Fiat-based B2C subscriptions are one of the fastest growing services in the world. Unfortunately, cryptocurrencies have lagged considerably in this regard. This inability to set up recurring subscription-based payments has been one of the biggest impediments to the merchant and business adoption of cryptocurrencies. 8PAY plans to change that by building a decentralized payment protocol which will leverage smart contracts to enable single, recurring, and on-demand payments.
The rise of the subscription market
The e-commerce subscription market alone has grown by more than 100% percent year-on-year for the past five years, with the largest retailers generating more than $2.6 billion in sales in 2016, which is up from $57 million in 2011. When you look into it, the reason for this exponential increase is pretty apparent. There are a host of benefits into adopting a subscription business model:
- Simplicity: A subscription model simplifies the business process and makes it very easy for both consumers and service providers. Since the payment process is automated, the customers don’t need to make repeated payments and the service providers don’t need to obtain orders from their existing customers.
- Customer Retention: The subscription model also ensures long-term customer retention, because the consumers already know, before entering the service, that this is going to be a long-term relationship.
- Marketing Opportunities: The subscription model also assists in enabling long-term marketing solutions. The service provider can always reach out to the consumers and engage with them for upselling and cross-selling opportunities.
- Cash Flow: A subscription model is a brilliant way of ensuring consistent cash-flow within your business. Timely automated payments ensure the regularity of business and cash generation. The model makes sure that the overall stability of the business is maintained.
Subscription business models can be broadly divided into the following three categories:
- Replenishment: Razors, diapers, etc.
- Curation: Snack boxes, cosmetics, mystery bags, etc.
- Access & Subscriptions: Membership-based music streaming, movies, tutorials, live sports, etc.
How 8PAY creates a decentralized market
8PAY is a payment protocol that brings fiat currency capabilities to cryptocurrencies. By enabling single, recurring, and on-demand payments, 8PAY aims to make cryptocurrencies suitable for everyday use. While most crypto payment processors are ideal only for one-off purchases, 8PAY is looking to breath new life into this space by enabling recurring, subscription-based payments.
Steps to enable subscription services
8PAY enables merchants to enter into a smart contract with their customers. The smart contract is an automated and well-defined agreement between two parties. Smart contracts have the following features:
- Since they are made on top of the blockchain, they are decentralized and transparent.
- They act as an escrow of funds which are released only when certain pre-specified actions have been taken.
- The smart contract directly connects the service provider and the consumer without going through any middlemen.
Enabling fixed and variable price subscriptions
8PAY will enable the establishment of an agreement between the service provider and the consumer, all through smart contracts. Using smart contracts, the service provider can enable fixed and variable price subscriptions. For fixed subscription, they’ll be able to set the amount that will be deducted every given timeframe while for variable price subscription the amount is to be intended as a maximum amount per timeframe. Other custom parameters are available as well.
To understand how this will work, let’s take a hypothetical example. Suppose an electricity supplier wishes to enable their customers to automate energy bill payments. Because the amount due will vary depending on energy usage, the supplier specifies a maximum of $200 per month. The customer clicks to accept this offer in the knowledge that their utility bill will be automatically debited from their wallet provided the total due does not exceed $200 per 30 days.
8PAY users can pay for the subscription by either using the 8PAY tokens or some selected stablecoins. ETH can also be used to pay for the subscriptions in the form of WETH (wrapped ether).
An individual, be it a merchant or a customer, can start a subscription plan by sharing one (or multiple) unique links and QR codes. These can be created on the 8PAY website in seconds. Furthermore, users may also create buttons for merchant websites through the provided embed code.
Enabling unlimited subscriptions
The 8PAY protocol also enables users to create variable subscriptions of an “unlimited” amount. There may be instances upon which users may want to enable an unlimited subscription, such as signing up for a video streaming service, or for recurring health insurance payments. When an unlimited variable subscription is enabled, the creator and recipient will both be prompted with a warning seeking confirmation that they wish to proceed.
8PAY wants to encourage wider adoption of crypto payments by bringing in a decentralized payment protocol which will allow for single, recurring, and on-demand payments. This flexibility in payment methods will encourage more merchants to take the crypto payments route.