Consumers want to pay by direct debit but websites failing to offer the option
Research, conducted by YouGov, found almost half of UK consumers (45%) were likely to choose Direct Debit to pay for online subscriptions, compared to almost a third (32%) who were likely to choose debit card. However, in a snapshot view of 29 top subscription websites in the UK including Amazon Prime, HelloFresh and Spotify, none currently offer customers the option of Direct Debit. In contrast, 100% offer credit/debit card, 62% offer PayPal, and 3% accept mobile payments.
Hiroki Takeuchi, CEO, GoCardless, said: “Payment preferences can have a huge impact on checkout conversion, especially for subscription businesses. There is no ‘one size fits all’ solution but businesses must understand that choice is crucial if they want to continue to appeal to consumers. If you fail to offer the most relevant options for recurring payments, customers will walk away.”
The research also found that:
- 19% of UK consumers were likely to pay by credit cards for online subscriptions, and 16% digital wallets.
- 43% of UK consumers were ‘very unlikely’ to use Credit Cards to make any kind of recurring purchase online.
- For traditional subscriptions, 48% of UK consumers would prefer paying with Direct Debit, compared to a third (33%) who were likely to choose debit card, and 12% who would opt for a digital wallet.
- For household bills – 47% of UK consumers said they were likely to pay using Direct Debit. 54% were ‘very unlikely’ to do so with digital wallets.
- For instalment payments – 52% of UK consumers said they were likely to choose Direct Debit compared to 32% for debit cards, 21% for credit cards and 11% for digital wallets.
Commenting on the findings, John Phillips, Managing Director of Europe, Zuora Inc., a global subscription billing platform, said: “Today’s consumers are shopping and paying for things differently. Subscription-based services are exploding in popularity because they give greater value and flexibility. We see more and more consumers using a greater variety of innovative payment methods – including digital wallet services and direct debit – because of their ease and convenience. To meet changing consumer expectations in the Subscription Economy, businesses need to offer convenience and flexibility in how they accept payments.”
Neil Proctor, Global Head of Customer Systems at Hive said: “You need to understand customer preference for payments. Hive initially thought credit cards would work in all markets, but we quickly realised that wasn’t the case. You have to give customers options if you’re going to make recurring payments work for your customers.”
Tom Rotem, Chief Executive of Chargify commented: “Subscriptions are, in essence, relationships that constantly change over time. In recent years, the ability to offer a menu of payment options has increased in importance for both getting new customers in the door and retaining them as the customer/merchant relationship evolves.”
GoCardless went onto survey 12,785 consumers in countries accounting for two-thirds of the global volume of recurring payments (UK, France, Germany, Spain, Denmark, Sweden, USA, Canada, Australia and New Zealand). Globally, variation in payments preferences has as much to do with culture as technology. For example, in America cheque is still a popular payment method when paying regular household bills in the US. In Germany, cash is still king as 40% are ‘very unlikely’ to use credit cards and 29% feel the same about debit cards.
One unifying theme however was that more than 30% of consumers globally were likely to choose Direct/Bank Debit to pay for online subscriptions in the majority of international markets (9/10); North America being the only exception (19%).