12 NOV 2019

Subscription management: for a fee with credit cards, for free with carrier billing

POSTED UNDER Digital Goods Direct Carrier Billing Payments Subscriptions
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Mattias Liivak

Head of Marketing & PR, Fortumo

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The subscription economy is growing. People want to pay and consume on demand instead of buying and owning physical goods and digital content. Digital service providers who want to meet these needs face an unpleasant challenge.

Credit card subscription payments don’t work out of the box. The card payments infrastructure has been built for one-off transactions and payment service providers do not provide recurring payment functionalities.

This means companies using a subscription business model either need to build the solution themselves or purchase it from vendors like Stripe, Recurly or Zuora. This can get costly: Stripe for example charges an extra 0.4% to 0.7% for subscription payments.

Things work a bit differently with carrier billing. Functionalities to support subscription payments are already included without extra fees. While merchants need to rely on paid solutions to process subscriptions with credit cards, it’s part of the package with Fortumo.

For this purpose, we have built our Subscription Engine on top of our direct carrier billing platform. Here’s what the Subscription Engine helps merchants with:

  • User management: manages user subscriptions on behalf of merchants; renewing user subscriptions at the correct time and frequencies and terminating or cancelling subscriptions when necessary
  • Payment retries: failed payment retries in cases where recurring charges fail (also due to technical, but mostly for commercial reasons – spend limits or low prepaid SIM account balances); our recent case study shows a 14% revenue increase from retries
  • User notifications: “invoicing” for carrier billing subscriptions is done through SMS notifications for initiation, renewals, failures and unsubscriptions; postpaid customers also receive the invoice as part of their monthly phone bill
  • Promotions: built-in support for various marketing activities, including free trial offers, promotional pricing, discounts to loyal customers and counter-offers during cancellation
  • Analytics: API-based real-time reporting for both operational (payment events to give or revoke user access) and accounting/analytics purposes (transactional data itself)
  • Refunding: automated refunding of users (either recrediting their prepaid balance or removing the charge from their monthly phone bill) through the Refund API
  • Localization and currencies: this should go without saying but in all countries where Fortumo operates, consumer-facing checkout flows and communication is localized and consumers can make payments in their local currency

As the popularity of the subscription economy grows, so too will the amount of users who want to make payments but either don’t have a credit card, abandon their cart due to the lengthy checkout process or refuse to share their personal data online.

For these consumers, carrier billing provides merchants with a globally available payment method to continue growing their revenue. If you’re thinking of taking this direction and want to take advantage of our Subscription Engine while doing so, get in touch.

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