How merchants can thrive in a subscription economy – interview with SlimPay

There’s been a change in consumer behaviour and disruption in the payment world. How would you describe this evolution? 

We cannot deny that technology is one of the main drivers in the evolution of payments. But behind all these technological advances is where we stand – the consumers. We are the ones driving this digital disruption.

When we entered the age of the sharing economy, we effectively said goodbye to ownership and put more emphasis on accessibility and experience. Especially, among the younger generation, where streaming movies and music is preferable to owning DVDs and CDs.

We have also witnessed the rise of instant gratification. Technology has unlocked convenience and instantaneous gain, resulting in this behaviour of getting what you want, when you want – without exhausting too much energy while doing so.

All of these developments have ushered us into the subscription economy that we are living in today. As you mentioned, we favour usage over ownership. Why should merchants adapt their business model from selling a product to a subscription? 

For merchants, the challenge is: how can they increase their revenue and reduce churn? We believe the strategy lies in subscriptions (or recurring payments). We conducted a survey on European consumers and their behaviour, where we found that 85% of them use at least one subscription.

A long-term engagement is created when you sell services based on what a customer wants instead of selling one-off product. You have a built-in customer retention by offering a subscription or a pay-as-you-go service. But there’s another thing that’s missing from this conversation: you really get to know your customer. It enables merchants to cater their services toward offering the best customer experience and added value.

There is also a shift in dynamics between consumers and merchants. Consumers no longer want to be restricted to certain rules of engagement, meaning they want the freedom to terminate a subscription at any time. Typically, merchants offer a contract that locks customers into a subscription for 12 months or 24 months. By doing this, you’re introducing the idea of churn.

What some businesses have discovered is that if you launch an unlimited subscription that gives consumers the flexibility to cancel anytime, the churn is lower and the topline is higher. This presents a huge market opportunity for merchants – if they are ready to embrace this kind of engagement model.

For merchants who are doing recurring payments, what kind of pain points are they facing?

When a consumer enters the payment funnel, there’s a high chance that they will abandon paying because of the complexities. But if they finish the payment, that’s what we call conversion.

Today, the conversion rate is low industry-wide. Some of the reasons for this include a poorly optimised checkout process, security concerns over payment data, and limited availability of payment means.

The payment experience for consumers has become a headache – we have all these credentials to remember and prerequisites for stronger authentication. This has become a pain point for merchants to offer a quick and user-friendly checkout experience.

Now once you get past the checkout challenge, there’s the issue of how long it takes for the payment to be processed, and whether that payment is actually collected. Failed transactions have an impact on overall revenue, especially if you have a subscription business model.

So how do you solve this? That’s the role for payment service providers like SlimPay. Our focus is on mitigating all these frustrations by building a one-stop solution for all payment needs. Can you tell us more about this solution, specifically how it solves the challenges merchants are experiencing?

SlimPay has developed an end-to-end solution covering the entire payment process through innovative technology such as API.
First, SlimPay addresses the customer enrolment issue by offering a user-friendly checkout front end. Our checkout manages electronic signatures for both SEPA Direct Debit (SDD) mandate and document signatures. With one single signature, merchants are able to have their clients sign a contract and a mandate.

Second, SlimPay helps merchants in their payments collection by allowing SDD payments and card payments. It’s essential for merchants to offer the right payment mix that can address specific needs. Let’s say you are a merchant selling a physical device and a subscription to a service, you will need to get an instant confirmation of the payment before shipping the product. SlimPay can help you by combining both payment means at the checkout – first with payment by card, and then through SDD on a recurring basis.

We’ve also created the Automatic Retry feature in the event that merchants need to recover failed payments. This feature helps merchants minimise their losses through a hassle-free process.

Finally, SlimPay allows merchants to use a unique dashboard to follow up on their activity and their clients’ activity. SlimPay acts as a bank, meaning that we hold the merchants’ account. This account is centralising the transactions made by SDD and card, which enables an easier reconciliation process.

After nearly a decade in this industry, we can really say that we have proven track record in the management of recurring business payments. We created our solution so that merchants can really focus on what matters: increasing their topline.

This editorial was first published in our Payment Methods Report 2019 – Innovations in the Way We Pay, which provides a comprehensive overview of the up-to-the-minute trends, updates, and innovations in the payments space worldwide, depicting the key developments in the way people pay.

About Jérôme Traisnel

Jérôme Traisnel is the CEO and Founder of SlimPay, focusing on reinventing the subscription payment journey. A serial entrepreneur, he specialises in new technologies, mobiles, and security. Jérôme also sits on the board of several innovative companies.

About SlimPay

SlimPay is the European leader in recurring payments for subscriptions. SlimPay’s payment solution enables merchants to facilitate acquisition, increase the consumer lifetime value, and maximise revenue – through card and direct debit payments. Launched in 2010 in France, SlimPay operates across Europe with flagship offices in Paris, Madrid, and Milan.