Why should you give consumers more control over their subscriptions?
Subscription services have become very popular—from streaming entertainment to dinner kits and pet food to fitness classes. While merchants appreciate the recurring revenue streams provided by subscriptions, consumers appreciate the convenience of not having to reorder things they want regularly.
But as the number of subscriptions soars, consumers are having trouble managing them. The average household now has four subscriptions to on-demand video streaming services, according to Deloitte—and that’s just one kind of subscription service among many. U.S. consumers have an average of 12 subscriptions, according to data from Statista.
Given the issues consumers face with managing subscriptions, merchants and issuers have an opportunity to deliver a better experience by making it easy for them to cancel, pause or resume their subscriptions. There’s a growing business case for making subscription management easy and transparent.
Here’s why giving consumers more visibility and control over their subscriptions—from one central place, such as a digital banking app—makes sense:
1. Consumers crave a better subscription experience.
Consumers are having a hard time managing their many subscriptions, and increased awareness of this issue is leading them to want greater control.
One recent survey by C+R Research found that consumers significantly underestimate how much they’re spending on subscriptions each month, while 75% said it was easy to forget about subscriptions they pay for. Forty-two percent said they forgot to stop paying for a subscription they were no longer using, with 86% of consumers saying they had some or all of their subscriptions on autopay.
Moreover, 35% of consumers globally consider canceling or pausing a subscription to be somewhat or very difficult, with 22% saying merchants have required additional information to do that, according to a Datos Insights survey conducted for Ethoca.
Research also suggests that if consumers don’t have an easy way to cancel their subscriptions, they’re more likely to dispute those charges—leading to costly chargebacks. One-third (34%) of those surveyed by Datos Insights said they’ve disputed a subscription charge with their bank or card issuer, while a 2020 Mastercard study found that 60% of all chargebacks involve recurring transactions.
2. Interest in subscription management tools is increasing.
Likely because of the challenges of managing subscriptions, consumer interest in subscription-management tools has been growing across the globe.
The share of consumers interested in a subscription-management tool provided through their digital banking app climbed to 87% in the U.S. in 2023, up from 78% in 2022, according to a survey by Datos Insights for Ethoca. In Australia, U.K. and Brazil, interest in such a tool reached 82%, 93% and 96%, respectively.
There’s also been growing regulatory calls around the world to make subscription management easier for consumers. In the U.S., the Federal Trade Commission has also been raising awareness of subscription management issues and is considering enacting a “click to cancel” rule that would require merchants to make subscription cancelation very easy—with the click of a button.
3. Consumers are willing to switch banks for it.
And it’s not just about wanting it. Consumers say they’re even willing to change banks to access subscription management features. Over half of those surveyed by Datos Insights said they would switch (or consider switching) to a bank that offered subscription controls through their digital app.
That further shows that many consumers are eager to get more control over their subscriptions.
Why businesses need to pay attention
Consumers increasingly want better digital experiences, and they expect easy-to-use, seamless self-serve tools from the brands and services they spend their money with.
For merchants, not providing easier ways to manage subscriptions can have downstream negative impacts, including more disputes and chargebacks, higher operational costs, and blocked cards leading to lost customers.
For issuers, not providing the subscription-management tools consumers want may cost them valuable customers—as consumers gravitate toward the banks that provide them. Moreover, offering such tools may reduce operational costs and help build a more engaging customer experience.
Ethoca Consumer Clarity™ now provides Subscription Controls capabilities—allowing cardholders to better manage their subscription services and request cancellations of their transactions directly through their digital banking app—without needing to initiate a dispute. Read more about how subscription controls work.
