UK retailers are losing out on £4.3 billion annually due to outdated payment details, according to new research conducted by Opinium for Acquired.com, a next generation payments business focused on recurring commerce.
Nearly two in five (38%, Figure One) of adults in a nationally representative survey responded that they have cancelled a subscription in the past because they have been prompted to update their payment details.
For those cancelling, this represents an average loss for retailers of £210* per adult annually, a significant loss of £4.3 billion annually when scaled nationally.
Younger age groups are more likely to take action and cancel, with 43% of 18-34 year olds having cancelled a subscription, compared to 30% of 55+ year olds.
This is also far more prevalent behaviour in London, with 54% having cancelled at least one subscription when being prompted to update payment details, compared to lower scoring regions such as Yorkshire & Humberside (30%) and the North West (31%.)
Customers are required to update payment details on their subscriptions when their designated debit or credit card is no longer active, which will typically be due to receiving a new debit or credit card and the old card being cancelled. This can happen for various reasons, including card expiration, loss, or theft. According to one leading card provider, cards are active for an average of 3-5 years, meaning retailers could be losing customers on a regular cycle, just due to outdated information.
Eline Blomme, Chief Strategy & Product Officer at Acquired.com said, “Keeping payment details up to date has traditionally been a challenge, often leading to unnecessary consumer friction. When retailers ask customers to manually update their card information, there’s also a risk that the customers will not get around to doing it. This potentially leads to churn, and as our research demonstrates, this is becoming a costly issue for retailers.”
“But payment technology can help with this. Account Updater and Network Tokenization enable card details to be updated automatically whenever a card is replaced or renewed. This eliminates the need for retailers to prompt customers for updates, reducing the risk of losing subscribers due to expired or changed payment details. Despite these benefits, adoption remains surprisingly low.”
“Many businesses either don’t prioritise these features, fully understand their benefits, or have the technical resources to implement them. For businesses that rely on recurring payments, partnering with a payments provider that offers both features presents a valuable opportunity to enhance customer experience and boost revenue.”
