DeFi Payment Processing
B2B Vault Episode 55: Businesses & Today’s Subscription Economy

Written by Allen Kopelman

February 22, 2022

Video Transcription

Hey, everybody is Justin with B2B Vault: The Payment Technology Podcast with host Allen Kopelman. We provide educational information about business payments, FinTech, and the technology businesses need in today’s world. In today’s episode, we will be talking about businesses in the subscription economy. So head on over to Allen, take it over, buddy. All right. Hey everybody. Welcome to B2B vol. So today, we’re going to talk about the subscription economy and what’s going on with that, and how businesses can, you know, adapt to using subscriptions to grow their revenue. So let’s get at this. So skip subscription economy is a phrase coined by Zuora. I hope I pronounced their name correctly, describing a new business landscape in which traditional pay-per-product or service companies move towards subscription-based business models. A company has some subscription-type software and then links into payment gateways, which we provide. And we have merchants who use this software in many other types of software that can, you know, board in subscriptions.

So, you know, the Washington Post did a story and 2001 June. In that story, they talked about how subscriptions were booming during the pandemic because many businesses wanted to have a subscription model that started popping up and growing. you know, like companies like food delivery, Instacart you know, all of a sudden other companies like started adding on delivery services with a, with a monthly fee and things like that. So, you know, the subscription economy is growing, and UBS financial services predict that this subscription economy or grow to 1.5 trillion by 2025, that’s only in three years double the 650 billion that it was worth back in 2021. So this is not going to stop. Subscription-based billing is a growing thing I have told business owners many times. Like, you know, if you guys ever thought about some subscription-based service for your business, so that you can have a monthly income, monthly income that you have, you can count on every month. So let’s get into what we’re going to talk about today. So this has been a scorching topic. What kind of business, you know, what a business is doing with subscription? So you have recurring billing. So you have your pool cleaned, and the guy charges you every month cleaning or pest control comes once a quarter.

You know, they bill you quarterly, or your air conditioner, different kinds of companies like avid air conditioning company. I compensate my ass twice a year. So they went from charging you a yearly fee because people would just forget to pay the yearly fee. And they started charging monthly, like $12. So $12, you don’t think about it, but I’ve seen it on everything. So you got, you know, it’s a recurring billing for services like that subscriptions to all kinds of different things like media, Netflix, you know Amazon, you can either pay for the year or pay monthly platform fees. So companies are charging for access to their platform. That’s something new. And I started seeing that pop up recently, where we got a couple of new customers, and they’re like a platform fee, you know, instead of a, and I was like, I didn’t understand it, but we’ll see how it works. You know, it’s automated charging, so you’re set. You’re charging the person’s credit card or hitting their bank account with ACH. And then they’re getting the bill afterward, but they know it’s coming, you know there’s also like a company true bill. Right. I hear it on the radio all the time. Oh, hook up your bank to True Bill. They’ll tell you what kind of subscriptions you’re doing. Maybe you don’t want all those subscripts. Yeah. So, you know, it’s a useful tool because people might have memberships to things that they forgot they had. Cause it’s small amounts of money, you know, but now it’s going on. I mean, look at Netflix. I think Netflix used to be $7. I was, and I think now it’s like 14 or 15 bucks.

Yeah. It’s nuts. You know what? Oh, wait, go back. Then businesses are figuring out how to incorporate, you know, and also recurring donations. Subscription-based giving started to become even more popular. So you could go on a church’s website or a synagogue, you know, or whatever charity you want to participate with. I see commercials all the time, tunnels for towers, oh, only ten bucks a month, whatever it is that they’re trying to collect. So it’s a hot topic. If you’re a business and can figure out some kind of subscription to incorporate into your business, I think this is a great idea, and we can help you with that. So now I think that something that I’ve seen a couple of brands doing, it’s almost like a subscription box for, for there, you know, for their clothing Brands. Well, there’s a lot like a stitch. You can order clothes At the same specific brand, though. Not like, you know, like those other ones where they put together an outfit for it. Right. It’s just like one brand. It’s not like major brands doing it, but more like people are just printing shirts and then, oh, It’s a new business. You sign up, and then, you know, you get a new shirt every month. It’s pretty cool. Yeah.

It’s a new business model. I think many, you know, many businesses, you know, why to implement a subscription program. So instead of charging, a yearly can charge monthly. It’s a smaller amount of money. People that were charging yearly, too many cancellations monthly to kind of try it before you jump in, you know, oh, I’m going to, like, we tried a couple of products and the office, and it’s like, oh, you don’t want to pay for the year. You’re going to say, well, let’s try it for two or three months. Then if it’s good, we’ll pay for the whole year. You still get those savings. But you know what, if we don’t like it, we just tried something recently. We’re like, well, it’s not worth it. So we canceled, knew we had it for a month or two. We came to it. So, you know, you have to, it’s also a great way. You know, some people say, oh, I want them to pay for the year, but you’re going to get more loyalty out of your customer by, you know, letting them pay by the month, you know? Cause then they’re not going to notice it. I’ve been suggested once to a chamber of commerce. I go, you know, all these chambers of commerce, I don’t know why they don’t get it. Right. Chambers of commerce and other networking groups. I see where they, you know, they want to charge 300, 400 dollars a year. Right. I don’t understand why don’t you go to the subscription model, and you want small businesses here where you’ve just gone through three years.

