The subscription box industry has had momentous growth over the past several years. Online visits to sites selling subscription boxes have jumped almost tenfold in the past four years in the U.S. At 41.7 million visits in April of last year, the industry continues to garner interest from young, affluent consumers.
In the first quarter of 2018, visits to subscription box sites rose 24% year-over-year, reaching 18.5 million Americans. McKinsey reports that 15% of online shoppers have signed up for at least one recurring subscription.
Clothing subscription boxes, in particular, have sprung up everywhere. From Stitch Fix to Trunk Club, people love the convenience and speed of receiving a tailored box of apparel on a regular basis.
Online merchants selling clothing subscription boxes have a healthy market with growth expected to continue. That said, there are several obstacles that online subscription merchants face in conducting business. One of the biggest is finding and securing one or more subscription merchant accounts.
Subscription Merchant Accounts: What’s the Deal?
Experienced business owners understand the importance of merchant accounts, but if you’re new to the subscription space, you may not realize that subscription merchant accounts are unique. For one, working on a recurring or rebill business model can be complex.
Merchants that charge customers on a weekly, monthly or annual schedule need to ensure payments are processed quickly and effectively. The goal is to maximize revenues while making it easy for customers to pay for their products or services.
If you offer subscriptions to your customers, you should look into the benefits subscription merchant accounts can offer. Subscription merchant accounts enable you to:
Nix Missed Payments and Lost Customers – working with a dedicated recurring billing solution that provides dunning management can ensure that a merchant continues to receive ongoing payment for services rendered.
Enjoy Lower Processing Fees – specialized subscription merchant accounts help businesses consolidate cost-per-transaction. This means paying one lowe fee per month, week, or year as opposed to paying a per transaction fee.
Predict Cash Flow – Cash flow is king for recurring billing merchants. Having a clear understanding of cash flow for each upcoming period is essential. Subscription merchant accounts allow merchants to gain deep insights into the health of their business.
Clothing Subscription Merchant Accounts: Payments Options to Consider
Once a merchant is set up with a reliable subscription merchant account, there are some payments options to consider. These items are integral to smooth operations and a seamless customer experience.
Payment Card Validation
Some merchants opt to validate a customer’s card details when they subscribe. This can be done via a $0 or $1 authorization charge. For the best experience, merchants should communicate this nominal fee to customers, to avoid unnecessary chargebacks or customer complaints. Let customers know that this charge is simply a pre authorization, which only tests the card and does not actually deduct money from the customer’s account.
Account Updater
Account updater services are offered by the major card brands and issuers to help merchants avoid declined transactions. By automatically updating payment information, merchants avoid unnecessary declines due to inaccurate of expired payment card data.
Payment Methods
Since clothing subscription boxes are popular with younger generations, it’s important to offer a variety of preferred payment methods. This should include all major credit cards, but also alternative digital options like PayPal and Apple Pay. International merchants should also take care to offer multi currency options and currency conversion.
Custom Recurring Billing Solutions
Hard-coded billing is not ideal for clothing subscription merchants. Instead, work with a specialist that provides custom recurring billing solutions. These enable merchants to easily update pricing to match market demand. These solutions also have tailored tools to prevent and manage chargebacks, refunds, and other issues unique to the recurring business model.
Dunning Management
An unfortunate reality for clothing subscription merchants is that sometimes customers churn. This happens for a number of reasons: customers forget to update expired payment card details, cards are lost or stolen, or information is not entered correctly. Some card declines are legitimate. Those that are unnecessary can be prevented through dunning management. This system handles complications by retrying charges after a set period of time or by sending out email reminders about an upcoming charge.
MerchACT specializes in clothing subscription merchant accounts. We work with merchants to reduce unnecessary card declines, avoid chargebacks, and streamline the payments process. Our expert advisers are on hand to answer any questions you have and to guide you in growing your business. Contact us today to learn more about our tailored services.