Debit Cards Are Most Popular for Subscription Payments, a Recurly Report Says

The most popular payment method for funding subscription payments is a debit card, with the checking account-connected option being used for 52.9% of global subscription payments. Subscription platform Recurly Inc. released this and other data in its “2023 State of Subscriptions” report Tuesday.

The second most popular option was credit card at 26.7%, followed by PayPal, 18.8%, and other options, 1.6%. In North America, debit is most used at 54.9%.

However, decline rates are highest for debit cards, at 11.1%, with alternative payment methods at 5.8%, and credit cards at 5.4%. “For both initial and recurring transactions, debit cards also had the highest average decline rate at 9.2% and 13.0%, respectively. An initial transaction is the first transaction on the first invoice for a subscription, while a recurring transaction is the first transaction on all but the first invoice for a subscription,” the report says.

The decline rate for alternative payments—Recurly supports Amazon Pay, Apple Pay, PayPal, Single Euro Payments Area, and Venmo—is the lowest at 1.5%.

Subscription payments are notorious for churn, the rate at which subscribers leave a service either voluntarily or involuntarily. Debit cards had the highest overall churn at 97%, followed by alternative payment methods at 7.7%, and credit cards at 5.9%. “Similar to decline rates, credit cards are associated with lower churn rates and debit cards are associated with higher churn rates,” Recurly says.

Among its findings, the report suggests that diversifying subscription payment options can help ease churn.

“While some variations in decline rates across payment methods are due to differences in consumer preferences and not the payment method, subscription businesses must prioritize a strong payment strategy to optimize the factors they can control,” the report says. “Ultimately, more is better—a balanced mix of several payment methods, coupled with a thoughtful payment experience, makes consumers more likely to convert.”

San Francisco-based Recurly analyzed data from more than 2,200 Recurly merchants over a 12-month period. The research involved more than 65 million unique active subscribers.