Subscription management: automated payments for digital goods
Subscriptions describe a regular receipt of goods in return for a recurring, time-based fee. In today’s society, however, subscription models are not limited to tangible goods such as daily newspapers, but are also used in e-commerce. Online retailers whose business models include subscriptions are potential users of subscription management. Digital services such as streaming, online games or even digital magazines are suitable for this. To ensure a smooth process, service providers offer subscription management services. After registering a direct debit or credit card transaction once, the execution of further payments continues automatically. A subscription management service organizes access to goods to be sent on a regular basis over a certain period of time for a set amount. This period can range from a day to a week to monthly billing.
The choice of provider
Depending on the tariff structure, the product offered and the range of functions, there are different providers that can be considered for the realization of a subscription management. The simplest solution is a payment service provider. A PSP supports recurring payments. If a more complex rate structure is desired, there are recurring billing providers. These not only take care of monitoring the entire rate structure, but also handle rate changes, credit memos and other functions such as invoice verification. Some service providers are more appropriate than others for subscriptions that manage download-only content. However, these may not be geared toward physical goods.
Subscription management through payment service providers
The basic advantages of using a subscription management service are as follows:
- Regularity of incoming payments is monitored
- Payments are automated
- Flexible design of subscription terms and conditions
- Automatic cancellation of expired subscriptions
- Help with cancellation through user-friendly interface
- Security for the online merchant when handling subscriptions
Subscriptions are used under different conditions. The subscription management of a payment service provider allows it to offer simple subscription solutions. This certainly proves to be an advantage: the store operator is able to make flexible settings for the subscriptions it offers. This means that both limited and unlimited subscriptions can be taken out. Fixed-term subscriptions extend over a limited period of time. During this period, payments are made at a fixed time in the form of a recurring fee. In the case of time-limited subscriptions, the respective service provider not only takes control of the regular payments, but also triggers the subscription at the end of the term. Subscriptions that have an indefinite term continuously charge a fee in fixed payment cycles. If the customer cancels an open-ended subscription, a user-friendly portal for end-customer management (customer self-service) is often available to support the customer. The range of services offered by a payment service provider can also be enriched by risk management, protection against fraud, and a payment guarantee.
