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Subscription models start to dominate ecommerce payment trends study finds

By Paul Skeldon June 22, 2018 - 10:43 am

While Visa and Mastercard continue to be the primary payment tools for ecommerce, what they are being used to pay for is changing – shoppers are opting for subscription models.

So finds the Q1 2018 benchmarking report on Digital Commerce Trends in Software & Online Services Sales from 2Checkout (formerly Avangate).

According to its global research, there has been “an overwhelming shift to subscription commerce” in 2018, exacerbating a trend that started in 2012. In 2012, only about half (49%) of software sales were for subscription-based products and services, while a substantial 76% of sales in Q1 2018 have been for recurring-based purchases.

The share of subscription-based products has been increasing steadily over the years, 2017 witnessing a 75% level.

Regional variations in payments preferences are growing too. Visa and MasterCard continue to dominate in terms of payment methods, accounting for 68% of global online sales, followed by PayPal at 19% and American Express at 7%. This split emerges almost unchanged from the previous years, at global level and mirrored closely by United States, the largest software market.

Other countries show stronger preferences for local payment methods such as iDEAL in the Netherlands (43%), Alipay in China (42%), local credit cards in Brazil (28%) and Turkey (17%), Carte Bancaire in France (at 12%) and JCB and Konbini in Japan (with 19.5% and 5% respectively).

“We’ve been tracking these digital commerce benchmarks for years now and it’s interesting to notice clear trends – such as the proliferation of subscriptions – as well as payment preferences around the world and most sought-after software products and online services. As companies continue to expand into international markets, they need to be prepared to sell in the ways their end-customers want to buy, support a broad range of payment methods and business models, and sell through multiple channels and touchpoints in order to deliver exceptional user experiences. Understanding trends and buyer preferences is an important step in this direction.”

– Erich Litch, Chief Revenue Officer, 2Checkout

The Digital Commerce Benchmark is based on a sample of hundreds of thousands of worldwide transactions moving through 2Checkout’s Avangate platform between January 2017 and March 2018.

  • james
    3 months ago

    “In 2012, only about half (49%) of software sales were for subscription-based products and services, while a substantial 76% of sales in Q1 2018 have been for recurring-based purchases.”

    you used to be able to buy offline software, now you can’t.
    MS office, photoshop, etc etc. make up a large chunk of software purchases.
    hardly a buyer ‘trend’, when it’s a manufactured outcome.

    so suggesting that retailers “be prepared to sell in the ways their end-customers want to buy” is absolute nonsense in this context.
    end-customers want to buy software, and that’s the end of it, not continue paying for it year-on-year, but that’s what they’ve been forced to do, because that’s all the software creators are offering now, hence the spike in software subscriptions.

    “Understanding trends and buyer preferences is an important step in this direction.”
    oh the irony.

  • SAM
    3 months ago

    Actually it offers poor value for money, and the customer never actually owns anything. Essentially the Apple i tunes model.
    Over the longer term not cost effective.

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