Most well-known subscription businesses, like FabFitFun and Twitch, debuted initially in the US. Only after spending years growing and perfecting their business model did these companies enter markets outside the US, recognizing the potential of international expansion to fuel growth. Take Netflix, for instance: earlier this year, the American streaming giant reported an anemic increase in US subscribers while seeing explosive international growth.
It’s not all sunshine and rainbows, though. International markets can be a tough nut to crack, with complex issues like currency acceptance, taxes, data privacy, and fraud all needing to be sorted out. Subscription businesses in particular need to deal with transaction value limits on recurring transactions and many countries’ preference for non-card payment methods.
Recognizing the importance of global expansion for subscription-based companies, Recurly helps our merchants in a number of ways when it comes to tax compliance and accepting alternate payment methods. Here are a few ways Recurly can help you take your subscription business global.
Let subscribers around the world pay in more ways
Payment habits vary significantly in different countries and regions. It’s not just a matter of currencies (though we’re really happy about the fact that Recurly now supports over 140 currencies): subscribers also prefer different payment methods.
In many countries, credit cards aren’t as common as they are in the US, and subscribers sometimes want recurring payments to be pulled directly from their bank accounts. This payment method is called direct debit, and it offers a number of benefits, such as potentially cheaper rates for merchants and higher authorization rates than credit cards.
Thanks to Recurly’s partnership with GoCardless, Recurly merchants can now accept direct debit payments internationally without additional configuration. This includes SEPA in Europe, Bacs in the UK, and BECS in Australia.
Outside of Europe and Australia, subscriptions have become increasingly popular in Brazil: according to E-Commerce Brasil, the subscription economy accounts for over R$1 billion in transactions every year. However, around 70% of cards in Brazil aren’t authorized for international transactions, which means merchants without an on-the-ground Brazilian presence experience extremely high decline rates. Recurly’s partnership with Adyen and PrimieroPay enables merchants to process payments in Brazil with a better success rate, without having to create a local entity in Brazil or calculate VAT.
Make taxes less headache-inducing
“I love paying taxes!” said no one ever. Unfortunately, taxes are not only unavoidable, but also complicated, especially given the different rules and regulations imposed by various countries and regions (e.g. digital service taxes). Merchants that sell subscriptions must calculate taxes on all invoices, including credits, subscription changes, and refunds. With ecommerce taxation rules constantly evolving, merchants that try to calculate taxes on their own are in for a world of hurt.
Recurly provides subscription companies with a variety of solutions to calculate taxes:
For merchants just getting started with Recurly, Recurly’s built-in taxation functionality is a great place to start. While it doesn’t support every geography or use case, Recurly Taxes can help you calculate basic rates, configure taxable regions at the country and state/province level, configure taxable plans, tax based on customers’ physical or billing address, and more.
If your needs are more complex in nature—common for most global businesses and those operating at scale—Recurly integrates with both Avalara and Vertex, two leaders in the tax calculation and remittance space. By using Avalara or Vertex, you’ll unlock many more taxable regions, advanced tax reporting, more complex tax code mapping, and the ability to set custom rules based on your unique needs.
Streaming companies in particular can use Avalara’s AvaTax for Communications solution, now integrated with Recurly, to bill for surcharges, taxes, and fees imposed by state or local jurisdictions on communications services.
While Recurly is not a tax expert, we aim to provide you with tools that you can use to comply with tax laws around the world. To understand which laws and regulations your business is subject to, please consult a taxation expert. If you don’t have one, Recurly can refer you to a tax expert.
Get More Guidance
Given all the challenges involved with global expansion, it’s nice to have a partner that can help you out. Recurly has partnered with Adyen, the leading international payments platform, to enable subscription companies like yours with all the tools you need to expand into new markets.
Recurly’s Jenna Wyer, Head of Payments and Business Development, recently sat down with Sophia Goldberg, a Product Manager at Adyen, to discuss how subscription businesses can set up a payments and billing strategy that’s globally scalable. Check out the 30 minute webinar, now available on demand, to get all the information you need. Watch it now!