Subscriptions are not only a more stable way to earn revenue, but they also provide businesses with the opportunity to develop long-term relationships with their customers. Subscription-based models are expected to account for $1.5 trillion in global market value by 2025. As consumers continue to make more and more purchases online, subscription models are becoming increasingly popular. In 2023 we will see exciting developments in subscription-based business models that could change the whole market.

With the launch of new products and services, businesses are constantly in need of more ways to get their products into the hands of consumers. Subscriptions are an excellent way to do that. They offer consumers access to a variety of products at a fixed price over a set period of time. This makes it easy for them to try out a product or service without having to make a big commitment right away.

The trends and challenges of 2023

Payment technologies have been in a constant state of evolution for decades, but the pace of change has accelerated in recent years due to several factors: shifts in consumer behavior; competition from non-traditional players such as mobile wallets and payment apps; pressure on profit margins; and the need for greater security. As consumers use more mobile devices to make purchases, they expect a seamless experience across channels (for example, online). Corporate customers are also demanding greater agility in their accounts payable processes as they seek to lower costs while increasing speed to market.

Digital transformation refers to the adoption of automated technologies, which allows businesses to reduce their costs and increase their efficiency. Tap-to-mobile payment technology has consumers' attention, but it also gives merchants the freedom to accept payments anywhere, in a restaurant or at a food court in the street market. Merchants should take advantage of this new technology and use it to benefit by offering tap-to-mobile options for customers who do not want to carry around their wallets or purses all the time. 83% of consumers expressed the will to use the tap-to-mobile method and 95% of small and medium-sized businesses (SMBs) highlighted the consideration to utilize the technology, including 92% of cash-only businesses.

PYMNTS and FlexPay collaboration surveyed 200 executives at companies that provide subscription-based services and products in retail, health and fitness, media, and other sectors. According to the research, these businesses got 40% or more of their revenue from the subscription model and reported annual revenues of $100 million and above. Besides these numbers, the study has some interesting insights in terms of challenges the businesses could deal with in 2023.

The challenges the businesses could deal with in 2023, PYMNTS and FlexPay collaboration survey

Every subscription business knows that the key to success is maximizing profits and keeping up with the competition. But what many do not know is that there are some hidden links between failed payments, involuntary churn, and customer lifetime value (LTV) and they significantly affect subscription-based company.

Involuntary churn is when customers leave without warning or outside of your control. This can happen for a number of reasons: they forget their payment due date, they change jobs and lose their company benefits, or they decide to cancel their service because it is no longer working for them.

Failed payments are when customers do not pay on time or at all. This can happen because of a late payment fee or an expired card — which means it is not just about making sure your customers get paid on time, it is also about potential obstacles outside of your control.

Customer lifetime value (LTV) refers to how much money each customer will bring in over time. In many cases, the sooner you identify a problem with a customer's payment method or their ability to keep up with their billings, the better off you will be — and that means knowing why they are leaving so quickly could make all the difference between getting them back and losing them forever.

Top cases of failed payments chart, PYMNTS and FlexPay collaboration survey

Another trend is the fact that today's consumers are looking for more flexibility when it comes to making payments. They expect that their payment options will be available at all times in order to make purchases from anywhere in the world, on any device with any operating system. This means that businesses need to have a wide variety of payment options available for their customers including payments in crypto. It is important that you've got the right tools in place to ensure that no matter how your customer chooses to pay, your business stays ahead of the curve.

Businesses have to pay a lot of money to accept credit cards. Credit card companies charge higher fees, and the payment processor takes a cut as well. In order to get their hands on the money they earn from their customers, businesses have to pay more than just the amount they are charging — they also have to pay those additional fees.

When you accept cryptocurrency, however, there are no additional costs associated with accepting payments from your customers. You can reduce your costs by accepting cryptocurrencies like Bitcoin and Ethereum because it is cheaper for both you and your customers. By accepting cryptocurrencies, you can minimize expense. If you would like to know more about crypto transaction fees — it might be helpful to have a look at a detailed guide.

Final remarks

The subscription model is not only a way to offer more value and convenience to your customers, it is also a way to build trust and loyalty. By providing your customers with a subscription service, you demonstrate that you care about them as individuals: you know what they need and when they need it and can deliver it on time. In turn, they will see themselves as part of something bigger than themselves: they become part of your community.

When customers can pay using their preferred method, they are happier with the experience. They are also more likely to remain loyal customers. With the rise of online shopping, more businesses are seeing the value in offering new payment options — especially ones that allow them to accept payments from international customers.

Cryptocurrencies are easier to use than traditional payment methods because there is no need for users to enter their bank account information or other personal details. The only thing required is an internet connection and a digital wallet. Additionally, since cryptocurrencies are not controlled by any particular country. This makes them especially valuable for businesses that do business internationally or have customers from all over the world.

Wondering how you can provide a seamless customer experience across all channels?

Let us show you how Calypso Pay can facilitate more transactions from new customers while reducing costly declines and losses from existing ones.