I never understood why they would make you a small business, spend so much money to be in part, like to be part of the BBB BBB, like all these Other things. Like why would you not offer a monthly subscription for this? What happens if the business fails? Right. But I’m just saying like, you know, these chambers here we are, we went through two years, right? We’re going on the third year of this whole pandemic thing. Everybody businesses are, you know, crunching. They have less help than they ever have before. They can’t find people to hire. Right. You know, costs have gone up and then, you know, people need networking opportunities. They want to be part of the chamber. I’ve even talked to a couple of cities I’ve interacted with. I’m like, what are you guys doing? You guys raised your life. They, their licensing fees, you know, for licenses is so expensive. You know, license, you know, to get a business license, give a break to the businesses. But the chambers, like if you have a chamber, don’t charge 20 bucks a month or 30 bucks. I see some of those chambers of commerce are 5,000. Well, that’s it. If you want to be like an a, you want to be a trustee member. Right. Okay. Well, if you’ve got five grand, you do go ahead and pay it. Do you know what I’m saying? Just for the basic business, they should have a membership like a $30 a month membership that businesses can say, okay, we’ll set upright. In a checkout for 360 bucks. It’s a lot easier to cough up 30 A month. Right. They can pay $30 a month. I don’t understand why that hasn’t been popular with those or networking groups. I’ve been told like one networking group. They used to have a $200 membership. And now I think it’s 30 bucks for the whole year. Okay, great. I applaud them on that. You know, I applaud them on that.

Because many of the older generations are so wary of, you know, like the automatic bill pay. No, I don’t think it’s that. People have adapted to automated bill pay, paying for subscriptions. I mean, how many people started paying for Instacart and people, I guarantee you like Netflix probably increased their subscription-based 20, 30, 40% during the pandemic. People are sitting at home like, oh, I don’t want to watch TV all day. I get on some, let’s get some movies going, you know, for sure. But I’m just saying, you know, that I think people are used to it, and I think more businesses need to wrap their head around it, you know? And they could offer a discount. Oh, if you have the subscription, then you get Rocky. He doesn’t like subscriptions. Listen, Rocky has a subscription for dog treats. Okay. They sat in the right if you get Side streaming subscriptions during the pandemic past 1 billion. So 1 billion people have now signed up for some sort of, Yeah. It’s worldwide. It’s crazy. Yeah. I mean, it’s saying like even dog treats, I have it on a subscription. They give you a discount as they send it to you. The same box of stuff. Every month. I, I got the same thing for my daughter’s rabbit. Right? Send me the hay and the bedding and the food once a month. So I don’t have to go to the store, and Rocky loves it. That way, he gets his treats. Okay. So, you know, when you want to find more out about the B2B vault, visit our website, B2B vault.info. You can also find us on social media, Instagram, Facebook, Twitter, follow us on all the popular podcast networks. We recently got added on to Pandora and Amazon Music, which you have to go through an approval process. So that’s exciting. Very cool. Yeah. That’s cool. So why implement a subscription? We have already gone through this. Why is it there twice? Okay. What kind of businesses is doing subscription plans? So we have, you know, businesses who are providing, who are providing services, are doing it air conditioning company. You know, those types of companies never really did it.

Businesses charge you one time when they come through your house, you know, so this way they can get people on memberships, and they’re going to come and do all that. Even like I buy air conditioning, filters like that. So you order it, and they send you your like six filters, and that 1, 3, 4 months go by, they mail you another six filters, SAS software. That’s been going strong. I can tell you this. Like I follow one website. AppSumo, you know, they, every week they’re adding more SAS software on there. More and more software where you’re paying a monthly fee to a, a monthly fee for your software. So that’s very popular, you know, software companies in general, who are charged, have software that you use either, you know, instead of paying, you know paying one time for the software, they’re going to a subscription model. Oh yeah. You know, a lot of software is gone to high tech companies. They’re going to subscription models. I mean, you’re going to see like those Oculus glasses, and they’re like three, 400 bucks. I guarantee somebody will put together a subscription model for those things. It only can be used for that metaverse or a few different metaverses or movies or whatever. We saw when we were talking about somebody saying they were going to make them, and they’re going to incorporate those like Oculus glasses with augmented reality for dating. I was like, that’s crazy. I’m going to go on a date with the goggles media. We just talked about Netflix Disney. I mean, there is an overload of paid channels.

