech GoCardless offers its recurring payments acceptance solutions to 50,000 customers worldwide — a number it is looking to boost. The company is teaming up with payments and KYC solutions provider Accuity to fuel its expansion in the United States. GoCardless will use Accuity’s American Bankers Association (ABA) routing number information and its Bankers Almanac Payments Data solution to help businesses seamlessly collect payments in the U.S.
One subscription business recently received a boost of its own. If the latest fundraising effort by ClassPass is any indication, the rise of subscriptions isn’t waning anytime soon. The fitness subscription app, now worth $536.4 million, is issuing 22.7 million Series E shares that could lift its value to close to $1 billion.
Subscription scams such as continuity billing or negative option billing fraud costs U.S. cardholders more than $14 billion annually, according to one study. The Tracker’s Deep Dive explores some of the data-rich defenses companies and FinTechs are employing to gain the upper hand against digital crooks. These include advanced machine learning systems that identify crooks by analyzing usage patterns and flagging anomalies during onboarding. For many companies, typical biometrics is no longer good enough to effectively fight fraud; more aggressive solutions are also using face recognition technology that recognizes unique vein patterns in individuals, for example.
An Analytical Approach To Fighting Subscription Churn
While fraud-busting technology will only get more sophisticated as hackers’ schemes evolve, smart subscription companies know that it’s important to go beyond just digital solutions to strike the proper — and potentially profitable — balance between providing security and a smooth and seamless relationship with customers. Along with a focus on technology, knowing what customers value is a vital weapon against churn and fraud, explains Kate Thunnissen of Trint, a London-based automated speech-to-text platform provider. “There is no better product development team than customers,” Thunnissen says.
In the Tracker’s Feature Story, Thunnissen tells PYMNTS why maintaining a deep respect for customers means providing convenient and fraud-free environments, even if payment processes are slightly delayed.
About the Tracker
The Global Recurring Payments Tracker®, a PYMNTS and GoCardless collaboration, is a go-to monthly resource examining the complexities and challenges of the international recurring payments space, as well as the latest efforts to enable smoother cross-border transactions for global business growth.