Skip to content

ACI Blog

Rise of the Subscription Billing Economy: Trends, Challenges and Solutions

In response to these trends, the subscription market is growing exponentially. According to one survey, 71 percent of adults pay for one or more subscriptions, an increase of 18 percent from five years ago. And the businesses that provide them are booming. Over the past seven years, companies throughout North America, Europe and Asia Pacific have seen subscription-based sales increase by more than 300 percent.

Consumers want fast, easy and personalized service when it comes to keeping on top of their subscriptions and their payments. In order to meet these growing demands, companies need to evaluate the unique challenges of offering a subscription service, or risk impacting their bottom lines.

New challenges in a growing market

As with any burgeoning market trend, the pay-as-you-go subscription model comes with its own set of challenges. The biggest problem with subscriptions is, ironically, the reason they are popular to begin with. A subscriber does not buy ownership and can therefore, at any time, forfeit their customer status. Because of that, subscription providers are seeing a major obstacle emerging: customer churn. This refers to the number of customers who stop paying for the subscription, or unsubscribe, during a given period of time. There are two forms of churn — voluntary and involuntary — and each represents a serious challenge to the subscription economy.

Voluntary churn occurs when a customer, based on their experience with the subscription, consciously chooses to unsubscribe. Customers often voluntarily opt-out of a subscription when they feel they aren’t getting the full value of their money, are dissatisfied with the payments process or find a more competitive service. Customers will often be dissatisfied if they aren’t informed of price increases and the reasoning behind them, or a lack of notification over the end of a promotional period.

Involuntary churn occurs when a subscription ends due to a payments issue. Subscription payments fail or are rejected for many reasons; a credit card on file has expired, there are insufficient funds in a bank account or the account number on a debit card has been updated.

Addressing customer churn with seamless payments

With the rapid growth of subscription-based services and products, addressing the churn challenge becomes more and more critical to success. At the root of the battle to retain subscribers is a proactive, customer-oriented billing and payments service.

Involuntary churn is, for the most part, preventable. And companies can offer solutions to help reduce it by proactively stopping the churn before it happens. Subscription services often lack payment reminders or notifications, severing critical communications between business and subscriber. Companies should look to partner with payment providers (like ACI) that can work to build back this necessary connection notifying the customer regarding an upcoming payment or an expiring credit card.

For companies looking to address and prevent voluntary churn, consider focusing on providing a seamless, branded and personalized billing and payments experience across all channels – and keeping customers informed with notifications delivered to their preferred channel. Companies should look to maintain regular communication with customers to discourage voluntary churn. Educate customers about special offers, price increases and product upgrades. By consolidating the payments experience into a fast, easy, informative and personalized process, payment providers are able to elevate subscribers’ experiences and, in turn, encourage customer retention.

Additionally, to further circumvent voluntary churn, companies should consider allowing subscribers to pay using alternative payment methods, such as PayPal and Zelle, to increase customer choice and improve their experience.

The subscriptions ecosystem continues to grow as more options become available, so keeping customers happy will be critical to long-term success.


ACI Worldwide is innovating the billing and payments experience for subscription providers, leveraging new capabilities such as real-time payments and sophisticated fraud prevention methods. Find out more about our billing and payment solutions.

Vice President, Business Development – Subscriptions

Mike is an experienced business development leader whose goal is to help clients establish and achieve their market share, revenue, customer experience and cost-savings goals.