Ethoca Consumer Clarity offers more insight and control over subscriptions in digital bank channels
Subscription services have seen exponential growth in recent years, offering consumers the convenience of buying and paying for things automatically and on a recurring basis—whether weekly, monthly or annually. From online streaming services to home-delivered meal kits, subscription-based purchases have become a popular way to buy things amid the ecommerce boom.
According to the 2021 UBS report “Investing in Digital Subscriptions,” the global digital subscription economy is expected to reach $1.5 trillion in value by 2025. And as a testament to our love affair with ease and convenience, in the U.S. alone, consumers have an average of 12 media and entertainment subscriptions, according to Statista.
However, despite the popularity of subscriptions, consumers may not even know how many subscriptions they have. Do you?
Subscriptions fuel disputes and chargebacks
While subscription services make our everyday lives easier, research shows they lead to more disputes and chargebacks—likely because consumers don’t have an easy way to track and cancel them. A recent survey by PYMNTS.com found that 43% of subscribers said they are likely to cancel a subscription within the next year.
The reasons subscription purchases lead to more disputes shouldn’t be surprising: Cardholders may forget they signed up for a subscription and mistake a recurring monthly payment for an accidental or fraudulent charge. Or, they may have meant to cancel, say, an annual software subscription, only to discover a $100 renewal charge on their banking statement—so they rely on the dispute and chargeback process to get a refund.
The high cost of disputes and chargebacks associated with subscription transactions means merchants and issuers are wise to work together to find a solution. Merchants are liable to cover the costs of chargebacks associated with card-not-present transactions—which subscription payments generally are. And issuers often write off the costs of low-value disputes, making it especially important for them to stop the rising tide of disputes stemming from recurring transactions, given that many of them are often low value transactions.
Moreover, the U.S. federal government is looking to make subscriptions easier to cancel, with the Federal Trade Commission recently proposing a “click to cancel” rule that would require merchants to disclose the terms of their subscriptions more clearly, as well as let consumers easily cancel subscriptions online.
Research shows that consumers would also value more control over their digital purchases, with 72% of those surveyed saying they’d like a one-stop “super app” for managing their digital activities.
Providing consumers with visibility and control of their subscription services
So, how do you increase the value of subscriptions while reducing the risks and costs of chargebacks?
Mastercard’s Subscription Controls product is now available through Ethoca Consumer ClarityTM, allowing cardholders to better manage their subscription services and request cancellations of their transactions directly through their digital banking app—without needing to initiate a dispute. The product shows which transactions are subscriptions and allows cardholders to cancel them directly through the bank app.
Subscription controls is available via one integration into a versionless API that also provides other powerful details Consumer Clarity already offers—like merchant name and logo, transaction details and carbon footprint scores. Subscription Controls offers a more powerful way to give cardholders more visibility and control of their purchase transactions within an issuer’s digital banking app.
“Consumers everywhere are being more mindful of their spending and wanting easier and more seamless ways to manage, track and control their finances,” says Gaurav Mittal, EVP, Ethoca. “Enabling customers to manage their subscriptions directly in digital bank channels not only helps drive a better brand experience, but it can also help reduce subscription-related disputes and their impact.”
And this is just the beginning. In the future, Subscription Controls will also allow issuers to provide a ‘hub’ view that shows all recurring payments including subscriptions, recurring payments, and card-on-file transactions, as well as offer the ability to suspend and reinstate or even upgrade subscription levels—directly through their banking app.
Driving engagement with a total customer experience
Consumer Clarity is about more than just preventing costly disputes and chargebacks. In an increasingly competitive landscape, it’s also about offering more value and forging a deeper connection with consumers by giving them visibility into their transactions.
As consumers have more choice and flexibility around their shopping and purchases than ever before, financial institutions and merchants looking to engage them need to make sure they’re giving them the experience they expect and demand—even after a transaction.
Offering greater insights and control over subscriptions—something that makes their lives easier—is a powerful way to do that.