Nearly half of UK consumers want to pay for subscriptions with direct debit
See the major brands failing to provide this option, according to global consumer payment preferences, as we unpick what this means for UK startups
48% of UK consumers want to pay for subscriptions with direct debit, according to recurring payments expert and direct debit provider GoCardless.
The subscription economy is booming, with 90% of Brits holding some form of subscription or another. Be that for music, makeup, snacks, films, or any other product you could possibly imagine (there’s even a personalised pasta subscription these days), it’s estimated that we spend an average of £56 a month on subscriptions.
Nearly half of consumers want to pay via direct debit. Yet major consumer websites in the UK, including Amazon Prime, HelloFresh and Spotify, fail to offer customers the option to pay via direct debit.
Further findings from the research reveal that 43% of UK consumers are ‘very unlikely’ to use credit cards to make any kind of recurring purchase online. And, the 48% of UK consumers who prefer to pay via direct debit for traditional subscriptions is offset by the 33% who were likely to choose debit card, and 12% who would opt to pay using a digital wallet such as Apple or Android Pay.
In response to this, John Phillips, Managing Director of Europe, Zuora Inc., commented “To meet changing consumer expectations in the subscription economy, businesses need to offer convenience and flexibility in how they accept payments.”
A sentiment echoed by Neil Proctor, Global Head of Customer Systems at Hive: “You need to understand customer preference for payments… You have to give customers options if you’re going to make recurring payments work for your customers.”
Hiroki Takeuchi, CEO, GoCardless, said: “Payment preferences can have a huge impact on checkout conversion, especially for subscription businesses. Businesses must understand that choice is crucial if they want to continue to appeal to consumers. If you fail to offer the most relevant options for recurring payments, customers will walk away.”
As the so-called “menu of payment options” increases, so does the consumer demand for choice. In order to attract and retain customers, businesses that offer a subscription service, and therefore rely on regular payments from their customers, must now be equipped to cater for an array of payment preferences. With direct debit leading the way, and e-wallets the payment preference underdog, it’s clear that startups need to be diverse and flexible in order to stay ahead of the game.
Tom Rotem, Chief Executive of Chargify commented: “Subscriptions are in essence relationships that constantly change over time. In recent years, the ability to offer a menu of payment options has increased in importance for both getting new customers in the door and retaining them as the customer/merchant relationship evolves.”