From predictable cashflow to better customer retention, there are many benefits associated with online subscription billing. However, when it's introduced without appropriate preparation, the repercussions can be catastrophic.
Spotify, Netflix, Dollar Shave Club and now even car subscriptions… we’re watching the end of ownership and evolution of the online subscription business model. In fact, a McKinsey report found that the value of online subscriptions rose from US$57 million in 2011 to US$2.6 billion in 2016.
Unsurprisingly, the frequency of automated online payments is increasing, with the Reserve Bank of Australia revealing they account for 16 per cent of Australians’ total weekly expenditure.
The advantages of an online subscription model are numerous. For businesses, automated recurring payments provide a predictable and consistent income, while reducing the time spent chasing and reconciling funds. It’s also a convenient and attractive option for customers, who no longer need to provide card or bank account details whenever a bill is due and have the opportunity to pay large invoices in small installments, rather than all at once.
Risk of cybercrime
Yet despite the obvious benefits of selling online subscriptions, recurring payments can present a challenge for businesses, says IntegraPay's
chief experience officer and co-founder, David Urry.
“In the past 10 to 15 years, there has been a marked increase in subscription billing and automated payments, and a simultaneous increase in data breaches,” he says. “A number of businesses subjected to fraud have taken a massive hit to their finances in the way of fines, but also to the reputation of their brand and subsequent loss of customers.”
It’s for this reason that many organisations are enlisting the services of payment providers like IntegraPay to navigate the complexities and management of recurring payments.
“A number of businesses subjected to fraud have taken a massive hit to their finances in the way of fines, but also to the reputation of their brand...” David Urry, IntegraPay
“We provide businesses with a platform that not only captures and stores customers’ credit card and bank account details legally and securely, but also remembers the frequency and value of each transaction that needs to be automatically debited,” says Urry.
While some businesses might attempt to manage the process independently, Urry says they’re often deterred by several hurdles – particularly the security element that comes with storing credit card data.
“Businesses must ensure they comply with Payment Card Industry Data Security Standard (PCI DSS) for the secure capture, storage and processing of credit card payments,” he explains. “Consumers are aware that their details are being stored somewhere and there’s a lot of trust on their part that the company they’re dealing with has taken the appropriate security measures, so they’re not the target of fraud.”
Everyone's a target
With the prevalence of cyber fraud only set to intensify, Urry believes businesses of all sizes should be particularly vigilant when adopting a subscription-based billing model.
“Fraudsters rely upon businesses thinking that no one is ever going to target them,” he says. “That’s totally the wrong impression to have, because as soon as you’re online, you’re known. Whether you’re a large corporate, a medium-sized business or a sole trader, the threat from cybercriminals is the same – they’ll be working hard to access your customer data.
“That’s why it’s always a good idea to entrust a payment provider that has all the security in place needed to protect your data, so you can rest assured that your business and brand are safe from this type of activity.”
Visit IntegraPay to find out more about how your business can accept online subscription payments.