The beginning of a new year is always the time to evaluate what worked and what didn’t work in the previous year, so we can take those learnings and catapult into the year with a fresh perspective.
As one of the fastest-growing industries, the state of the recurring billing space has certainly shifted over the past year—but so has the way it accepts online payments.
The pandemic has changed the way businesses interact with their customers and paved the way for more subscription businesses to arise. In fact, financial services firm, UBS, predicts by 2025, the subscription industry will double in size to about $1.5 trillion dollars. With the average enterprise business running upward of 400 different software applications, there’s no question the recurring payments industry is growing dramatically.
And this presents a huge opportunity for subscription businesses, whether they’ve been in the game for years or are just hopping on the subscription train now. But to successfully capitalize on that opportunity, you’ll need to know the lay of the land.
To help you make sense of the recurring billing and payments landscape, we’ll shed some light on the seven trends every SaaS business should be aware of in 2022:
1. The SaaS tools that enabled work-from-home won’t be going anywhere
Even as businesses return to the office, forecasts suggest up to 30% of the workforce will continue to work remotely at least some of the time.
SaaS tools have enabled the work-from-home infrastructure to thrive in ways it couldn’t have even a decade ago. New technologies such as cloud marketplaces and collaboration tools have allowed teams to function seamlessly.
SaaS businesses will certainly continue to flourish and support the work-from-home infrastructure well into the future. In fact, by the year 2026, the SaaS industry is projected to almost double in size to about $307.3 billion. This is great news for SaaS-based businesses, which will likely continue to lead the way in innovation and profitability.
2. Any business can be a subscription business
Tons of unique business models that aren’t traditionally subscription-driven are exploring the requirements for launching a subscription business model. Even elevators are hopping on the bandwagon!
Over the past few years, the surge in subscription business popularity has been driven in part by its dual appeal for businesses and customers alike. For businesses, the subscription model allows for predictability and recurring revenue. Whereas for customers, this model promises convenience and customization.
In fact, due to the nature of recurring payments, strategy consultant Robbie Baxter argues the subscription business model is suitable for any business and is good for cash flow as well as valuation. Expect to see a continual uptick in the number of subscription businesses popping up in 2022 and beyond.
3. The competition is only about to get more intense
As more subscription-based businesses pop up worldwide, however, the competition to succeed is only going to get tighter.
According to a study conducted by the Subscribed Institute, subscription business revenue has grown around 6X faster than the S&P 500 in the past nine years. This trend is likely to increase well into 2022 and beyond.
So, to stand out in the crowd, evaluate your business tools, consider niching down to a specific vertical, and continue putting the customer experience at the forefront.
4. Payment flexibility is key
As customers demand more convenient payment options, the popularity of cashless transactions—including ACH transfers—is increasing.
And this is good news for your business: Fees associated with ACH transactions are only a fraction of what you’d pay to process a credit card transaction. There has been record growth of ACH payments over the past six years.
Particularly in the subscription billing industry, businesses enjoy ACH as a cost-effective, hassle-free, and reliable method to accept recurring payments with ease. An integrated payments ecosystem—including payment gateways that can process ACH payments, credit card transactions, and multiple currencies—will be an advantage for businesses looking to gain customer favor over their competitors.
5. Innovation is driving more evolution
Expect to see more innovative offerings built on data and intelligence analytics in 2022 to improve the customer experience for small and medium subscription businesses. Innovations like buy now pay later, biometric, and crypto payments are also likely to enter the mainstream.
There will be a greater role of AI and machine learning in solving cybersecurity and customer experience problems related to payments. This will help businesses improve upon the status quo, personalize the customer payments journey, and ensure utmost security.
By partnering with the right technology platforms, businesses can ensure they are on par with consumer expectations.
6. Cybersecurity in payments will be a big priority
With an increase in online payments comes the need to create more security around transactions. Although consumers have a greater appetite for making payments online and there’s been a general rise in online payments over the years, fraudsters are certainly taking advantage of the growing complacency as it relates to payment security. That’s why in 2022 there will be a greater focus on cybersecurity in payments.
Over the next decade, fraud is expected to cost the industry upwards of $400 billion in losses.
Financial services and regulators plan to tackle this issue with the help of AI and cloud technology. That said, it’s important for businesses to be mindful of their payments technology partners and ensure they maintain the highest level of compliance.
7. The demand for a fast, efficient, frictionless payments experience is at an all-time high
Minimizing the barriers of access to payment processing continues to be a priority for consumers well into 2022.
The need for quicker, more efficient ways to pay for subscription services will impact purchasing decisions. So, businesses should continually work towards improving their payments ecosystem in order to be on pace with their competitors. Convenient choices for payments—such as one-click payments, auto-renewal subscriptions, digital wallets, and more—are surefire ways to innovate and elevate that payment experience.
The key to subscription business success is the ability to move quickly
The subscription payments industry is a fast-evolving and ever-changing market. As business leaders, it’s important to be aware of these changes and evolve with the times.
Inevitably, SaaS businesses are taking over, and with the rising numbers in these businesses comes the question: how can my business differentiate itself in such a saturated landscape?
To remain competitive in the space, businesses will need to systematize their current processes and ensure the business management tools they use are forward-looking and adaptive.
If you’re looking to simplify your subscription billing and payment processes this year to keep up with the trends, fill out the form below. We’d love to chat and find out if we’re a fit!
