The FTC’s new “click-to-cancel” rule, designed to simplify the process of ending subscriptions, has created a stir, putting additional pressure on subscription businesses to reassess their strategies. Research from payment processor Solidgate suggests the problem is dire.
Solidgate surveyed 1,000 adults and found that 25% had upsetting unexpected charges with their subscriptions, and 80% wouldn’t recommend a subscription service to a friend if they had trouble cancelling it. One in three consumers cancelled a subscription service in the last year due to billing frustrations.
Other findings include:
- 70% would abandon a service entirely if they experienced problems with payment processing.
- 60% feel businesses don’t provide enough information when transactions are declined.
- More than 50% believe they aren’t given enough time to resolve payment issues before cancellation.
- 82% worry about their card details being leaked when linked to subscription services.
- 5 in 6 feel like businesses should offer more flexible billing dates to avoid declined payments
Solidgate co-founder and CEO Yuri Alekseev believes fine-tuning payment processes can help businesses reduce churn, build customer trust, and enhance brand reputation in the subscription economy.
“Our research reveals the delicate balance between challenges and opportunities in the subscription economy,” said Alekseev. “While subscriptions are a convenient model, even the slightest payment issues can quickly erode customers’ trust and loyalty. What’s more, businesses might not even know they are making these mistakes.
“Businesses looking for a competitive advantage need to fine-tune their approach. That includes offering flexible billing options, being sure you communicate clearly and quickly about payment issues, and putting in place robust security measures. This will not only ensure that customers have a seamless billing experience but will also maximize the chances that they refer your business to their friends and family.”
“In today’s subscription economy, the payment process is no longer just a backend function – it is vital to driving revenues,” the Solidgate CEO concluded. “Businesses that deliver smooth, secure, and flexible payment experiences can secure their advantage, reducing churn and boosting their brand reputation.”