I mean, there’s an overload. Yeah. I’m getting a little tired of everything. I mean, I’m all for subscription base, you know, as far as it comes to streaming stuff, instead of paying the cable. But I think that the cable company like Comcast, I think they need to incorporate where you can just pay that and go, okay, I want Netflix. I want the Disney channel, and I want this, and you just pay it all on one bill. And then it gives you like a bundle. They give you a bundle deal like they used to do with HBO, Showtime, Cinemax. Right. The cable companies need to get with the program and bundle these subscriptions up. Is it the cable company, or do you think it’s the networks that are seeing the value in branching out away from cable television and just relying on the individual? I think people, I think people still need cable because if you want to get news and all that, otherwise you’re going to be doing like Roku TV or something, Or no, my dad uses a slang, Slang, peacock. You get news on peacock. Yes. Well, you just got to bring the internet into your house, but that’s what I’m saying. But then you have all these payment services. How do you bundle them up? Maybe some new company needs to be born, and they’ll say, oh yeah, well you can buy a bundle from us. Do you know? And I think people would be open to that. Bundling, you know, support fees instead of paying a yearly support fee, pay a monthly support fee, you know, B2B businesses. I think they’re like last on except for software. I think that’s the last on the list of companies who have, who have instituted a monthly fee.

I’ve even seen some CPAs, you know, that work with us where we showed them like, oh, that we’re having problems collecting yearly fees and month. And even when they charge people quarterly and we showed them, Hey, do a monthly subscription for your accounting service that you’re doing then at the end of the year. So your customer has to write you a check for two, three grand, and then you’re financing that out for them for five, six months, you get paid all during the year. Right? So I think more B2B companies look at B2C companies, which we’re talking about like snack boxes, pet stuff, you know, health products. There’s tons of stuff makeup, but one thing I think these companies need to do is make sure that they have an easy way for people to cancel the subscription or update or change it. so that, you know, they don’t get charged backs because there’s nothing worse than getting a chargeback With this one, w a subscription box loot, crate. And they would send me like all kinds of Marvel action figures, right. Shirts and everything. And then it started getting boring. Like I didn’t like it. And once I realized you’re kind of locked in, Yeah, you got to call them. But now, like many credit cards, they make it easy. Or you have talked to like a true bell, boom, you hit it button, and they cancel it because they send the company a message that if they’re not going to cancel it, they’re going to be a chargeback. So, you know, that’s a whole new thing. Education is something that I think will start growing because people might be homeschooling their kids. They need tutoring for their children and things like that or educational programs at home. Maybe their kids aren’t going to use these enrichment programs at the schools, which is disgusting that schools have thrown away all these enrichment programs like music and sports and stuff like that. So I think that EDU education needs to get with the subscription program.

I mean, I saw Panera the other day. Oh, it happened to stop in a Panera. And that a thing where I think it was like eight or $9, and you buy a special cup and then you can get coffee all month long for free. Yeah. For the nine bucks. That’s crazy. That’s pretty well; they figure you’re going to buy a sandwich or a bagel, or at least then right. Yeah. Maybe the guy who comes in and grab. suppose you’re on the road all day. In that case, you’re a big coffee drinker; maybe you get a Panera Bread Cup. you know, non-profits we mentioned before try to focus on more, you know, smaller donations from people instead of getting big donations and getting more monthly donations. So many companies are coming up with ways to make this happen. I think you’ve got to put on your thinking cap, and you got to get creative, you got to see what can you, you know, what kind of idea could you come up with for, you know, a subscription-based product for your business? You know, it could be anything. So, I was trying to figure out a way of the previously, not just recently, you know, but how to set up a system where you pay as you go for web design. I’ve seen it’s tricky, though. I saw a company online to purchase a certain amount of hours, like graphic design. It could be a little hard to do that for web design, but I thought it was interesting. I don’t know if they’re still in business. I saw it a few months ago. Like on social media, it’s becoming more And more popular. So, You know, you have to get creative, think outside of the box, you know, and, and, and, and incorporate things into your business. Even, you know, a membership, you know, so, oh, if you pay for this membership monthly, you can do it at a nightclub, maybe at a restaurant too. Oh, you’ve joined this membership. Okay. Well, we’re not going to charge you a delivery fee, or they’re going to give you seating preferred seating. When you come to the restaurant, you know, we’re always talking about NFTs.

