Subscription payments, more often than not, get paid by credit cards. What if we told you that was about to change? Would you believe us?
Today, the global subscription market sits at around $120.04 billion, yet in three short years, we can expect that to quadruple and then some.
With the rise of digital transactions and recurring bill payments, businesses need a secure and efficient alternative payment solution. Why? Because the cost of credit card fraud, chargebacks and processing fees are too high.
That's where alternative payment solutions, such as EFT bank payments, come into play. This article explains how advanced bank account payments become a match for credit cards and what that means for digital platforms with subscription payments.
How EFT Bank Transactions Can Solve Failed Payments
Picture this scenario: your platform has 10,000 subscribers. Each subscriber has an automatic transaction charge to their credit card every month. And every month, like clockwork, your organization experiences 20% of credit card failures due to expired card details or insufficient funds.
Frustrating? Extremely. Costly? 100%.
Recent studies reveal that a staggering 41% of subscription businessesencounter credit card payment failures, resulting in lost revenue, customer churn, and mounting frustrations for both businesses and consumers.
The good news is that with advanced payment technology, EFT payments have emerged as a reliable and cost-effective alternative to credit cards, particularly targeting subscription businesses.
How? Well, for one thing, bank accounts don't expire. No more chasing down users and waiting for them to provide you with new details.
Thirdly, anything credit cards can do, EFT account payments can do just as well. Fewer chargebacks and less chasing mean a more streamlined recurring payment experience, making it easier for businesses to manage their subscription billing.
With the payer's authorization in place, companies can automatically pull funds from their customers' bank accounts on a recurring basis.
This automation not only simplifies the payment process on your end but also improves customer retention thanks to seamless and hassle-free transactions with no frustrating "please update your credit card information emails."
Bank Account EFT Payments Explained
Some of us in the industry call it the unsung hero in the payment space. It stands tall as the backbone of money movement, facilitating billions of transactions annually.
Electronic Funds Transfer is the technology behind the scenes that seamlessly moves money from one bank account to another. Similar to credit cards, it serves as the financial infrastructure that quietly powers rent, recurring bill payments, and much more.
EFTs enable the transfer of funds from one bank account to another. Not unlike credit cards, to initiate these payments, you only need a few essential details.
EFT vs Credit Card Payments: It All Comes Down To Costs
EFT bank account payments are emerging as a powerful alternative to credit cards, offering unique advantages for various business needs. While credit cards have long been the go-to option for convenience and rewards, EFT payments offer cost-effectiveness, security, and streamlined recurring payments. Here are some key comparisons:
Reduced Cost
Credit card payments often incur fees of around 3% per transaction, while EFT payments are significantly more cost-effective, going as low as $1 for fixed-cost processing.
So let's say we take the example from above. We have a platform running 500 $1000 transactions a month on credit cards. The cost savings are astronomical. Like upwards of $15,000.
Recurring Payments Simplified
Credit cards have long been associated with easy setup for recurring payments, but EFT solutions offer an equally straightforward and seamless process.
Credit Card Payment Tokenization
EFT services have caught up with credit cards by offering tokenization capability, ensuring secure and encrypted payment information storage.
Added SecurityFeatures
Many businesses still rely on cheques as their primary payment method despite the prevalence of cheque fraud. In contrast, EFT payments adhere to stringent regulations enforced by clearinghouses. Business EFT payments are safer due to direct transfers of funds and the confidentiality of account numbers.
EFT payments are an excellent choice for recurring payments, providing convenience for customers and cost savings for businesses. Customers can also find EFT payments easy to understand since they are already familiar with direct debit payments.
Get Access To Smarter Subscription Management Tools
Through VoPay's payment API, you gain access to customizable automated billing tools that let you set up recurring bank account payments from customers on your specific billing plans with ease. Build embedded payment flows into your platform easily and make recurring EFT bank payments a core component of your subscription business.
