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Retailers risk losing out on subscriptions due to complexity and cost, new research finds

New research from YouGov and TrueLayer has revealed 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 challenges of transparency and control for consumers could lie in the wider roll out of variable recurring payment (VRP) mechanisms. Created as part of the drive towards open banking, these payments happen in the background, but are faster, more transparent and easier for consumers to manage. 

Currently, the Competition and Markets Authority (CMA) has only mandated banks to offer VRP between two accounts belonging to the same person. Business payments, such as utility bills or recurring payments for products and services such as subscriptions, were not included, so it remains at individual banks’ discretion to provide them.

Despite this, VRP for business payments are already being used by NatWest in collaboration with TrueLayer, making it easier for consumers to view and make changes to their recurring payments.

In April the government announced measures designed to help consumers avoid being caught in subscription traps, but this did not include mandating a more transparent approach to managing payments for subscription-based services. If retailers were to address this gap, they could benefit – reducing customer turnover and building trust with existing users.

Commenting on the research findings, Jana Reid, Head of Bank Partnerships, TrueLayer said: “With the rising cost of living, it may seem surprising that so many are willing to keep paying for their subscriptions – provided they are easier to manage and cancel. But the subscription economy has become so important to how we live, so instead, retailers who offer subscriptions must look at how they can provide customers with the flexibility and control over their money that they are looking for.

“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, to put consumers in the driving seat in managing their outgoings.”