Pay-as-you-use’s complexities mastered, with next-gen recurring payment suppliers
Ever since software developers began to sell their applications, there have always been issues with piracy and the protection of intellectual property.
There have been several models which, over time, have each found their niche, but like all things, there are fashions in charge models which alter.
Mainstream software companies began using the lease/hire model to bring in revenues for their apps about ten years ago. Adobe was one of the first well-known companies that adopted the recurring stipend method of providing their suites of applications.
Since then, the pay-as-you-use model has proved highly popular, and the widespread adoption of cloud technologies has made this the de facto way of paying not just for software, but for an extensive range of products and services. From software libraries of obscure plug-ins to subscriptions for regular deliveries of men’s razors, the pay-as-you-use model is well-liked across consumer and B2B markets.
For suppliers of goods or services (physical, virtual or digital), there’s the advantage of predictable revenue streams. For purchasers and service users, there are few up-front costs – in pure business terms, XaaS reduces CAPEX and keeps OPEX ledger rows smaller, and predictably regular.
Companies or organizations wishing to offer their goods or services in this manner have previously had to consider the significant cost of building, and then maintaining recurring payment systems which satisfy their customers’ demands and concerns.
Regular payments seem quite a simple affair, but in truth, the devil is in the detail. Customers or consumers need assurances that the basics are well-covered by the organization they’re interacting with:
– will payment details be safe (is the supplier PCI DSS-compliant)?
– can I cancel my payments quickly and easily?
– what if I forget my account details?
– what if my card’s expiry date comes up?
– can I start with a free trial?
– are there any offers on the table, such as discounts, or can I buy six months’ service, and get one free?
Given the technical complexity of the code required to satisfy even a few of the above, means that there is a steep cost of deploying the regular payment model up front.
For well-funded start-ups, this may not be an issue, but for many new companies (and older organizations wishing to move with the times), the quandary of customer expectation versus the financial burden involved in satisfying those expectations appears insurmountable.
To satisfy this market demand, a new generation of service providers has appeared. Additionally, existing financial mechanism providers, like payment gateways have extended their offerings to capitalize on demand.
Standalone companies which operate jointly with multiple gateways, but are not tied down to a provider, have several advantages. Not only are they more fleet of foot in pure agility terms, but they can also negotiate excellent commission rates with gateways, passing on savings to their clients via volume discounts.
Additionally, any company which operates trans-globally needs a recurring payment provider whose internal systems are designed to be interoperable. Different geographies not only use different currencies and taxation rules, but are predominated by different gateways, and different customer preferences.
If trading in parts of Asia, for example, there is still a need to supply goods (one-off or, for instance, every month) on a cash-on-delivery basis. And of course, different countries have varying levels of governance concerned with data retention and security, plus there may be massive variance in the financial strictures placed on companies wishing to operate there.
Here at Tech HQ, we’ve looked at three suppliers of recurring payment management services that our readers may wish to consider. We’ve deliberately chosen suppliers whose offering is not run-of-the-mill, where a recurring payment schema was added as an afterthought. We hope you find one of these to your taste:
Chargebee began its life on the Indian subcontinent and has garnered significant investment over the last seven years, notably from Tiger, Accel, and Insight. It now has over 10,000 customers using its services, and it operates right across the world.
The company provides its extensive service portfolio through a central dashboard, giving its customers a simple-to-use and yet highly granular service offering.
Beyond the functional aspects that are built around providing absolute subscription and billing flexibility to end-customers, Chargebee has built its reputation in delivering a delightful end-customer subscription experience – from elegant checkout flow to tasteful and timely dunning communication in the language of the user.’
Chargebee’s customers are able to offer their users a range of payment options that ticks every box: check, card, and third-party integrations (Amazon Payments, Apple Pay and so forth), plus there are powerful facilities to manage trials, pro-rata charges (if customers switch from payment plan A to plan B, for example), run offers & trials, cope with under- or over-payments, and much more. All these options are offered out of the box – there are no hidden charges for “advanced” features.
There’s integration with systems like Xero & Quickbooks, plus international currency exchange, powerful invoicing, and complex transnational regulation & tax issues are dealt with seamlessly.
Preferences for payment gateways vary from area to area, but the list of supported partners is long, even for more obscure territories like Croatia and Andorra. Large markets from Australia, Malaysia, and the US are, of course, well covered off. Any gaps are filled by a range of API connectivity options, too.
Finally, there’s a highly technically competent support & success team on standby to handle all the curveballs that a subscription model can throw at a business.”
Read more about Chargebee, click here
Vindicia is part of the Amdocs group of companies, a large supplier of various business services covering communications and financial management.
CashBox is the company’s recurring billing management system and offers features like special offers, coupons, loyalty programs – even virtual currencies for microtransactions.
Subscription terms for end-users are highly variable, (daily, weekly, monthly, quarterly, annual, seasonal, and so on), plus there are several options which will be attractive to software development houses, such as freemium model management.
Vindicia’s platform has many thousands of tax rules & strictures built in, allowing companies to trade globally without having to worry about the legality of trade. There are also a host of fraud prevention measures, including GPS tracking of end-users to ensure that card or payment details are not cloned and re-used criminally.
There’s a host of business intelligence reporting that can be drawn to increase revenues, and this is added to by background “churning” ( the reapplication of payment charges after declined payments), the latter alone said to increase revenues by up to six percent.
Additionally, Vindicia offers a further service, Vindicia Select, which purports to be able to ascertain why payments might be failing, and automatically attempts to rectify missed payments.
End-users can easily set up virtual wallets which contain multiple payment methods – if one fails (after a card’s expiry date is reached, for example), a second or third method can be charged. This type of facility is highly helpful to end-user and retailer/service provider alike.
Zuora’s offering can be constructed in a modular manner around the company’s Central Platform. There are several dozen common pricing models for end-users available, for example, allowing companies to A/B test new pricing structures. Varying up-front deposits, tiered pricing, multiple discount layers, per unit or overage-based models can all be trialed and deployed – without changing existing customers’ agreed payment structures.
Billing, tax, and revenue rules are automatically added, when desired, to each charge. There are also over 30 gateways integrated, as are a number of standard ERPs and CRMs, all out of the box.
The mainstay of the Zuora offering is its malleability and underlying business focus. There are products also on offer like RevPro, which automates much of the revenue processing overheads from which many businesses suffer.
The company currently operates out of 16 world-spanning offices from China to the US, via Japan and Europe; Zuora is a truly international concern.
There’s a wealth of online resources available from the company, too, which helps its customers get up to speed in the highly competitive online, recurring billing world. From how to best analyze subscriber “churn” to simple guides designed for those considering first steps to a recurring revenue business model, Zuora offers a highly professional solution.
*Some of the companies featured are commercial partners of TechHQ