GoCardless & Zuora team up to provide US subscription businesses the best way to collect recurring payments
By Chris BassMar 20203 min read
We’re excited to announce that GoCardless and Zuora now offer US subscription businesses the flexibility to accept ACH payments from clients, subscribers or members.
Here at GoCardless, we’ve created the first global network for recurring payments, to help subscription businesses increase their addressable audience, cut costs, eliminate involuntary churn and maximize LTV by using ACH debit as a payment method. Since 2007, some of the largest companies in the world have trusted Zuora to enable their subscription business management - now together with us here at GoCardless, their US customers have further flexibility in taking recurring payments.
What is ACH? ACH, a system for moving money electronically between bank accounts, includes business-to-business, government, and consumer transactions (both domestic and international). Payment processing via ACH has existed since the 1970s and accounted for more than $51 trillion in 2018. Learn more in our guide to ACH.
Subscription businesses perform better
With the growth of the subscription economy it’s critical for US businesses to become more customer-centric as they compete for growth. It’s been shown that the availability of different payment methods (offering the customer payment preference) positively impacts key business outcomes like expanding the acquisition funnel, increasing cash flow and lowering churn.
“Catering to your customers’ payment preferences is key to capturing more of the market,” says Amy Konary, VP of Business Innovation at Zuora and Chair of the Subscribed Institute. “Data from the Subscribed Institute indicates that businesses which accept a greater number of payment methods and currencies grow their customer base up to 6% faster.”
Subscription businesses in North America do better than the S&P 500
The Subscription Economy™ in the US has exploded in recent years and continues to see strong growth. The latest Subscription Economy Index has shown that over the last three years revenue in the North American sector has grown 21%, nearly 3x the S&P 500 growth rate.
Over the last seven years the subscription economy as a whole has thrived, growing more than 350 percent, as more customers begin to favor access to digital services over the ownership of physical products. Considering the overwhelming number of technology updates, plus the costs or maintenance issues with product ownership, it’s easy to see why customer demand for simplicity is fueling subscription growth.
With GoCardless and Zuora, it’s never been easier for subscription businesses to take advantage of the massive growth of the subscription economy.
Accepting payment via ACH debit isn’t just what your customers want - it benefits your business too
We partnered with YouGov to survey nearly 5,000 businesses (across a range of size and industry) and found that roughly half of companies are likely to make payments with a corporate card. But how will you meet the needs and preferences of your other half of customers, or half of your ledger?
ACH debit is often the second most preferred payment method among US companies - when it comes to subscriptions, 38% of US businesses prefer to pay via ACH debit. Unsurprisingly, ACH debit is also the second-most commonly offered payment option by the 50 largest public SaaS companies of 2019. By adding ACH debit as an option, you’re immediately appealing to practically 4 in every 10 customers you deal with.
How ACH debit benefits your business
Accurate forecasting has a ripple effect on goal setting, budgeting and performance measurement. When payment is late, doesn’t come in or is returned it becomes a consistent challenge to chart business growth. Tailor made for the subscription economy, ACH draws directly from the customer’s bank, providing a reliable method of remittance and resulting in on-time and accurate payment.
A key result of budget accuracy is reinvestment. The more accurate a business is (and the less churn it has) the more investment becomes an opportunity as predictability and targeting grow. ACH debit has an advantage over other payment methods by providing the confidence a business needs in demonstrating that areas marked for growth are measured properly.
A company’s most important resource is its people. Imagine the productivity lift when the time your team typically spends tracking down payment issues is instead used to find creative and valuable ways to utilize the budget. Team members will be freed up to focus on what they do best, and that’s a great way to get them more engaged in the business’ goals.
Many businesses accept payment by credit card, but the processing fees tend to be high - often in the neighborhood of 2-4% per transaction (not including setup and operational fees).
ACH debit is more cost efficient, and those savings scale significantly when you’re taking recurring payments from customers.
The GoCardless/Zuora partnership: A game-changer for US SaaS businesses
The ability to accept ACH debit as a SaaS and subscription payment method in the US is a significant milestone for Zuora users. It’s also a reflection of the US market’s aggressive growth trends with the subscription economy and the heightened need for payment preference as the market matures.
A survey by McKinsey showed that a handful of US e-commerce subscription retailers generated more than $2.6 billion in 2016, up from $57 million in 2011 - an exponential increase over the course of five years.
GoCardless processes $13 billion in transactions a year and is proud to partner with Zuora in an effort to change the game by making subscription payments easy for US businesses.
“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 the US.”
-Andrew Gilboy, GM North America, GoCardless
The GoCardless integration with Zuora is another key milestone in our efforts to solve the problem of getting paid around the world.