Recurring payments online or by mobile are growing in frequency and complexity. A recurring card transaction is one in which the payer’s payment credentials are stored with a merchant for future use to conveniently handle regular bill payments, facilitate quick checkout at an e-commerce merchant site, or pay for a subscription for goods or services. This new report, titled U.S. Recurring Payments Market Forecast, 2017–2021: Set It and Forget It, explores U.S. market size and reviews service offerings featured by seven providers in the U.S. market.
“Buyers appreciate the convenience of entering their account information just once. Merchants appreciate the connectivity they achieve with their customer when recurring transactions are used and the consistent cash flow they create. Similarly, issuers like the transaction volume that recurring transactions create when cards are used, but if not managed well, these transactions can result in loss of customers and financial losses,” comments a co-author of the report.
- Discussion of the recent growth of the different recurring transaction types and the anticipated surge of internet of things (IoT) payments is driving payment stakeholders including issuers, acquirers, networks, and independent software vendors (ISVs) to improve the way recurring transactions are managed.
- Projection of the growth of recurring payment transactions in the fueled by digital commerce and bill pay as well as the popularity of subscription payments. Recurring transactions processed on debit and credit cards in the United States are expected to reach $473 billion by 2021.
- The impact that changes made by the global card networks and a recently introduced legislative bill could have on the future direction of recurring transactions.
- Description of the complexities that merchants experience in attempting to manage these transactions and the tools that merchant processors and ISVs offer to improve the buyer experience, including an overview of service offerings of 7 U.S. providers.
The Rise of Subscription Commerce
Bill Payment via Recurring Transactions and Stored Card Credentials
Use of Card on File for Purchases
A Potential Regulatory Wrinkle for Recurring Transactions
Sizing the Market for Card Recurring Payments
Best Practices for Supporting Card Recurring Transactions
Buyer Acquisition and Choice
Identifying Recurring Transactions Payment Code
Handling Exception Items
Account Updater Services
Recurring Payments Providers: Market Examples and Positioning
More businesses are turning to a revenue model that includes subscriptions, card on file, and other recurring transactions. Amazon has famously accomplished this with its one-click purchasing function using stored card and account data, capturing an estimated $7 billion to $10 billion in Amazon Prime annual subscription fees. Having a card on file with a biller or subscription service assures a consumer of uninterrupted service, and being able to store card credentials in an app or wallet to use for online or mobile purchases is a great convenience. Merchants gain a predictable cash flow and a stronger tie with their buyers when they offer a frictionless payment process.
Being able to offer effortless payments to buyers requires plenty of effort behind the scenes on the part of issuers, acquirers, and merchants as well as independent software vendors (ISVs) if they are involved. Card data needs to be kept current, agreements with buyers to use stored account data need to be maintained, and all information needs to be stored securely and the requirements of Payment Card Industry Data Security Standards (PCI DSS) need to be met. Software providers specializing in subscription billing and card-on-file requirements are proliferating, and new network standards that enforce the use of identifiers to distinguish stored credentials used for subscription payments versus card-on-file transactions have been instituted.
This report delves into topics of recurring transactions including:
- The venues where recurring payments occur and their unique attributes
- A market estimate of recurring transaction volumes in the United States
- Best practices for successful recurring transactions, including the role of account updater
- First Data
- National Retail Federation