VRP could end costly ‘subscription traps’, TrueLayer research finds
New research from YouGov and TrueLayer published today shows that despite the rising cost of living dampening consumer interest in subscriptions, the majority of people would still use them if they were easier to cancel and manage.
With the UK subscription market estimated to be worth £1.8 billion, exploring new payment methods could help retailers tap into this market at a time when revenues are under pressure, while building trust with money-conscious customers.
62% of respondents said they are planning to review their subscription services in the next six months in the context of the cost of living crisis and 38% say they have already cancelled a subscription service.
At the same time, 38% of the public have kept paying – accidentally or otherwise – for a subscription service they’ve stopped using entirely. Almost one in ten (9%) people with subscriptions say they spend over £25 per month on services they don’t regularly use, while a quarter (25%) said they didn’t know how much they were currently spending on their little-used subscriptions.
The findings suggest that the difficulty in cancelling subscriptions – many of which are set up as ‘card on file’ payments, which do not show up alongside Direct Debits on a user’s bank account – is a key factor driving this behaviour: 45% of respondents agreed that subscriptions were too difficult to cancel.
However, consumers are willing to continue paying for services by subscription, providing they have more transparency and control: over half (51%) say they would be more willing to use subscription services if they were easier to cancel.
The answer to the issues of spending transparency and control for consumer outgoing could lie in the wider roll out of variable recurring payment (VRP) mechanisms. While the Competition and Markets Authority (CMA) mandated these payments between two accounts belonging to the same person, business payments such as utility bills or subscriptions were not included, so it remains at banks’ discretion to implement them.
Despite this, VRP for business payments are being provided by NatWest in collaboration with firms including TrueLayer, going beyond the CMA’s requirements and making it easier for consumers to view and make changes to their recurring payments.
Commenting on the results, Jana Reid, Head of Bank Partnerships at TrueLayer, said: “At a time when budgets are under increased pressure, these figures demonstrate that people want more control over their finances and too many are caught in subscription traps. The subscription economy has become an important method for buying products and services but, currently, it is difficult for consumers to see and amend the subscription services they use.
“Open Banking can transform this by giving control and flexibility to consumers, allowing them to see and make changes to subscriptions more easily via their banking app. TrueLayer is excited to be pioneering this approach and we look forward to working with more banks to roll it out and putting consumers in the driving seat to manage their outgoings.”
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