62% of respondents said they are planning to review their subscription services in the next six months in the context of the cost-of-living crisis and 38% say they have already cancelled a subscription service.
At the same time, 38% of the public have kept paying – accidentally or otherwise – for a subscription service they’ve stopped using entirely. Almost one in ten (9%) people with subscriptions say they spend over GBP 25 per month on services they don’t regularly use, while a quarter (25%) said they didn’t know how much they were currently spending on their little-used subscriptions.
The findings suggest that the difficulty in cancelling subscriptions – many of which are set up as ‘card on file’ payments, which do not show up alongside Direct Debits on a user’s bank account – is a key factor driving this behaviour: 45% of respondents agreed that subscriptions were too difficult to cancel.
However, consumers are willing to continue paying for services by subscription, providing they have more transparency and control: over half (51%) say they would be more willing to use subscription services if they were easier to cancel.
The answer to the issues of spending transparency and control for consumer outgoing could lie in the wider roll out of variable recurring payment (VRP) mechanisms. While the Competition and Markets Authority (CMA) mandated these payments between two accounts belonging to the same person, business payments such as utility bills or subscriptions were not included, so it remains at banks’ discretion to implement them.
Despite this, VRP for business payments are being provided by NatWest in collaboration with firms including TrueLayer, going beyond the CMA’s requirements and making it easier for consumers to view and make changes to their recurring payments.
The subscription economy has become an important method for buying products and services but, currently, it is difficult for consumers to see and amend the subscription services they use. Open Banking can transform this by giving control and flexibility to consumers, allowing them to see and make changes to subscriptions more easily via their banking app.
The global subscription ecommerce market size is expected to increase from GBP 62.64 billion in 2021 to GBP 103.13 billion in 2022. And it is expected to reach GBP 776.81 billion by 2026.
With the UK subscription market estimated to be worth GBP 1.8 billion, exploring new payment methods could help retailers tap into this market at a time when revenues are under pressure, while building trust with money-conscious customers.
Offering subscription memberships to consumers has been shown to increase customer purchases and increased revenue from subscriptions has a long-term impact. Merchants can expect this recurring revenue stream from subscriptions to improve their cash flow, budget forecasts, and business valuation.
Therefore, subscription commerce allows merchants to provide a direct-to-consumer experience that attracts, retains, and benefits customers long-term. As the subscription commerce industry grows, merchants that offer subscription options to their consumers will see significant long-term results.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now