We are starting to see a revolution in the buying/paying habits of European consumers, as they increasingly adopt the subscription payment model. (See CTMfile review of the SlimPay & Innopay report, Europeans and the Subscription Model viewed from a payment perspective.) The growing acceptance of recurring subscription payments across all countries is opening up new markets:
Number of monthly subscriptions per person /country in Europe
Source & Copyright©2016 – SlimPay & Innopay
Usage of subscriptions per expenditure (global)
Source & Copyright©2016 – SlimPay & Innopay
But these new markets will only be opened up IF: the recurring payment services are easy to use (frictionless) and protect the security concerns of both consumers and businesses. There are now a growing number of dedicated pan-European payment services for the recurring payments and subscriptions market. An important example is the SlimPay service which is taking an increasing share of the European subscriptions market.
SlimPay is a pan-Europe subscription payment service covering 35 countries for collecting consumer-to-business recurring payments. It is already used by 2,000+ merchants across Europe which range from the very large, e.g. EDF, tripadvisor, to SMEs throughout the region. Basically, SlimPay provides a smart recurring payments gateway based on direct debit, which offers three basic services:
- direct debit mandate set-up and management: which uses SlimPay’s own electronic signature systems based on two-factor SMS in which:
- A customer authorises a direct debit by electronically signing a mandate through communicating a 4-digit code received via text message. The code can be communicated via a number of channels.
- Merchant’s customers sign mandates by verbally communicating the code via the company website, face-to-face or on the telephone. (Acceptance of this approach varies by country, e.g. in France well accepted while in other countries it is less accepted which is why SlimPay plan to offer local country variations to their mandate processing.)
- 1. The Merchant collect funds from a customer through the use of a previously setup Mandate and provides SlimPay with the new transaction details as well as the Mandate previously setup
- 2. SlimPay validates the Direct Debit data provided and schedules its execution
- 3. SlimPay informs the Merchant about the successful scheduling of its direct debit transaction.
- merchant acquiring collection service:
- 1. Merchant provides SlimPay the details of a previously setup mandate and the new billing plan
- 2. SlimPay validates the billing plan details provided and schedules the execution of the direct debits
- 3. SlimPay informs the Merchant about the successful scheduling of the billing plan and its payments.
The chart below shows how the three services come together:
Source & Copyright©2016 - SlimPay
SlimPay also provide a ‘Re-submit Direct Debit’ service for consumers who had no funds available when the first direct debit was submitted. This is a three step process :
- SMS or e-mail alert: SlimPay enables merchants to send reminders via SMS or email to pre-notify consumers of a re-try attempt
- Retry via direct debiting: SlimPay can repeatedly retry to recover a failed transaction. The merchant can decide if they wish to notify the customer of the retry attempts or not
- Recovery via other payment systems: in the case of failure following retry attempts, SlimPay offers the merchant the possibility of recovering the failed payment via bank card. (All subsequent transactions after recovery will be collected via direct debit.
SlimPay usage and pricing
Initially, SlimPay the mandate management service was sold as a stand-alone product to large corporates because the banks did not have such a service. Today some companies taking only mandate signature service while others are using all three options.
Also some banks have taken the SlimPay service for their DD mandate management.
Charges are based upon the number of transactions per month.
Opening up new markets
The traditional recurring payment markets, e.g. mortgage, energy are vitally important and will continue for ever. However, it is the new markets that are being opened up by the frictionless direct debit services that is exciting companies, e.g.:
- buying usage rights rather than ownership outright:
- music streaming at Spotify, Adobe’s subscription software model
- videos/cinema - Netflix
- peer-to-peer car rental, e.g. Drivy in France in which user buys access to a network of cars instead of owning a car
- France’s national railway company SNCF offers unlimited access for a monthly subscription
- contact lenses subscription service
- food delivery services.
In opening up these new markets Slimpay have found that the key is to:
- cover all consumers’ desires and needs:
- Source & Copyright©2016 - SlimPay & Innopay
- offer frictionless direct debiting from a bank current account.
SlimPay are currently focusing on the high volume direct debiting countries in Europe - UK, France, Netherlands, Belgium, Germany, Spain and Italy. In the longer term, they plan to adopt local direct debit mandate authentication services in all European countries to ensure frictionless mandate authentication throughout the region.
However, subscription payments are not limited to Europe, already SlimPay has a foothold in the US market with their partnership with the subscription giant Zuora.
CTMfile take: Cashflow from subscription payments is the best kind: predictable and regular. Opening new markets with recurring payments is a dream that could come true.
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