Today, customers seek uninterrupted services and more value in specific areas of their lives that they prioritise. One way to deliver on this promise is to introduce subscription-based products. Businesses from sectors as diverse as healthcare, retail, and food delivery to education, OTT, and mobile services can benefit from this model.
However, the sheer numbers associated with the model can be staggering, especially as businesses scale. For instance, in the second quarter of 2024, OTT platform Netflix touched a subscriber base of 277.65 million paid subscribers globally, growing by 8 million subscribers from the previous quarter. On the other hand, by 2028, mobile network subscriptions are projected to cross 7.7 billion.
This is where superior recurring payment infrastructure can play an important role in the accelerated growth businesses with a subscription model. In this blog, let’s understand how seamless, secure recurring payment can help subscription businesses get more innovative and drive revenues.
What are recurring payments?
Recurring payment refers to a business practice where customers automate the process of making payments on a recurring basis at a chosen interval. The frequency of renewal varies, ranging from weekly, monthly, and quarterly renewals to bi-annual and annual renewals, and so on and so forth.
Factors such as the customer’s budget, unique needs and aspirations, and the time frame of services required typically determine the ticket size and frequency of the recurring payment. Normally, businesses that offer subscription-based products require consistent renewals to sustain their businesses.
Today, subscription-based businesses are growing in popularity, especially among younger generations such as millennials and Gen Z. Hence, the subscription model has expanded into a diverse range of sectors, which span both business-to-consumer (B2C) and business-to-business (B2B) models.
Here are some popular examples:
- Telecom/ Internet services
- Streaming services
- eCommerce
- Education and training programs
- Media subscriptions
- Beauty and personal care
- Financial services such as brokerage platforms
- Fashion and lifestyle
- Healthcare, fitness & wellness subscriptions, such as gym memberships
- Food delivery services/ meal prep kits
- Pet care products and services
- Software as a service (SaaS)
How recurring payments drive revenues
Recurring payments are the backbone of successful subscription models. Here’s a brief look at how this payment practice can help businesses boost revenues:
1. Boosts healthy cash flows
Positive cash flows are an important pillar for running a healthy business. They ensure that a business has adequate funds to run its daily operations. As a larger number of customers authorise recurring payments, a business’s balance sheet starts recording a higher inflow of cash.
This trend is especially beneficial for fledgling businesses that may not have much liquidity and assets. The ability to predict future payments helps businesses strategise and accelerate business growth.
2. Encourages customer loyalty
As businesses launch subscription models, customers get to reap the benefits of uninterrupted services. This model helps them derive greater value through the strategic curation of subscription products as per their needs and wants.
As businesses scale, more subscriptions translate to an influx of payment inflows. Hence, a smooth recurring payment experience is emerging as an important factor in building customer trust and growing customer retention.
By investing in superior payment solutions, businesses can make the experience smooth, with a high payment success rate ranging between 90% and 100%. This is an investment in nurturing long-term relationships with customers. In turn, it has a domino effect on increasing Customer Lifetime Value (CLV) and reducing customer acquisition costs.
3. Helps businesses attract new audiences
Today, diverse customers have diverse needs and wants. For instance, the universe of telecom products alone is so wide, with customers having diverse needs in terms of data, voice calls, and other offerings.
Businesses can drive revenues by curating a slew of unique subscription products for diverse customers. The payment process must be simple and user-friendly, especially for newer customers.
They may include first-time internet users and other underserved demographics. Superior recurring payments infrastructure can fuel and accelerate such growth and expansionamongnewer audiences.
Powering uninterrupted recurring payments
In 2021, the Reserve Bank of India (RBI) introduced new regulations to govern recurring payments. This new regulation impacted subscription businesses overnight. Let’s understand what it entails.
RBI guidelines prevent businesses from automatically renewing a subscription without the consent of a customer. Obtaining a customer’s consent multiple times can prove cumbersome for both customers and businesses.
This approach can lead to delays in renewing a subscription, which can temporarily affect a customer’s access to services and products. Businesses that are unable to solve the issue can suffer revenue losses.
In light of RBI’s recurring payment guidelines, businesses need a reliable and compliant solution to ensure easy, seamless renewals of subscriptions. This is where the adoption of a software feature such as UPI Autopay facilitates uninterrupted recurring payments.
For instance, Plural by Pinelab’s state-of-the-art payment gateway comes with a UPI Autopay with a simplified recurring payment workflow. The entire process is automated.
- Once a customer chooses the subscription product and confirms the terms of the subscription mandate, they must give a one-time approval using a UPI PIN.
- The terms include important details such as the payment amount, frequency of renewal, payment date, and duration of the mandate.
- Once completed, the amount is deducted on the selected dates, and the subscription is automatically renewed.
- Customers have the option to pause or revoke the subscription at any given time.
- Both customers and businesses receive timely communication via SMS/ email at every step of the process.
In conclusion
Today, the consumer mindset for specific services and products is shifting towards subscription-based consumption. As businesses acquire more subscribers, they need full-proof payment software to ensure that customers renew their subscriptions.
Going forward, the adoption of superior recurring payment infrastructure will play an important role in the scalability, customer retention, and growth of subscription-based businesses. By partnering with a superior payment software specialist, they can identify and integrate the right solutions for their business needs.
Plural by Pine Labs offers Plural Gateway, a cutting-edge payment solution that automates the entire payment process. A few key features are:
- Businesses can offer their customers a seamless, secure, transparent, and flexible payment option on their websites, apps, and other interfaces.
- Customers have access to over 100 payment modes. They can choose from a wide range of EMI options, as well as Buy Now Pay Later.
- The UPI Autopay feature is specially designed to support businesses with subscription models and help accelerate renewals on time.
- Through the customised payment links feature, businesses can also drive revenues via channels such as social media and messaging apps.
Reach out to us about your needs and start a conversation.
Plural by Pine Labs has received an in-principle authorisation from the Reserve Bank of India (RBI) to operate as a Payment Aggregator.
