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Financial Operations6 min read

How to make transactions simpler for subscription growth and retention

Finance Essentials for Subscription Businesses | Part one


Making financial transactions easy and safe is an instrumental part of creating an optimal customer experience to drive conversion rates and customer retention. In a new series of articles, we explore the different aspects of financial processes within subscription businesses, beginning with how to make transactions simpler.



Recurring payments in the customer journey

In subscription businesses, payments are a much more integral part of the customer journey. Customers are billed and payments are collected in a repeat intervals. Every billing and collection touchpoint is a value checkpoint for the continuous customer relationship.

In both B2B and B2C subscription businesses, limited payment gateways, insufficient funds, failed and delayed payments and dunning processes affect both the customer experience and the business’s financial strategy significantly. Optimizing subscription billing and collection efficiency while taking customer experience into account often takes up resources with a trial-and-error approach.

Many have turned to event-driven platforms to leverage more benefits of automation, including being able to respond to real-time customer actions and collect the right data, which would enable businesses to further understand their customers and create better experiences with enhanced payment flows.



An event-driven approach is essential

Making payments a streamlined experience across all geographics, whilst still giving customers a sense of safety, requires a combination of innovation and familiarity with your business. While recurring payments might become a routine in the customer relationship, it is important to continuously monitor the user interactions around payment activities after the initial transaction to prevent churn, payment disputes, and revenue leakage down the line.

With an event-driven approach to the customer journey and payment processes, businesses are able to rely on triggers and track payment processes in real time for the necessary actions to be taken automatically, especially for risk assessment and fraud prevention processes. In the payments journey, from the shop, checkout, billing, collection, payments routing, retries, notifications, and the correspondent dunning and accounting policies, the systems where these actions take place need to inform one another based on events to have an efficient order-to-cash workflow.

In a subscription business, payment journeys are tightly connected to customer actions throughout the entire customer journey. For example, if a customer performs an upgrade at the end of the billing period, it is important that the systems know to activate risk assessment services, inform the customer about when and how much the new amount will be collected and the correct payments journey should take place. An event-driven architecture enables real-time updates for the customer and the backend systems, collects the right data for structured reporting, and thus enables smooth customer experiences throughout.

Therefore, subscription businesses require systems that can flexibly merge with modern payment solutions to create more efficient workflows and great customer experiences.



How do you provide a frictionless payment experience?

Consumers expect an always-on, intuitive experience, but at the same time, they expect you to stay up to speed with new ways to purchase and pay. To deliver this, you need to make sure that the elements are in place at each stage of the customer lifecycle.

Creating a repeated frictionless payment process that offers the best customer experience requires five key elements:

  • Automated billing and payment collection processes
  • Customer-centric billing
  • A subscription customer portal
  • Localize your payment methods
  • Automate risk management measures


Automated billing and payment collection processes

Having automated billing and payment collection processes in place is vital both for customer experience and for accuracy, especially as your company grows. Manual billing processes are slow and predisposed to errors, which ultimately leads to internal issues for the organization but will also aggravate customers and give them a reason to leave


Customer-centric billing

It's important to think about the perspective of the customer when it comes to payments and to gain a regional understanding of local behaviors and customs if you're operating in different parts of the world.

The key to customer-centric billing is offering the flexibility that makes it easy for the customer to say 'yes' to your product or service. Leaving or not purchasing because of a lack of flexibility in payment options falls into the category of avoidable and involuntary churn.

For example, in some regions, it's common practice for people to be paid monthly, whereas others get paid weekly. Being mindful of details like these will help to improve the customer experience across the board and increase customer retention.


A subscription customer portal

Enabling customers to manage their own invoices and payments increases convenience and reduce the internal resources spent on the billing and collection process. Customers will be able to see their subscriptions and the processing status of their payments, which reduces the waiting time to contact customer service and allows both sides to have immediate access to solutions when the payments fail. The customer portal also increases customer touch points and can be used as an additional communication channel for updates on the product. It also allows businesses to embed direct conversion paths for up- and cross-selling.


Localize your payment methods

In a connected, online world, payment systems need to enable cross-border payments, incorporating the different consumer habits of different parts of the world, as well as different currencies. That means finding ways to minimize or avoid bank charges for markets outside your home country and establishing relationships with payment partners and local authorities that facilitate that. 

You need to integrate with local payment networks and financial institutions that allow payments to take place. Preferably, you should work with a payment partner with a global acquiring network, who you can trust to handle your cross-border payments while ensuring that the entire payment experience is familiar and easy to use for the customer.


Automate risk management measures

Fraud is a big problem with online payments, and customers are both increasingly nervous and cognisant of the issue. However, at the same time, it's important that fraud prevention is not so stringent that it becomes an impediment to purchasing. Using rules to segment customers and payment behaviors can help find the right balance between protecting your customers and the revenue for your business. Working with a modern and trusted payments partner is as important as staying compliant with international compliances. 

In the end, don't forget to make information around your actions clear so that customers can transact with a sense of trust, knowing that the business abides by all the security standards set forth.



A baseline for making subscription payments simpler 

By maximizing cross-border opportunities, localizing your approach, and exploring different payment models with a customer-centric mindset, subscription businesses can leverage streamlined customer journeys and payment processes to optimize conversion rates and which are an essential juncture in the development of long-term customer relationships.

This is crucial for the ultimate goal of a subscription business, which is to attain and retain customers for sustainable growth. These are values that are wholly supported by the keylight Platform, which enables a seamless, frictionless payment experience with superior connectivity to payment solutions. Payment gateways can be easily embedded into the event-driven architecture, making global payment gateways subscription-ready for digital recurring business models.


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