Why Should Retailers Offer Subscription Products To Millennials?

May 04, 2017

According to a leading credit card processor, retailers can turn millennials into loyal customers by offering products and services via subscription.

Compared to Baby Boomers (born between 1946 and 1964) and Gen Xers (birth years ranging from the early-to-mid 1960s and ending birth years ranging from the late 1970s to early 1980s) Millenials, also known as Generation Y or the Net Generation (born between 1980 and 2000) are more comfortable to pay for things, especially physical products, on a recurring basis.

The research reveals that 70% of Millennials have a product subscription. Gen Xers have only 44% and Baby Boomers have only 19%. Almost 90% of Millennials have a service subscription. Gen Xers have 78% and Baby Boomers have 67%.

According to the mentioned processing company, this doesn’t mean e-commerce merchants should view this as an opportunity to target older consumers with subscriptions. The point is that they should become more tenacious with regard to the younger generation, who are expected to grow their spending power to $1.4 trillion by 2020.

Based on the research, 77% of the consumers who don’t currently have any product subscription aren’t likely to subscribe in the future.

Merchants interested in a reliable and low-cost payment processing for their business should consider turning to emerchantbroker.com, the #1 high risk payment processor in the US. EMB offers exceptional merchant account services and ultimate protection for payment processing. EMB is named one of Inc. 500’s Fastest Growing Companies of 2016 and boasts an A+ rating with the BBB.

The senior product leader for e-commerce at the above mentioned company notes that merchants can take advantage of this type of business model. He mentions the following advantages:

  1. Customer lifetime value (CLV) to a merchant goes up. A consumer can click “buy” once and get products shipped every month without any further thought or action.
  2. Services that wouldn’t be affordable if billed in one lump sum become less costly. Millennials are quite interested in this since they like using online services but have the tightest cash flow as compared with previous generations.
  3. A growing recurring revenue stream can help increase the value of your company.

He further notes that though merchants can enjoy a number of benefits, they should make sure their payment provider offers features for recurring billers that maximize approvals and minimize unnecessary declines.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.