So, you know, by this NFP and then get some kind of benefit, it could be the same thing with a membership, you know, you’d have to make an NFT do it. Right. But I’m just saying, you know, some kind of membership I think a membership For like a dance club or something would be a great idea for, you know, people who are on to be on the VIP list. Right? You want to get preferred seating. You don’t want to wait in line. You know, as I said, for, or for restaurants, you know, that they are restaurant could do it for, you know, like, oh, they have takeout and delivery, and companies don’t charge you whatever extra fees they’re charging. Right. So, you know, how do you manage subscriptions? So gateways can manage subscriptions. You can manage subscriptions through many CRM products. Okay. Which link up to a gateway. You can use third-party software. There’s a bunch of that third-party software that we work with, you know, or, you know, let’s say you’re a larger company and you have a software. And then you sell that software to other people who do memberships. You could get set up in a whole payback model and run that. And then that can bring even more revenue into your, by setting that up real quick. I think you’re going fast. All right. So the gateway explains. So how would you manage your subscription on a gateway? So like with authorized.net. So when people were checking out on your webpage, you know, you, you integrate with the API with authorized.net or NMI or any of the gateways, and that lets you, you know, the person’s clicking a box or they’re automatically enrolling in a subscription. So it saves it into their customer manager.

And then when that, when your date comes up, which I always think is a better idea. So the person pays on, like, if you went in on the third, it always charges you on the third. You don’t try to like bundle everybody up to the first of the month. No, it should be whenever you’ve said. So, and then, you know, so all gateways have that in there, you can program that easily without using third-party software. But some people use a third-party software, like a CRM, you know, some example of that, like Salesforce or orange CRM. So Zoho. Yeah. And then payments are, so then, you know, because maybe there’s a whole sign-up process. That’s going with that. And they need all that data on that customer, or they’re building something custom themselves or like third-party software. Like we mentioned the company initially, or there’s like charge B. There’s a bunch of them that have subscription-based software because, let’s say, you’re not a big web designer. Right. And you want to get some plugins. Right. I bet you, and there’s a word. I bet you Justin can go search on his phone. Now. I bet you there’s a, there’s a plugin for WordPress. Cause Justin, he’s a big WordPress guy. I’ve mentioned. There’s a, and I bet you, there’s a third-party plugin on WordPress to talk about that. Can that mean job memberships, right? Oh yeah. So I’m sure they have that. And the pay FOC pay FAC model, you know, where we have a hybrid payback model. So any size business can do it, but let’s just say I was a company and I was selling social media software to everybody. And people that signed up for the social media software or agencies, and then they want to charge their customers for, you know, what they do or let them use itself service. Then they could sign up, and then they could do billing through them. And then, the original company would make revenue from all the people downstream running subscription services.

So that’s where the payback model comes in. There are many ways to like manage subscriptions. High tech, low tech, medium-tech, you know, for your business, depends on like, what is the, what’s the boarding thing? A lot of works for the business, basically at the end of the day, whatever works for the business. You know, if you got, you know, if you’ve got a coat, if you’ve got a whole staff of people doing coding, they build the whole thing out themselves, or they use something like Salesforce. Still, it depends on how much data you need to collect initially. If it’s easy, you’re paying 50 bucks, right. A month or 20 bucks a month. That’s easy. You don’t need all that third-party software. You can just do a gateway, but maybe you need a CRM because they will get shipped like different pet supplies and things like that. That could be a little more complicated because now you’ve got to keep track of what did they order. Right. And then right. When does it come in, and then they can log in and maybe change their order up and stuff like that. So then you need something a little more robust. He is great for that because I was ordering my rabbit. As I said, my daughter’s rabbit food, and I realized that the hay he eats takes a lot longer for him to finish the amount they send. Right. So I had like three bales of hay in my house. And then you got to go in, and It was that easy. So I just went in there, I adjusted, and you can adjust the frequency, the amount. And yeah. So it was Right. That’s important for businesses to think about.

So is it something simple or something more complicated, or maybe they’re even doing it over the phone. They can still put it into a gateway. Yeah. So, you know, we have all kinds. We work with a whole host of different gateways, probably seven or eight different gateways. So, you know, we could discuss your project. So here, we want to engage with you. What’s your idea for a subscription service? Post it in the comments, like our Facebook page or on LinkedIn, find the podcast on LinkedIn or find me on LinkedIn, tag us on Twitter, tag us on Twitter at It’d be vault on Twitter, Instagram, Facebook, all the same, B2B vault. That’s it. Tag us with your idea. And then if we see a bow, a lot of good ideas, and we’ll come back, we’ll do a podcast and talk about those ideas. Or maybe you could get a contacted by us. We’ll interview you about your idea. See maybe how we can help. Right. So yeah, we can help. So you can always book on our website, NPS bank.com or@ b2bvault.info. You can book an appointment with me. Follow the podcast, Spotify, Apple, YouTube, Stitcher, Google, iHeart, Amazon music. Now, Pandora, overcast is another new one. Find us on social media. As Justin said, everybody, have a great day. B2B Vault Carpe diem we out.

Merchant Statement Analysis | Merchant Services Statement Analysis


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