New technologies are fuelling innovation across the payments sector, with automation helping to make the entire process faster and more convenient. Consumer demand is also changing and we’re seeing a surge in popularity for recurring or subscription-based payment plans. However, managing these recurring payments remains a substantial factor in a businesses operating cost, especially for those reliant on legacy systems.
Without the right technology, this can drain resources and hinder a businesses ability to grow. Here, Andrea Dunlop, managing director of Access PaySuite, explains why now is the time to invest in a digital-first payments approach and the efficiency savings this can bring, allowing businesses to focus on growth and scaling-up.
While many businesses already had some form of digital payments system in place, the pandemic rapidly accelerated this trend. At the start of 2020, UK Finance reported that cash payments continued their long-term decline during 2019, primarily as a result of the increased use of debit cards and online payments.
From March 2020 and the start of the first national lockdown, all businesses had to adopt a digital-first approach with cash becoming almost obsolete. One McKinsey report found that ATM usage in the UK declined by a staggering 46% per month on average from March to July 2020.
The pandemic also led to some huge changes in consumer behaviour, with 65% of UK households signing up to regular subscription services in an attempt to keep themselves entertained. In fact, spending on digital and subscription services increased by 39.4% in July, 2020, with research from BarclayCard Payments finding the UK to be a nation of ‘super subscribers’. The same report estimated that the subscriptions service economy is now worth a staggering £323million.
It wasn’t just entertainment platforms capitalising on this trend, one in ten retailers also launched their first sign-up service during lockdown, with a fifth now looking to develop their subscription offering longer-term. In fact, 75% of retailers now believe subscription services offer a more reliable and predictable source of income than a one-time charge model and 87% believe that subscription services allow their business to better keep up with competitors.
One study found that in the UK recurring payments accounted for £7billion of total transaction volume in 2019 and globally this number stands at $344billion. This trend also shows no sign of slowing, with the value of this market expected to grow annually at 24%, year-on-year.
Managing recurring payments
Given these figures, it’s easy to see why an increasing number of businesses are seeking to offer subscription-based payment methods in line with customer expectations. However, those reliant on legacy software will struggle, with whole teams required to manage and process these payments.
Digital-first technology, such as Access PaySuite, can automate the entire payment process, making it far simpler for both businesses and consumers. Despite what many think, switching to an integrated payments system is straightforward and over time could lead to huge savings in both time and money.
Remember, for businesses of all sizes it isn’t just the transaction fees that have to be considered. Managing disparate payments systems drains staff time, as does chasing overdue invoices and confirming payments have been made. It’s also unlikely that legacy software will be able to condense your valuable data in a meaningful way, preventing you from making informed decisions.
Once you have an integrated payments system in place, you can better manage recurring payments, with finance teams able to undertake cash flow forecasting based on guaranteed income. With a better idea of income over a set period of time, as well as being able to better manage rolling contracts and the automatic renewal process, businesses can turn their attention to growth or consider additional revenue streams.
No matter how many new subscriptions you take on, or new revenue streams you add to your business model – you know that the software has the capability to process and manage these payments as you grow. For those reliant on out-dated systems, growth may involve expanding finance teams, which can be a costly endeavour.
From a customer service point of view, it’s important that monthly payments are processed in the background as they would expect. Automatic renewal prevents individuals having to re-key their information or subscribe to a new deal, strengthening your chance of retaining their business.
In today’s digital world, we need payments to work without fuss and consumers are increasingly prioritising hassle free and frictionless payment methods