Making recurring payments work for travel subscriptions
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Making recurring payments work for travel subscriptions

Ai Editorial

13th February 2023

The market for travel subscriptions has been expanding and businesses in this sector must be on top of their game to ensure payment-related experience doesn’t adversely impact the growth or results in churn even though a travel business might be consistently acquiring new subscribers.

Repeated payments are the mainstay of any subscription business.

In this model, a scheduled money transfer generally happens automatically.

But as experienced in case of certain subscription or recurring payments, when a customer isn’t in control or aware of how it works, they can abandon the service. For instance, if a customer is scheduled to pay annually, and intends to opt for a new payment option (say instalments) but can’t do so, then the experience goes awry. The case of a traveller, who has opted for a subscription product, not enjoying the same mid-way can’t be ruled out. But what if cancellation is a tedious process?

Latest developments

Another point of consideration for a travel business is to offer multiple payment methods at checkout, but at the same time ensure the shopper doesn’t end up being confused.

Other than card payments, direct debit etc., businesses should also evaluate open banking payments to recurring use cases like subscriptions and memberships. Evaluate developments like introduction of variable recurring payments (VRP) in the UK. It paves way for recurring payments or money movement securely by leveraging the Open Banking framework. Among the use cases, VRP can permit one-off or repeat payments where the charge/bill might vary each time. Looking at the growth of subscription-based offerings, the flexibility of VRP is likely to make it a popular option to pay for such services.

It is clear that the introduction of open banking payments is resulting in more competition in this arena, specifically when we think of merchant payments. VRPs will bring competition into retail payment models which until now have been restricted to prevalent recurring card payment and direct debit payment models. So businesses must look at latest developments in order to understanding benefits and disadvantages before presenting options for transactions to support the subscription model.

By Ritesh Gupta, Ai Events

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