Subscription Commerce

The secrets behind the dynamics of the membership economy


Reading time: 6 minutes

In today's ever-evolving digital landscape, businesses are increasingly shifting away from traditional transactional models, instead embracing the myriad opportunities offered by the 'membership economy'. This trending business model, characterized by recurring revenue streams and tailored services, has become the cornerstone of many successful companies, from streaming services like Netflix to software providers like Adobe.

But within the membership economy, not all customers are created equal. The terminology can be confusing, with 'users,' 'members,' 'subscribers,' and 'recurring clients' often used interchangeably, though each represents a distinct level of engagement and commitment to a brand or product. Additionally, the way these customers pay for services or products—be it via credit cards or direct debit—can significantly impact both their experience and the company's bottom line.

In this article, we aim to demystify these distinctions:

  • offering a clear understanding of what differentiates a user from a subscriber,
  • a member from a recurring client
  • and how different payment methods can shape these relationships.
  • We'll also take a closer look at two popular payment gateways, Stripe and GoCardless, which facilitate these transactions.

As we navigate the waves of the membership economy together, we hope to equip you with valuable insights and practical knowledge that can help your business thrive in this brave new world of commerce: the subscription economy.

Understanding Key Players in the Subscription Economy

At the core of the subscription / membership economy are its participants:

  • users,
  • members,
  • subscribers
  • and recurring clients.

Though it's easy to conflate these roles, each denotes a unique relationship between the customer and the business.

What is an user?

In the context of the Software-as-a-Service (SaaS) industry, the term 'user' refers to individuals or businesses who use a particular software, irrespective of whether they're paying for the service or using a free version. Users can range from:

  • free trial users, who may be testing out the service
  • to premium users who pay for more advanced features or capabilities.

The relationship with users in a SaaS context often revolves around:

  • usage metrics,
  • feature adoption
  • and user engagement,

all of which can drive towards:

  • conversion (in the case of free users)
  • or retention and upselling (in the case of paid users).

This is evident in platforms like Slack or Zoom, where both free and paid users coexist, each having different levels of features and services.

What is a member?

The 'membership' model suggests a deeper level of engagement. Members often pay a fee to gain exclusive access to a platform's content or services, contributing to a sense of community and exclusivity.

This model can drive customer loyalty and engagement, as seen with online communities like Patreon, where members support creators financially in return for exclusive content and perks.

What is a subscriber?

The term 'subscriber' typically denotes customers who pay a recurring fee to access a product or service. The key here is the regularity and predictability of payments, which can be beneficial for both parties.

  • For the subscriber, it eliminates the need for repeated purchases and ensures continuous access to the product or service.
  • For the business, it provides a predictable and steady revenue stream.

An example here could be a subscription to a digital news outlet, like The New York Times.

What is a recurring client?

Unlike subscribers who commit to regular, scheduled payments, recurring clients represent a type of customer who has saved their payment method with a company to facilitate future purchases. This model provides convenience for the customer and encourages repeat business for the merchant.

It's commonly seen in e-commerce environments, where customers may not want to commit to a subscription but do appreciate the ease of future transactions. For instance, a customer at a clothing online store may save their payment information to streamline their future purchases, becoming a recurring client.

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Deep Dive into Payment Methods

In the membership economy, the method by which customers make payments can significantly influence their relationship with the service provider. Two common payment methods are credit cards and direct debit, each with distinct advantages and potential drawbacks.

Credit Cards

Perhaps the most familiar form of digital payment, credit cards are widely used due to their convenience and global acceptance.

  • For the customer, credit cards can offer security in the form of fraud protection, as well as potential rewards or points that come with spending.
  • For businesses, accepting credit card payments can lead to increased sales and customer satisfaction due to its widespread use and convenience.

However, this convenience comes at a price:

  • Credit card payments typically involve higher transaction fees, which can eat into a business's profit margins.
  • Additionally, there's always the risk of chargebacks and fraud, which could pose a financial threat to businesses.

