payment intelligence platform

Why every subscription company needs a Payment Intelligence Platform

Apr 11, 2022
Jan. 13, 2022
Apr 11, 2022
Why every subscription company needs a Payment Intelligence Platform

Subscription services are on the rise. The trend in favor of a subscription economy began before the pandemic, but the “Do Everything From Home” mentality accelerated interest. UBS projects that the subscription economy will more than double by 2025, growing from the estimated $650 billion it’s currently worth to $1.5 trillion.

This increased appetite for subscription services rests largely on subscription providers’ ability to enable seamless payments.

But seamless payments – especially for subscription billing – have become increasingly difficult to achieve, with legitimate payments being marked as fraudulent. Not only do massive inefficiencies exist at every step of the customer payment journey, but most members of the C-suite are hesitant to touch the payments tech stack and continue to refrain from investing in payments engineering. 

This “black box” effect within payments technology is no surprise. The tech stack touches every step in a customer’s recurring payments journey, from the initial check out to trial conversions. Untangling the complex web of technologies can lead to consequences that hinder the payments experience and internal operations. 

Here’s the catch: tech stack inefficiencies can hurt subscription companies at each touchpoint in the payments journey. Each hiccup – from checkout snafus to overlooked trial expirations to canceled subscriptions resulting from payment failure – adds up. Fixing inefficiencies is table stakes in a hypercompetitive economy, but inflexible tech stack configurations can make that impossible.

Subscription companies seem to be stuck between a rock and a hard place: “rip and replace” their entire payment tech stack, or doing nothing at all.

The good news? There is a third option: understand how a payment intelligence platform can connect to and optimize existing tech stacks to improve customer acquisition and retention.

What is a payment intelligence platform?

In an era where nearly everything is available via a subscription, competition is fierce. Just ask any of the one-third of customers who experienced a denied payment (false decline) and report they are unlikely to order from that company ever again. 

Many subscription companies don’t even realize these customers are in the wind until it’s too late – until they feel the full force of high churn rates, lost revenue, and reputational damage to their brand.

This reality is aggravated by intentionally opaque payment failure descriptions offered by issuers. Identifying and segmenting the reasons behind payment failures – a critical task to fix the problem – can be hampered by this “blunt instrument” approach.

A payment intelligence platform provides the visibility and flexibility companies need across multiple tech stacks to identify and solve problems fast.

It serves as the connective tissue that can easily integrate into existing payment stacks to optimize payments transactions everywhere they occur.

In short, it provides control over the end-to-end payment ecosystem with minimal effort or disruption. This loosens the handcuffs on companies bound to existing, sometimes monolithic, payments technology. It also unlocks a massive untapped revenue and customer retention opportunity that, left unaddressed, only increases over time.

How does it work?

Everyone loves finding loose change in the sofa. A payment intelligence platform achieves this at scale for subscription companies. Best-in-breed solutions offer a turnkey outsourced platform that helps customers win incremental revenue without ever needing to invest resources or create dedicated teams. It simply connects to your PSP and other existing systems via robust APIs to analyze your data, quantify, and deliver incremental revenue quickly. Pre-built. No code. Ready in minutes.

Modern platforms rely on the latest artificial intelligence and machine learning technologies to optimize each transaction for success – at checkout, during trial conversion, and on recurring transactions. 

Where most payment service providers rely on batch processing, a solid payment intelligence platform will optimize each payment individually. This can be done by selecting specific times for approval in conjunction with exactly how best to present each one for success. 

The hallmark of a strong payment intelligence platform is that it can:

Provide real-time insights: Top platforms provide real-time insights across the payment ecosystem including visibility into every failed payment and how it can be optimized.

Maximize authorization success: Authorization success capabilities enhance failed payment recovery and dramatically improve initial payment success at checkout, trial start, and trial conversion.

Ensure legitimate payments: Platforms should apply sophisticated AI and ML to ensure only legitimate payments that have failed are recovered, limiting chargebacks.

Specifically, how does it drive value?

A payment intelligence platform drives value by recovering failed payments that create accidental churn. Retaining these customers alone can immediately add up to 4% ARR to the top line – that’s $4M ARR for a $100M ARR company. 

And while accidental churn is a critical problem to solve — totaling more than $443 billion in lost revenue per year — it’s only the tip of the iceberg. A payment intelligence platform can also be a boon for growth teams looking to enhance check-out and trial conversions. Imagine being able to boost the number of customers in trial and on fully paid subscriptions by 4%. Those numbers add up.

What’s more, subscription companies get an added layer of overall payment intelligence to help optimize each payment, including cross-border payments, across different payment stacks.

What to consider

A payment intelligence platform should be easy to integrate and implement. Beware of solutions that charge a flat rate as the best solutions will be built on a success-based business model. That is, they get paid when you do by earning a percentage of the recovered revenue they help you collect. 

Avoid platforms with a “trust us, it’s working” mentality in favor of those that provide granular visibility into how AI and ML are getting the job done. You should be able to pinpoint how the platform is optimizing payments at every step along the way.

While it may seem like you face an “all or nothing” approach to streamlining payments, there is a better way. The key is finding the right platform to facilitate faster, more streamlined, more successful payments.

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