GoCardless and Zuora go live in Australia with seamless recurring payments
By Martin LloydMar 20194 min read
Today we’re pleased to announce that Zuora is partnering with GoCardless to help Zuora customers take recurring payments in Australia!
GoCardless has been processing payments in Australia since 2018, and with the addition of the BECS scheme to the Zuora partnership, they’re uniquely positioned to support the growth of the Australian subscription economy and solve the common issues that enterprise businesses face through collecting recurring payments.
According to Iman Ghodosi, Zuora's GM Asia Pacific Region:
Collaborating with GoCardless means we can offer our customers, and their customers, more flexibility and scalability when it comes to subscribing to new goods and services. By providing more payment options than ever before, companies are able to tailor their offerings to attract a wider range of subscribers, on more attractive and profitable terms.
Australia: a growing market for subscription models
The Australian market has been experiencing a drastic shift in the payments landscape over the past few years, with more than two-thirds of Australian businesses planning to adopt a subscription model by 2018-2019, according to the ANZ Subscription Shift, a 2016 survey by Ovum for Zuora.
Additional findings from the Zuora survey include:
In the next two to three years, more than half (55%) of ANZ enterprises plan to follow a hybrid direct-to-consumer engagement model, up from 33% in 2016
Almost half (47%) of enterprises are looking to change their goods and services pricing due to the integration of connected life offerings
The ANZ Subscription Economy is projected to grow in the range of 2.7% annually until 2020
With an average of 44 Direct Debit transactions per person each year, Australian consumers use this bank-to-bank payment method for a wide range of payments including utility bills, childcare, sports club memberships, insurance, housing, and online subscriptions.
Additionally, businesses often pay via Direct Debit for their ongoing relationships with partners or suppliers, like marketing agencies, accountants or wholesalers. Between 2013 and 2016 the number of Direct Debits increased by 30% (Reserve Bank of Australia, Consumer Payments Survey, April 2017).
In Australia, the annual value of transactions processed through Direct Debit is almost 6 trillion AUD. This is 35.9% of all non-cash transactions (Bank of International Settlement, October 2017). In the past six years, the volume of Direct Debit transactions has increased by more than 50% reaching more than one billion in 2016.
A recent article from The Financial Review explores in more detail why Australians are ditching credit cards in favour of 'buy now pay later services'.
Why is Direct Debit the right solution?
Direct Debit is the perfect solution for collecting payments, and it seems that customers in Australia agree; almost 36% of non-cash transactions were made through Direct Debit in 2017, with trends indicating that this number will grow in 2018.
Direct Debit has some key advantages over other payment methods. Designed specifically to handle recurring payments, Direct Debit is ideal for the subscription economy. It’s a bank-to-bank payment method, where the customer pre-authorises the merchant to collect payments directly from their bank account. It solves the problem of involuntary churn and drastically reduces the amount of time invested in managing the process through automating payment collections.
Unlike credit and debit cards, Direct Debit never expires, and bank accounts can’t be physically lost or stolen. What’s more, failure rates with Direct Debit payments are as low as 0.5% - and that figure is almost always due to the simple reason of customers having insufficient funds. GoCardless enhances Direct Debit, providing a payment solution specifically designed for companies using the subscription business model. The GoCardless product uses Direct Debit to support those key metrics driving success in the subscription economy.
The GoCardless/Zuora partnership: A boon for Australian subscription businesses
The ability to offer Direct Debit as a subscription payment method in Australia is a significant milestone for Zuora, as they continue to grow in the region. A recent survey by Zuora revealed that 70% of Australian and New Zealand businesses are planning to make the shift to a subscription model in the next two to three years.
This move toward a subscription billing model is further supported by the same research, showing that Australians and New Zealanders spend an average of $660 AUD per month on subscriptions or recurring goods and services.
As GoCardless CEO and founder Hiroki puts it:
As more and more businesses become international, they face endless frustrations in managing payments across multiple territories. Our partnership with Zuora has enabled us to reach an international market and offer our automatic payment solution to global businesses through one of the world’s most popular subscription billing platforms. We’re thrilled to be taking our partnership to the next level and look forward to bringing our solution to Zuora’s customers in Australia and beyond.
The GoCardless integration with Zuora is another key milestone in our efforts to solve the problem of late payments around the world.
GoCardless for Zuora is now live in the following countries and schemes: