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Data for today’s episode is provided by Mercator Advisory Group’s Blog – Subscription Economy Accelerates as Stay-At-Home Lifestyle Spurs Demand
Six Necessary Services for Subscription Management:
- Recurring Billing Functionality: Merchants must gather and secure account details and card credentials, which increases PCI-DSS.
- Cardholder Account Updating: Includes updating card network payment credentials and updating the services/prices being provided.
- Automatic Transaction Retry: Resubmitting a transaction after it fails requires different responses according to the reject reason code.
- Customer Invoicing: Provides transparent transaction details and compliance requirements by jurisdiction.
- Accounting & Tax Calculation: Particularly around recurring revenue and rejected or dropped services – this is a focus for ISVs.
- Reporting and Data Analytics: Tracking data along the entire subscription lifecycle – from free trials, onboarding, pricing changes and account changes.
The subscriptions economy has become a growth segment of the U.S. services economy. While subscriptions go back many years, it’s been the digitization of commerce and consumer purchase behavior that now drives the subscriptions market. Through 2022, online subscriptions will find higher growth due to continued consumer popularity of streaming services and software. Payments firms, including ISVs, merchant acquirers, and payment gateways, must understand the subscription management requirements of sellers and key trends that are driving market growth. A new research report from Mercator Advisory Group, Subscription Economy Accelerates as Stay-At-Home Lifestyle Spurs Demand, sizes up the U.S. online subscriptions market and its future direction.
“Video and music streaming has led the rapid growth of online subscription services for stay-at-home households during 2020. Online subscriptions have become a growth area within e-commerce and will continue in the foreseeable future. Bundled subscriptions prove to be a winning marketing strategy for the leading industry players such as Amazon and Apple and consumers have responded enthusiastically,” commented Raymond Pucci, Director, Merchant Services Practice at Mercator Advisory Group, the author of this report.