Nearly everything we purchase seems to be moving to some type of subscription model. The facts bear this out, as the global subscription market is expected to rise to $406B by 2025. There used to be one cable TV bill. Now, most people have several streaming TV subscriptions. Buying food or products on Amazon has turned into a subscription, as many merchants offer the option to subscribe for regular product deliveries.
Visa wants to help consumers rein in all of their subscriptions through its new Subscription Manager. By putting every subscription in one simple location, consumers can see what they are subscribed to and manage those subscriptions. Visa's Subscription Manager is currently in a pilot program in select regions.
To avoid being left behind, Mastercard has a similar subscription management solution called Smart Subscriptions. It allows consumers to pause, cancel, and resume their subscriptions. Consumers can see their subscription spending by category, along with any upcoming bills.
Mastercard's solution relies on its open banking technology API. This API can bill financial data from participating banks (i.e., those that use Mastercard's API). The program is currently being piloted in the U.S. and is expected to increase its coverage later this year.
A study by PYMNTS in collaboration with sticky.io found that consumers decreased their subscriptions from an average of 4.1 in 2022 to roughly 2.9 as of Q1 2023.
This same study found that merchants are finding creative ways to increase consumer satisfaction with their subscriptions. Those who offer more subscription options have higher retention rates and fewer cancellations. For example, the top 100% of subscription performers offer a method for pausing subscriptions, while only 23% of the bottom performers do the same. Additionally, 100% of the top performers provide consumers with guarantees or refunds, while only 20% of the bottom performers offer such options.
In addition to pausing options, allowing customers to switch subscription products and move up or down subscription tiers has improved customer lifetime value.
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