Subscription companies are storming international markets (VB Live) | Industry
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The subscription model is booming — and now savvy companies are looking beyond the border. But global expansion brings new, complex issues that can make or break you. Learn how to expand your subscription business into new countries, tackle key challenges in potential markets, mitigate fraud, and more when you join this VB Live event!
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Subscription companies have to face and consider a number of huge issues when they’re expanding abroad, says Luke Salinas, SVP of strategy at global payment company Adyen. Everything from local regulation and payment network compliance to fraud, data security, privacy concerns, and other risks.
“Each region really brings its own flavor, its own set of challenges,” he says. “It can be especially challenging for high-growth companies, which subscription companies often are.”
And while subscription businesses face the standard challenges every business faces when moving into new markets, mostly revolving around the question of whether to establish a local entity or operate on a cross-border model, there’s one that’s very specific to subscription businesses: making the recurring transaction model work.
For instance, merchants in India run up against transaction value limits with recurring transactions. Any transaction over a certain value has to be authenticated, meaning that the consumer has to be an active participant in that transaction every time — it can’t happen in the background. Or moving into a market like Brazil — where Boleto is a very popular payment method — you’ll see that it’s a radically different ecosystem from the card-centric world that we’re used to here in the U.S., he says.
“You’re asking, ‘Can we maintain our monthly subscription model in a way that’s relevant for local customers and local payment options?’” Salinas says.
And sometimes the answer is no. Moving to larger, more valuable markets can mean pretty fundamental changes to a subscription company’s business model, such as moving to quarterly or annual subscriptions, or a prepaid model where a user maintains a balance and spends down against it.
There’s also fraud to consider, Salinas adds. You have markets where the incidence of fraud is higher in general, he says, but there are particular kinds of fraud that subscription businesses are more vulnerable to.
For instance, a non-U.S. company with a recurring transaction model coming into America, is going to want to understand prepaid card fraud in the U.S., which is pretty unique to that market. Or in Europe, where the key recurring or subscription payment is a direct debit method called SEPA, which has an unlimited dispute right. In other words, consumers can dispute transactions for no reason, no questions asked, for a fairly long period of time after the transaction. Understanding how consumers can misuse that right is pretty critical as merchants look to reduce fraud going into Europe.
“Every market has its own flavor,” he says. “In the end, it really depends on what you’re selling, what product or service, where you’re going in, and what your target demographic is.”
Salinas suggests tapping partners to accelerate your company’s ability to expand internationally. Their most obvious role, of course, is providing capabilities, whether that’s access to local card acquisition in certain markets, or new and more locally relevant payment methods.
But ultimately, he says, the most important role that a partner can play is to provide consultation and expertise — especially if you’re a younger, high-growth company going into these new markets, and you don’t have that expertise or experience in house.
“You really need to lean on your partners,” he says. “A lot of these markets are radically different from what domestic merchants are used to, especially when it comes to payments. Understanding and navigating those complexities is critical to building a sustainable business. The difference between a good partner and a great partner is offering that consultation, that expertise.”
Don’t miss out!
Register for free here.
Webinar attendees will learn about:
- The opportunities provided by the explosive growth in the subscription model around the globe
- How to overcome regional challenges, including local payment methods, regulations, data security, and taxation
- How to identify knowledgeable partners to accelerate your global expansion
- How localized communications throughout the subscription lifecycle boost subscriber retention
- Common fraud issues to anticipate and how to mitigate them
- Patrick Unnold, VP Customer, Recurly
- Luke Salinas, SVP Strategy, Adyen
- Lily Varon, Analyst, Forrester
- Rachael Brownell, Moderator, VentureBeat
Sponsored by Recurly and Adyen