Trusted payment solution providers are helping merchants take advantage of the “monthly box” trend.
Recurring payments are a key component of a growing trend: subscriptions. It seems like you can buy anything on a subscription basis these days. For decades, people subscribed to newspapers and magazines. It was easier than running out and buying the latest edition – and if there was an intriguing headline, you might not get your copy. Moreover, subscriptions meant you paid less than the newsstand price.
Over the years, more businesses, such as Dollar Shave Club, HelloFresh, and Birchbox, found that the subscription model was a great way to keep customers engaged and cash flowing in. Recent research by McKinsey and Company found that 15 percent of online shoppers, often younger consumers in urban areas, have become subscribers. They receive monthly personalized boxes of goods, providing them with a convenient, usually cost-effective way to stock up on the things they need.
Are your merchants selling subscriptions?
If you’re like other value-added resellers (VARs) or independent sales organizations (ISOs), you probably have a pretty well-defined market. You specialize in providing services to, for example, retailers that fall into the small and medium-sized business (SMB) category, small grocers, or businesses like salons or fitness clubs that provide services to consumers. Suggesting recurring payments to your customers may seem illogical because they don’t sell subscriptions. But should they?
During the pandemic, consumers shopped online more often when brick-and-mortar locations closed – and many discovered the added convenience that subscriptions offer. When they ordered cleaning supplies, health and beauty products, printer ink, or even groceries, some ecommerce sites gave them the option to start a subscription, often at cost savings per item. If it’s a product that the consumer uses regularly, it makes sense. When quantities begin to run low, another package will appear on the doorstep to replenish supplies. That makes subscriptions convenient, easy, and frictionless.
Recurring payments are key
The subscription model is also beneficial to merchants, allowing them to take advantage of greater and more predictable cash flow. Offering subscriptions can also enable more accurate sales forecasting and easier inventory management since merchants know in advance what they’ll sell.
However, managing subscription payments manually can be a burden on a merchant’s back office given the need to keep cardholder information up to date and keep payments in sync with fulfillment. By providing merchants with recurring payments, you make the sales process easier and more efficient for both your client and their customers. Once recurring payments are established, they continue automatically. Meanwhile, services such as Card Updater keep payment data current and reduce rejected transactions. Additionally, integration with POS and accounting systems ensures other departments are informed of payments.
How to implement recurring payments for your clients.
To set up recurring payments for a merchant, start by finding the answers to the following questions.
- Will the price the consumer pays be a fixed cost month to month, or will it vary?
- Will the customer be able to change subscription tiers from month to month, for example, choosing a plan with more features or changing a quantity in a curated subscription box?
- Does the subscription have an end date, or will it continue until the consumer cancels?
- Which types of payments does the merchant want to accept?
- How many subscriptions, and what is the average ticket the merchant expects?
When you have the answers to these questions, you can recommend the best way to add recurring payments to a merchant’s current payment solution and optimize them for cost-effectiveness, payment functionality, and the best consumer experiences.
A popular solution for brick-and-mortar SMBs is to add a virtual terminal, which allows a merchant to set up recurring payments in just a few steps
Business growth through subscriptions.
Consumers are always looking for the easiest ways to interact with merchants and buy the things they need. The set-it-and-forget-it nature of subscriptions and recurring payments takes convenience to a higher level – customers order once, and each month the things they need are delivered to their front door.
Your merchants that sell consumable products or curate monthly boxes can build their businesses with subscriptions. So why not assume the role of trusted business advisor and start the conversation about their plans and their options – and help them build predictable monthly revenue for their businesses with recurring payments. You may also be able to grow recurring revenue for your portfolio as well.
To learn more about selling recurring payments and offering free access to our Virtual Terminal, contact North American Bancard.
