Challenges of a Subscription Model Your Payment Gateway Can Help You Overcome

Merchants operating a subscription model depend on efficient payment processes to achieve business success and security. From managing recurring payments to optimising cash flow to retaining customers, having robust tools in place is crucial for effective subscription business model management. 

An effective payment gateway is one of these tools, and the technical capabilities of payment gateways today can prove beneficial when it comes to managing subscription model businesses. We look at the challenges of a subscription model and how the right payment gateway can help you overcome them to power your subscription business’ growth.

Key payment challenges of a subscription model

Managing subscription payments comes with a host of challenges that merchants need to keep in mind. Ensuring operations run smoothly is vital for effective payment processes and businesses need to consider factors like:

• High transaction volumes
• Chargeback-to-sales ratios
• Recurring billing and rebilling capabilities
• Payment industry regulations
• Security and data protection
• Risk management
• Possible account termination from payment providers
• Payment gateway stability (avoiding downtime)

But with the help of cutting-edge payment solutions and the expertise of a supportive payment partner, these concerns can be handled effectively.

The benefits of partnering with the right payment services provider

Partnering with an expert payment services provider means you have access to a wealth of industry knowledge and expertise that can help you make the best choices when it comes to your business’ finances. Guiding you on how to avoid card schemes penalties and to be compliant with market regulations, having risk and regulation expertise available through your payment services provider can make a big difference to your payment processes. 

A good payment services partner enables you to identify, evaluate and manage risks throughout the payment processing cycle, through tools and insights that ensure a consistent standard of security and privacy across your processes. This minimises payment risks like fraud and chargebacks, industry-specific business risk, and compliance problems. 

The right payments services provider should take the time to understand your unique business needs and provide the solutions best suited to meet those needs, while ensuring you are supported throughout your payment processing journey.

How a good payment gateway can address subscription model challenges

With the ever-increasing number of online purchases, payment gateways have enabled merchants to handle transactions from different locations, with different payment methods, securely. The capabilities of effective payment gateways also mean better control of subscription business challenges.  

Managing high transaction volumes efficiently

Transaction volumes are capped on merchant accounts in accordance with various business risk factors to prevent fraud and chargebacks. However, some businesses operate in high volume industries, like subscriptions and recurring billing, where high risk comes with the territory. 

A good payment gateway not only supports a high volume of transactions from a technical stability perspective, but also meets your risk needs through sophisticated processing capabilities, minimising risk concerns that come with, for example, processing credit card payments.

Minimising chargeback-to-sales ratios and managing risk

As a way of both minimising chargebacks and measuring business performance, chargeback ratios are an important performance indicator for merchants. Unchecked chargebacks resulting in a high chargeback-to-sales ratio could have a negative impact on businesses, like payment processors issuing penalty fees to merchants, or suspending or terminating their accounts. 

Because payment gateways facilitate a secure payment process flow, risks like chargebacks can be managed more effectively. A good payment gateway is secure and can substitute payment details into tokens to prevent the exploitation of sensitive data and enable real-time transaction billing along with PCI DSS compliance.

With an effective payment gateway, merchants should see a lowered chargeback-to-sales ratio and remain within their chargeback threshold, addressing this key challenge of a subscription model.

Effective recurring and rebilling capabilities

Subscription businesses do come with a fair amount of risk, but effective recurring and rebilling capabilities, supported by sophisticated payment gateways, can contribute to subscription model business success.

By offering merchants the ability to control their recurring transactions, they can improve their transactions management. Allowing merchants to suspend, cancel and renew transactions as needed via both API and customised buttons, within a time period of their choice, means increased cash flow, timely payments into their businesses, and minimised revenue leakage. 

Optimising gateway stability

By adopting an effective payment gateway that also supports various integrations, you can achieve a more streamlined payment processing cycle, including straight-through processing and the ability to support various payment methods. 

Additionally, effective payment gateways can offer technical stability that means decreased downtime risk and advanced features that streamline the customer payment process, improving both your customer experience and the stability challenges of a subscription model.

Summary: address subscription model challenges with an effective payment gateway solution

Yes, being in a subscription business can mean increased risk exposure and an array of other industry challenges, but these can be effectively managed, and business success encouraged, with the right payment gateway solution. 

When partnering with a payment services provider, consider both the payment gateway solution as well as the support they offer to ensure your payment processing risk is holistically managed, using both technical capabilities and expert insights and advice.  

How Fibonatix can empower your subscription payment capabilities

Partnering with a sophisticated payment service provider that offers an all-in-one payment processing solution and additional integrations, like Fibonatix, can empower your subscription management capabilities, address challenges of a subscription model and drive your business growth.

Fibonatix offers end-to-end subscription payment solutions and supports payment gateway integrations with cashiers, online shopping carts and CRM platforms. Integrations are fast, easy and user-friendly, with no hidden costs to your business. If you require a more bespoke solution, our technical experts build the most effective solution in line with your technical requirements, services and functionality.

As a PCI DSS and 3D Secure V2 compliant PSP, we’ve got your compliance and security needs covered.To learn more about our payment gateway offering, talk to our team of payment experts now or browse our range of payment gateway solutions.