By Ramakrishnan Ramamurthy
With innovation in technology, India is now a leader in terms of digital payments. This rise has led to a significant shift towards a subscription-based economy across sectors. The quantitative perspective highlights the rapid growth of the subscription economy. There has been a 437% increase in subscription-based revenue over the past decade. Anticipating the future of the subscription model in India becomes clearer when we understand the evolution and key drivers of the subscription-based economy.
Key Contributors to the Growth of the Subscription Model
There are multiple factors responsible for the rapid growth of subscription models in India.
The first key contributor is the rise in recurring payments within traditional financial services sectors, such as credit, insurance, and mutual funds. Most of this is enabled by technological innovations across the board. With easy autopay features available on multiple digital payments platforms like credit cards, debit cards, and UPI, it is easier for users to subscribe.
Credit penetration, which has reached deeper pockets of India, is also driving the growth of subscription payments. There is a jump in disposable incomes. Rising incomes have led to higher consumption, so quick commerce, digital commerce, and other online businesses are growing more than ever.
The increase in digital transactions has increased consumer loyalty and user experience, as seen in grocery and food retail.
Platforms like Netflix have pioneered this shift, demonstrating the potential for exponential growth through subscription-based models. Consumers are willing to subscribe due to predictable consumption patterns, contributing to the sustained growth of the subscription economy.
The Role of Regulators
Payment regulators have also been vital to India’s growth in subscription models. India is quite advanced when it comes to digital payment options. Hence, the payment regulators ensure that they maintain the same multiple payment options to align with existing digital payment experiences. With autopay options of both bank cards and UPI, users have no difficulty in initiating a subscription.
Another notable regulatory accomplishment is the establishment of near real-time settlements, which has increased the efficiency of digital payments. This is critical when dealing with monetary transactions, as businesses and customers rely on speedy money transfers.
What Does the Future Look Like?
Subscription-based models are innovative and have the potential to immensely benefit the merchants. The good thing is that traditional businesses are more adaptive and currently working on hybrid models. These models have physical assistance for transactions complemented by digital payment methods. This hybrid model enhances the customer experience by integrating digital onboarding processes like web programs and link-based payments.
On the other hand, the eCommerce space is already ahead and is aiming to replicate the one-time payment experience for recurring transactions. This integration across channels is further boosting digital adoption.
Statistics indicate that India’s GDP is projected to grow between 7% and 9% in the next few years. This economic growth means higher disposable incomes, which means more subscription-based consumption in both traditional and emerging sectors.
Currently, households make numerous one-time payments for utilities and education fees. Converting these into subscription models could streamline payments and enhance customer convenience.
Final Thoughts
The subscription-based economy is rising in India. With payment regulators and payment channels working constantly to provide a smooth payment experience for recurring payments, it will continue to rise.
Merchants need a seamless payment aggregator to support their subscription-based model and drive business growth. By fostering a favourable recurring payment environment for customers, businesses can capitalise on the expanding subscription economy in India.
(The author is Ramakrishnan Ramamurthy, Executive Vice President – India, Worldline, and the views expressed in this article are his own)
