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The subscription and recurring payment model helps companies move to a predictable recurring revenue model by signing customers up for monthly or annual subscriptions. It is commonly used in Software as a Service (SaaS) applications, where users pay a monthly or annual subscription fee to gain access to certain software tools or services. The flexible monthly billing model has helped SaaS businesses scale rapidly as customers can easily sign up for and cancel subscriptions. Notable examples include Microsoft 365, Adobe Creative Cloud, and Salesforce which helped popularize the subscription economy.
The global Subscription and Recurring Payment Market is estimated to be valued at US$ 154.05 Bn in 2023 and is expected to exhibit a CAGR of 18.% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
One of the major drivers for the growth of the subscription and recurring payment market is the increasing adoption of the SaaS business model. SaaS allows customers to access cloud-based software applications through a monthly subscription rather than incurring high upfront costs. This has resonated well with businesses as it lowers the initial investment and reduces financial risk. Moreover, recurring subscription revenue provides stable cash flows for SaaS companies to sustain and expand operations.
Another key driver is the convenience of subscription billing. Customers prefer the ease of setting up automatic monthly payments rather than dealing with hefty annual invoices. Vendors also benefit from predictable cash flows through recurring billing. Meanwhile, incorporating subscription capabilities for physical products has boosted recurring revenue streams across industries like consumer goods, media and automotive.
Key players operating in the subscription and recurring payment market are PayPal, Stripe, Square, Recurly, Chargify, Zuora, FattMerchant, Payment Depot, PaymentEvolution, FastSpring, Chargebee, Spreedly, ChargeOver, Chargent, Vindicia, CCAvenue, BillDesk. Among these, PayPal maintains a leading position due to its large customer base and deep market penetration worldwide. The company offers a seamless payment experience across desktop, mobile and in-store channels.
Segment Analysis
The global subscription and recurring payment market can be segmented based on type into subscription fees, recurring payments and usage-based fees. The recurring payments sub-segment currently dominates the market as it accounts for more than 35% share due to increasing adoption of subscription-based services across various industries such as gaming, music, media, healthcare and fitness. The usage-based fees segment is expected to witness highest growth during the forecast period due to rising demand for pay-as-you-go models across transportation, utilities and communication sectors.
Regional Analysis: The North America region currently dominates the market owing to high adoption of subscription models in the US and Canada for media streaming, online gaming, transportation and other services.
PEST Analysis
Political: Regulations around data privacy and security are influencing the payment processing industry. New laws such as GDPR are pushing companies to enhance customer data protection.
Economic: Growing digital economy and e-commerce industry are driving demand for digital payment solutions. Rising disposable incomes are encouraging subscription to OTT and streaming platforms.
Social: Changing customer preferences towards on-demand and personalized services are boosting the adoption of subscription models. Growing popularity of media streaming and other subscription services among millennials is fueling market growth.
Technological: Advancements in mobile payment technologies and fintech are enabling new subscription and recurring payment solutions. Blockchain, AI and big data analytics are helping companies to improve user experience and recommendations.
Key Takeaways
The global Subscription and Recurring Payment Market is expected to witness high growth during the forecast period due to rising penetration of digital services across industries.
*Note:
- Source: Coherent Market Insights, Public sources, Desk research
- We have leveraged AI tools to mine information and compile it
