The recurring subscription payments market is undergoing significant growth, primarily driven by the acceleration of consumer adoption. The market deals with periodic subscriptions to a variety of goods and services offered as an alternative payment model.
While subscriptions have existed for a long time, their use in the consumer products marketplace is still evolving. Despite the usage being relatively new, the proliferation has been rapid and has spanned many different vertical markets.
Recurring Payments Market Development
According to the latest worldwide market study by Juniper Research, the transaction value of recurring payments will exceed $15.4 trillion globally in 2027 -- that's up from $13.2 trillion in 2023.
This relatively slow growth of 17 percent reflects that recurring payments are a well-established market, but also disguises a rapid change of payment methods in the space, with Open Banking and Digital Wallet payments outstripping overall growth.
As more retail merchants struggle to keep their prices as low as possible, offering payment methods with lower processing costs is of critical importance and is driving change in the market, in particular, due to enthusiasm for digital payment methods.
According to the Juniper analyst assessment, a recurring payment is any form of payment that is made on a repeating basis -- regardless of the payment method or billing cycle.
Juniper Research also released its latest reoccurring payments vendor leaderboard for 2023. The top three ranked vendors are Mollie, Zuora, and Recurly.
The research found that the leading players scored well based on their breadth of integrations with different payment options and their tracking and customizable payment plan capabilities.
Juniper analysts suggest that recurring payments platform vendors must develop solutions to support future payment types as they are developed -- such as Open Banking and Central Bank Digital Currencies, in order to stay relevant in the fast-moving consumer payments arena.
"For merchants, they want to be able to bill their clients on a recurring or one-off basis, with the ability to create custom plans that match customer requirements, not the system capabilities. Those platform vendors offering an agile, API-based system will best meet these requirements and succeed in this highly competitive market," said Nick Maynard, head of research at Juniper Research.
One of the main benefits of adopting a recurring payment model is that businesses will no longer have to chase late payments or send out reminders at the end of each billing cycle.
Moreover, with recurring payments, the product or service billing process is automated, saving the company both time and effort -- reducing the administrative burden on businesses.
Outlook for Recurring Payment Apps Growth
Recurring payments also minimize the effort required from a consumer perspective. Customers do not have to act on invoicing reminders or go through the hassle associated with making manual payments for their subscriptions.
These benefits are likely to drive continued growth.
That said, I anticipate recurring payments will likely improve the customer experience. The subscription model provides consumers with a level of predictability for when and how much they need to pay for their repeat product or service expenditures.