Forecast: Subs payments market growth marches on
July 19, 2023
The revenues of the Recurring Payments market were estimated at $130.2 billion (€115.8bn) in 2022 and are anticipated to grow at a CAGR of 6.9 per cent from 2023 to 2033, according to a Fact.MR report. By the end of 2033, the market is expected to reach a valuation ofS $268.7 billion. Recurring Payments for service dominate the Recurring Payments market with a projected CAGR of 5.2 per cent from 2023 to 2033.
The recurring payments market encompasses various recurring payments management platforms, including payment gateways, merchant account providers, and subscription management platforms as well as recurring services such as subscription services or any other services that charge customers regularly.
The growth of subscription video and music streaming platforms has significantly influenced recurring payments as these streaming platforms rely on recurring payments for customer retention and to avoid churn. The revenues of streaming services like Netflix and Spotify have jumped by 18 per cent and 22 per cent from 2018 to 2022 respectively. The growth of these services is expected to boost the volume of recurring payments.
SaaS (Software-as-a-Service) companies often rely on recurring payments as a core revenue model. These companies offer their software as a subscription service, where customers pay a recurring fee monthly, quarterly, or annually to access and use the software.
As businesses have shifted towards remote work, there has been a higher demand for SaaS solutions. This has influenced the market value of the SaaS industry from $115 billion in 2020 to $187 billion in 2022.
Enterprises have also increased their spending on SaaS services by 33 per cent in 2022. This adoption of SaaS has led to a significant need for payment management systems for SaaS billing to help SaaS businesses manage recurring payments.
Subscription-based digital publication services utilise recurring payments as a core revenue model. Through subscription plans, these services offer access to digital content, such as articles, news, magazines or journals.
“The market for recurring payments has grown significantly in recent years as a result of the expansion of subscription-based business models and consumers’ growing desire for simple and convenient payment options. Regular, automated transactions that take place on a predetermined schedule and are often made in exchange for products or services are known as recurring payments. As a result, the demand for recurring payments has increased due to the expansion of subscription-based business models across a variety of industries, including software, media, e-commerce, and more,” commented a Fact.MR Analyst
For instance,
- New York Times Company has experienced significant growth in its digital news subscribers over the years from 12.4K subscribers in 2019 to 24.8K subscribers in 2022. Wall Street Journal has also grown its average digital circulation from 1.8K in 2019 to 3K in 2022.
As the digital landscape continues to evolve, subscription-based digital publication services are likely to see further growth influencing the growth of recurring payments for customer retention and predictable revenue growth.