Yesterday, Mastercard announced it is partnering with Subaio, a SaaS firm, to provide a way for consumers to easily cancel subscriptions. Using the Subaio digital platform, consumers can view all of their subscriptions and recurring payments and cancel their subscriptions directly through the app, no matter how the consumer is paying for the subscription. The new solution is already available in banks in North America and Europe.
“Through a single API, financial institutions can provide their customers with subscription control, as well as the ability to view digital receipts and merchant details – simplifying consumers’ digital financial lives,” Mastercard said in a June 29, 2023 news release.
Ajay Bhalla, president of Cyber & Intelligence for Mastercard, said consumers want more visibility of their monthly spending. This technology solution gives consumers direct control over their recurring payments through a single source.
“This puts power back where it belongs – with the consumer,” Bhalla said.
Subaio CCO Frederrick Hamann also commented on the new partnership.
“Together with Mastercard, we stand stronger in empowering consumers to make informed financial decisions in today’s subscription economy,” said Hamann. “We deliver a smooth, hassle-free experience for controlling subscriptions and payments, designed to meet the needs of modern consumers’ fast-paced lifestyles. Our solutions cultivate a strong sense of commitment within this digital generation, driving growth for our partners.”
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Growth of subscriptions
According to Statista, US consumers have an average of 12 media and entertainment subscriptions with millennials averaging 17. According to Subscription Flow, the subscription economy is estimated to grow to $1.5 billion by 2025. With such heavy usage of this convenient business model, consumers are looking for easier ways to manage and control their subscriptions, said Mastercard.
Potential impacts
Mastercard said their partnership helps parties on all sides of the equation:
- Consumers can better manage their spending and cancel subscriptions when information is centralized and easily accessible.
- Merchants and issuers can reduce the cost of disputes initiated by consumers.
- Merchants and issuers can decrease the volume of complaints coming through their call centers.
In addition, this is part of a broader strategy by Mastercard to be more focused on the customer, the company said.
“When consumers are empowered to manage and discover subscriptions that are right for their everyday needs, issuers and merchants are better positioned to create and maintain long-lasting connections,” said Mastercard.
Insider Take
On the consumer side, the appeal of being able to manage all of their recurring payments and cancel subscriptions in one place is attractive. On the subscription side, however, companies and technology that employ such solutions are managing subscribers away from subscription businesses and their products and services. They also take away the opportunity for subscription companies to find out why consumers are choosing to cancel subscriptions (e.g., price, budget, not a unique product or service) and potentially preserve the business.
These apps are part of a growing trend, however, so subscription companies can’t ignore them. They need to recognize the challenges they present, accept this as their new reality, and strategize ways to retain subscribers. Two strategies that can help subscription companies reduce the inevitable churn created by these solutions include establishing a solid relationship with subscribers at the start of the customer journey, and creating a much needed or beloved subscription that subscribers don’t want to live without.
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