It has been more than a year since the adversity of the COVID-19 pandemic impacted our lives in many ways. While maintaining the vigilance of COVID-19 protocols, we have started accepting the changes it has brought to our personal and professional spaces. The pandemic has affected many industries, creating abundant opportunities for some, especially those that digitally offer their products and services.

We can also see an increased inclination towards digitalizing various processes and offerings in multiple industries that were earlier reluctant to implement digital tools. Even when it comes to our personal lives, all our tasks are digitalized right from getting all our necessities delivered, making payments, and receiving them from any part of the world, and working remotely. With a lot of patience and hope, as we move towards the end of the tunnel with the vaccine drives going on aggressively, it is safe to assume that a few of our lifestyle changes will remain undisturbed, especially when accepting digitalization.

Against this backdrop, Aria and Worldline organized an informative webinar session on the theme of “Subscription Payments in High Growth Markets”. From Quadrant Knowledge Solutions, I had the opportunity to attend the event and take away key insights regarding various challenges and opportunities in the subscription payment market. The session delineated multiple and commonly used payment options across Latin America, India, and Brazil.

Speakers of the event:

  • Michael Bilotta: Head of Digital Goods & Services @Worldline
  • Mike Judge: VP Product @Aria
  • Michael Carrell: Director Product Marketing @Aria
  • Michael Connelly: Director Channel Partnerships @Worldline

The session was an enlightening event where multiple Mikes from Aria and Worldline discussed various topics revolving around various market opportunities and challenges in the high-growth market.

The pandemic has boosted the digital commerce industry, and the reply on digital commerce for every aspect of life has been increasing day by day. With the expansion of the industry, customer expectations also grew significantly. Additionally, vendors started looking to grow their business across regions. Still, expanding businesses globally is not everyone’s cup of tea. Because as we move from one region to another, multiple factors such as the dialect, culture, acceptance of products, payment strategy, go-to-market strategy, pricing model, and business model also change. Expanding across regions requires the art of balancing between specializing as per local offering while standardizing processes to establish a sustainable global business without losing hold of the economies of scale.

It is of utmost importance to understand the market, including customers, language, currency, legality, and cultural differences. This understanding helps in marketing products and making better decisions in customizing the products according to market requirements to balance local and global approaches. The fastest-growing global regions are BRICS (Brazil, Russia, India, China, and South Africa), and organizations are aggressively looking to grab hold and expand in this market.

But is expanding business to a new geographical location that easy?

Various components impact the expansion of a global business into a new geographical region, but the main contributing elements are customer experience, product offering, back-office operations, and payment strategy. Product is the key aspect for which customers contribute to the revenue growth, and hence it is always advisable to customize the product based on local essence and touch. This does not mean that the organizations will change just the name or language of the product, but the product needs to be customized as per local requirements while keeping in mind the legal situation and payment barriers. Similarly, another significant component is the back office, which brings harmony to the business and helps in saving unwanted costs. The employees in the back office must have the authorization to edit and build the product throughout the processes.

Additionally, the back-office software or platform should be connected directly with the ERP and CRM so that each team has real-time data for a smooth flow of conducting business. Another important aspect is the available payment options and the flexibility to pay as per their choice and requirement. There are various digital payment options for each region, and they have their unique capability, ecosystem, and complexity. Moreover, there are multiple revenue models, and the subscription-based model is one of them.

The subscription-based revenue model is often considered the recurring revenue model, and it has been gaining a lot of traction across several regions. But the applicability of the subscription model goes beyond the recurring revenue. There is no doubt that a recurring relationship is what drives the subscription model. Still, the subscription model is fruitful only when the value that the organizations deliver matches the price paid by the customers. In regard to the same, there is a basket of models under recurring based revenue model to choose from including step-up situation pricing, trail-based pricing, and usage-based or consumption-based pricing. These subscription plans need to be changed as per customers’ needs, spending capacity, and psychology. Pricing should be such that it should be a win-win situation for both the organizations and customers.

Each market is unique in terms of its financial, geopolitical, and regulatory needs. For instance, in India, there are strict government mandates for local payments. The Indian market is dominated by RuPay (Indian equivalent to visa and master card) and UPI (United Payment Interface), which foreign companies often confuse with Union Pay International. Both RuPay and UPI are governed and managed by NPCI – National Payments Corporation of India. Additionally, the local currency of India (INR) is not globally accepted as compared to US dollars creating difficulties for foreign companies.

Similarly, Latin America has a unique and different setup for digital payment ranging from full service to money remain solution. Meanwhile, Brazil is the fastest growing and important region for e-commerce. The payment options in Brazil are dominated by the PIX payment system, which is managed and governed by the central bank of Brazil.

My participation in the webinar got me thinking about the various challenges and simultaneous opportunities of expanding businesses to a high-growth market and the scope of subscription payments that lie in their path. One thing is certain that the disruption element brought about by the variety of local and global alternate payment models will surely cause further innovation within the subscription space.

To check out this webinar for yourself, follow this link.

About the Author:

Pallavi Bothra is a part of Quadrant’s global research and consulting team. She is responsible for enterprise software research and also conducts – global strategic market outlook, SPARK Matrix Analysis, and client consulting assignments. She has also worked on various strategic research and vendor evaluation projects and is a part of Quadrant’s best practices team in identifying the most promising companies in the enterprise software domain space. Pallavi has been an integral resource for consulting assignments including detailed market mapping, custom market intelligence, analyst briefings, and others.
Pallavi holds a Post-Graduation in International Business and Marketing from Sri Balaji University (Pune, India) and B.Com from the University of Delhi, India.