The recurring payments market has become one of the fastest-growing segments in financial services, fueled by the rise of subscription-based business models and the increasing digitization of both consumer and business payments. As companies look for more efficient ways to collect recurring revenue, fintech providers are expanding beyond traditional card-based transactions to offer alternatives that reduce costs and improve payment visibility. GoCardless’ entry into the U.S. market highlights the growing demand for ACH-based recurring payment solutions and underscores the opportunity to modernize everything from consumer subscriptions to business-to-business payment workflows.
U.K. fintech GoCardless has launched in the U.S. with a payment solution for businesses to manage their subscription and recurring payments. Today’s article in TechCrunch explains that the capabilities will serve both consumer transactions as well as business-to-business (B2B) payments.
The GoCardless name refers to the use of ACH debits to fund transactions rather than card transactions. The company’s U.S. website states that its transaction fees are 1% of the purchase amount with a $0.25 minimum and a cap of $2.50.
GoCardless joins other recurring transaction fintech providers such as Chargebee, Chargify, Recurly, Stripe, and Zoura, plus processors including First Data, Tsys and WorldPay. Mercator Advisory Group published a paper on this market last year: Recurring Payments Market Forecast; Set It and Forget It.
Here’s more on the GoCardless form the TechCrunch article:
GoCardless’ new U.S. product supports debit payments on the ACH (Automated Clearing House) network. This means that businesses can use the GoCardless platform to offer U.S. consumers the option to pay by recurring bank payments, as an alternative to a credit card, for example. Likewise, companies can use GoCardless for debit payments for B2B transactions, such as relating to SaaS subscriptions, invoices or installments.
It is the B2B use case where GoCardless thinks there is the biggest opportunity for recurring payments, since, unlike in the U.K., for example, the biggest competitor would be writing cheques. That’s costly and slow by 2019 standards and doesn’t provide anything like the visibility that direct debits and ACH affords.
GoCardless adds that businesses using the GoCardless ACH debit solution gain increased visibility over payment flow via a “fully automated” collection system. This includes things like due dates, and whether or not a payment was successful or failed and why.
The addition of ACH debit means that GoCardless’ global debit network now covers more than 30 countries accessible through a single API and platform.
GoCardless enters a competitive but rapidly expanding market where businesses are seeking greater automation, lower payment acceptance costs, and improved visibility into recurring revenue streams. By leveraging ACH payments instead of traditional card networks, the company offers an alternative that may be particularly attractive for B2B subscriptions, invoicing, and installment payments. As recurring payments continue to become a cornerstone of modern commerce, solutions that simplify payment collection across multiple countries and payment rails are likely to play an increasingly important role in helping businesses manage cash flow and customer relationships.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group