Spotify Says Payments Choice Critical to Growing Global Streaming Market Share

A successful payment is music to the ears of consumers and corporations involved in streaming entertainment, so for global brands in the space, there’s no tuning out on the payments piece.

Speaking with PYMNTS as part of the Nuvei Merchant Payments Optimization series, Spotify Vice President, Global Head of Commerce and Customer Service Sandra Alzetta talked about some exciting pilots to build on the platform’s already robust payment options.

“We’re active today in 184 markets, which means that we collect payments in 184 markets,” she said. “Payments are very different in each market, which means that we have to look at each one individually and figure out the right offering for our users. If we get it right, we know just how powerful that can be.”

Not stopping at the card payment default, Alzetta noted that Spotify has partnered with Google on a user choice billing (UCB) pilot that has potential beyond the colossus of search.

“We’ve been working with Google, looking at how we make sure that we’ve got payment choice for their users,” she told PYMNTS. “We’re very proud of the fact that we’ve been working with them for the first of its kind in-app payments, which means that users have got the choice of how they want to pay.”

That work began in November, it’s live in 140 markets now, “and the focus here is always on giving our users the choice of payments that they want, the freedom to make payments,” she said, adding that “part of what we’re doing also is pioneering to make sure that not only do we provide this for our users, but we’re working with Google so this pilot can be made available more widely to other developers.”

Then there’s Spotify’s pilot with India’s UPI national digital payments platform. Saying UPI is “at the heart” of payments innovation in India, Alzetta said, “We switched [UPI] on first in 2019 for single payments, but we switched on UPI auto pay for recurring payments” late last year.

“It’s fair to say this has been extremely well received,” she said, “so, making sure that we’ve got that choice available matters.”

Read: Spotify Rolls Out Payment Options With Google

Getting Payments Right Is Its Own Reward

Spotify is using its work with Google and UPI to inform further expansions of payments choice for its roughly 433 million users globally, as it’s a crucial part of the overall experience.

Alzetta pointed out that at present, Spotify accepts 130 different payment types globally, going market-by-market to understand local and regional payment preferences.

“Why are we doing this? We’re doing it because we know that if we get it right it will have a marked impact on the ability of our users to pay,” she said, “which means that all of the hard work done upfront by the marketing guys, the product guys and so on when the user comes to pay, they’ve got the payment method that they want to use, and we make sure that it works in the most effective, efficient and frictionless way possible.”

Among things that Spotify takes “very seriously” is choosing payment types based on location, presenting payment options in the local language, and putting work into checkout experiences that are fast and frictionless, with clarity in terms of products, pricing and more.

“Ease of product selection sounds like an obvious thing, but checkout can either make that easy or make that confusing. If we get it right we see a very notable difference,” Alzetta said.

“Also, easy repurchase for non-recurring payments” is a critical area for subscription services like Spotify, she said. “There’s a lot of focus on what’s going on in the background that consumers don’t necessarily see, but we know that by making some changes there, it can make a phenomenal difference to performance.”

See also: Spotify Touts Growth in Users, Subscribers, Podcasts

Making Complexity Invisible to the User

Operating in so many markets worldwide, what happens behind the scenes — the machinery of processing payments — is an unseen and utterly vital component of success.

“The stuff that’s going on in the background matters very much,” Alzetta said. “We work with over 30 different payment partners globally. We do that because we know that we need to localize. We spend a lot of time thinking through whom we should work with on a global basis, multi-regional, multi-country, and then occasionally on a local basis.”

Those partnerships touch on everything from transaction speed to integration ease as companies must manage the associated opportunity cost of each.

Fraud is another prime consideration, and striking the right balance between stopping fraudulent transactions and minimizing relationship-ruining false declines is delicate. “On the fraud balance — that wonderful holy grail that we often talk about — we want to obviously keep fraud detection as high as we can, but we want to minimize friction and minimize false declines as well. We spend a lot of time looking at that and making sure that we’ve got the right partners to help us there,” she said.

A global payment optimization strategy also involves managing multiple currencies and the impact of FX. Spotify accepts 40 different currencies now, and by encouraging consumers to transact in the currency and payment option of their choice affects the bottom line.

Still, Alzetta said, “I love the fact that consumers are growing in confidence. They have the appetite to try new payment methods, and it’s all about what offers them the most convenience. We love the fact that we can expand our addressable target market by offering new payment methods. We’re also conscious that we can significantly increase inclusivity by offering the right payment methods. We don’t want to disadvantage any demographics.”