Direct Debit

Direct Debit is a method of payment where funds are automatically transferred from a customer's bank account to the business's account. It's a cost-effective and reliable way to collect recurring payments.

For customers, it simplifies the payment process and eliminates the risk of missing a payment due to forgetfulness or insufficient funds in a card account at the time of payment. Furthermore, unlike credit card payments that can decline due to expiration or loss, Direct Debit payments are less likely to be disrupted, enhancing reliability for businesses.

Comparatively, Direct Debit has advantages over credit card payments. It offers lower transaction costs, making it a preferred choice for businesses dealing with high-value transactions or a high volume of transactions.

It's essential for businesses in the membership economy to understand these payment methods and choose the one(s) that suit:

  • their business model
  • and their customers' preferences.

The right choice can lead to:

  • improved customer satisfaction,
  • reduced churn
  • and increased profitability.

The next part of the article will focus on the role of payment gateways, specifically Stripe and GoCardless, in supporting these various payment methods.

Stripe vs. GoCardless: A Comparison of Payment Gateways

Payment gateways form the backbone of financial transactions on the web. Acting as the bridge between customers and businesses, these platforms ensure a seamless, secure, and efficient transfer of funds. Today, we will examine two major players in this domain: Stripe and GoCardless.


Stripe is undeniably the global leader in payment gateways when it comes to credit card payments.

  • It is certainly not the cheapest option (1,4% + 0.25€ / transaction for European cards)
  • but its versatility and developer-friendly nature make it a robust and renowned payment gateway.

Stripe also supports direct debit payments but it comes with a important drawback: a fee of 7.50€ for each payment that fails because of insufficient fund (the most common reason for payment failure).


GoCardless, on the other hand, is a payment platform specialising in Direct Debit payments. With its focus on recurring payments, GoCardless is a favorite among subscription-based businesses. It offers several advantages over Stripe:

  • No need for an ICS number to accept payments via GoCardless.
  • No fee when a payment fails because of insufficient funds on the client’s bank account.
  • Transaction fees per transaction capped at 2€ compared to 5€ with Stripe Direct Debit.
  • No additional fees for cross currency transactions.

In our opinion, GoCardless is a superior option to Stripe in regards to Direct Debit payments. However, because GoCardless focuses solely on Direct Debit, it lacks the payment versatility of Stripe.

When using PayFacile:

  • on one hand you can connect Stripe for Credit Card payments
  • and on the other hand you can connect GoCardless for Direct Debit payments.

Therefore you can benefit from the two payment gateways!

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Transitioning to the Subscription-Based Model: Benefits and Challenges

As the membership economy flourishes, many businesses are considering transitioning from traditional transactional models to subscription-based models. Subscription sales offer many advantages. But the transition to a subscription-based business model also presents unique challenges that must be appropriately addressed to be successful.


  • Predictable Revenue Stream: Subscription models allow businesses to predict revenue more accurately, enabling better planning and more effective resource allocation.
  • Customer Retention: With subscriptions, customers make an ongoing commitment, resulting in potentially longer customer relationships and higher lifetime value.
  • Customized Offerings: Subscription models often allow businesses to segment their offerings, providing various tiers of services to suit different customer needs and budgets, hence reaching a broader market.


  • Customer Acquisition: Getting customers to commit to a subscription can be more challenging than one-time sales. The perceived long-term commitment can be a barrier for customers who are unsure or unacquainted with the brand or product.
  • Pricing Strategy: Determining the right price for a subscription service can be complex. It must be profitable for the business but also provide perceived value for customers.
  • Payment Management: The recurring nature of subscriptions necessitates a robust payment system that can handle renewals, failed payments, and cancellations.

Making the switch to a subscription-based model can be challenging for businesses. To succeed in subscription commerce, it's important to carefully balance the benefits and potential challenges. This requires:

  • understanding customer behaviour,
  • implementing effective pricing strategies
  • and establishing a reliable payment infrastructure.