How to improve payments performance in digital goods and streaming businesses

Digital goods and streaming businesses, like Netflix, Spotify, and PlayStation, rely on effective payments strategies for success. Many are global, meaning they need a payment service provider (PSP) that can offer access to local acquiring and a broad range of payment methods to meet local payment preferences. Support for subscription-based payments is also important.

Our Peak Season report found that 21% of household monthly spending now goes towards digital goods and services such as video and music streaming, online news media, digital education resources, and e-gaming. In the UK and US, streaming services rank as the top monthly non-essential purchases. The data shows that digital goods are on the rise, so there’s no time to waste in optimizing your payments strategy. 

What are digital goods? 

Digital goods, or e-goods, are intangible products that exist in digital form and can be sold and consumed online. A streaming service is a platform that delivers digital content, such as audio, video, or games over the internet in real-time. There’s lots of overlap between the two, as a streaming service is essentially a platform that provides access to digital goods. 

Key payments challenges and how to address them

Improving payments performance for digital goods and streaming businesses is essential for maximizing conversions, retaining customers, and ensuring a smooth user experience. However, it comes with its challenges. We’ll cover the most prominent ones below. 

Boosting acceptance rates

Maintaining a good acceptance rate is one of the biggest challenges digital goods businesses must contend with. 

If a payment fails on a music streaming platform, for example, subscribers must re-enter their card details, adding unwanted friction. 

Subscription payments work better on an out-of-sight, out-of-mind basis. Having to re-add card details with every new card or expiration might make customers think twice about their subscription. Is it worth the money? Do they need it? Why has the price increased?

Friction risks losing customers. But if you have a good acceptance rate, it can be mostly avoided – a valid payment shouldn’t fail in the first place. That’s why many PSPs have products like Checkout.com’s Intelligent Acceptance, Real-Time Account Updater, and Network Tokens to optimize the payment process.

Leading cybersecurity provider NordVPN improved its acceptance rate by 1.9% using Checkout.com’s AI-powered Intelligent Acceptance – optimizing payment efficiency for its security packages and refining Strong Customer Authentication (SCA) strategies. This ensured uninterrupted subscriptions while maintaining fraud prevention, supporting its mission to protect users’ digital world 24/7. Discover more in the case study.

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Partner with a full-stack payment service provider (PSP)

Full-stack PSPs offer many products and services to support your payments acceptance and beyond, rather than just focusing on one aspect of the journey like an independent payment gateway or local acquirer. PSPs can be your acquirer, payment processor, payment gateway, issuer, and more. 

PSPs fulfill every stage of the payment journey from when a customer clicks “buy now” to when your business receives the money, helping increase one of the most important metrics – acceptance rate – at every point. 

A key objective of digital goods and streaming businesses is to maximize customer acquisition and retention and grow revenue beyond basic subscriptions or single purchases. Which solutions do you need to support this? 

• Local acquiring maximizes customer acquisition
• A wide range of APMs boosts customer retention
• Smart analytics provide insights into customer behavior, helping both the above
• Tiered subscriptions, ad-supported models, in-app purchases, and premium add-ons capabilities 
• Issuer outreach, where the PSP communicates with the issuer to identify and resolve acceptance rate issues

Managing the threat of fraud

Another key challenge for digital goods companies is the fight against fraud. Online fraud in ecommerce is projected to total over $200 billion in 2025. Direct fraud losses have increased by 60% in digital goods alone in recent years. Fraudsters are taking advantage of companies’ digital nature and exploiting any weaknesses in user behavior and platform security. 

As a business, you need to protect yourself and your customers, but you must also strike a balance between that and performance. 

Too much of the wrong kind of fraud prevention can cause false declines, hurting sales, customer experience, and trust. But ineffective fraud prevention can cause false positives, increasing financial losses, chargebacks, and reputational damage. 

Let’s quickly cover the difference between false declines and false positives:

• False declines – when a legitimate transaction is mistakenly flagged as fraudulent and declined, which can be caused by overly strict fraud detection
• False positives – when a fraudulent transaction is mistakenly approved as legitimate, which can be caused by ineffective fraud detection software 

Fortunately, many PSPs offer advanced fraud tools combining flexible rules and machine learning. They adapt easily for accuracy and let you apply additional authentication to risky transactions. Key features should include 3D Secure (3DS) for SCA compliance, identity verification (IDV), and risk scoring.

Fraud Detection Pro helps Topps Digital, a digital collectibles company, manage fraud risks and improve its risk performance through unique rule sets and machine learning. It detects even rare fraud attempts, causing Topps Digital’s average chargeback ratio to drop below 1%, down from 22% before switching to Checkout.com. A material difference to Topps Digital’s bottom line. Discover more in the Topps Digital case study.

Localizing payments

Often, digital goods providers operate globally, but payments work differently in every region. The payment process must be localized to match local currencies, languages, payment method preferences, and more. 

Localizing payments enhances user experience, reduces cart abandonment, and builds trust and credibility. Customers are more likely to complete purchases using familiar payment methods in their own currency, driving short-term conversions and long-term market expansion. 

Around the world, credit and debit cards remain popular, but digital wallets like PayPal, Apple Pay, and Google Pay offer added convenience, especially for mobile-first users. Incorporating local payment methods such as iDEAL in the Netherlands or Bizum in Spain can increase conversion rates by making it easier for customers to pay. Explore Checkout.com’s payment method directory. 

Local acquiring

Local acquiring enables businesses to partner with a local acquiring bank or payment processor in the same country from which the payment card is issued. Local issuers are much more likely to approve transactions from local acquirers than via cross-border settlements because of higher trust, meaning your payments will have a higher chance of success. Cross-border payments are also more expensive due to currency conversion, cross-border settlement fees, and other hidden costs. 

There are also local tax regulations to comply with, which local acquirers will have covered, such as VAT for EU customers. Some markets, like the UK, include tax in the displayed price of items. In other markets, like the US, tax is added at the end or calculated during checkout. 

However, businesses face a clear challenge when it comes to local acquiring – usually, to partner with a local acquirer, you must have a legal entity set up in that country. This simply isn't feasible for businesses operating in multiple countries and regions. 

A global PSP with local acquiring licenses lets you expand without setting up legal entities in each new country. For example, Checkout.com’s French acquiring license enables EEA-wide payment processing for businesses with just one legal entity in an EEA member country. 

Local acquiring improves authorization rates, reduces costs, and simplifies compliance in international markets. 

Compliance

With different regions enforcing different regulations, payments compliance can be a headache. PCI-DSS is an international standard for protecting cardholder data during card transactions which all businesses must comply with. 

For any business operating in the EU, GDPR must be adhered to when handling customers’ personal and payment data. In the US, data privacy and protection laws differ state-by-state, but any reliable global or US-based PSP will ensure compliance across the board.

Processing recurring payments

Many digital goods and streaming businesses operate on a recurring billing cycle/ subscription-based model, which differs from regular payments. It’s important that these recurring payments can be processed without interruptions so that there are no hurdles in the experience causing customers to question their subscriptions. It also helps businesses stabilize their cash flow, eliminate late payments, save time and resources, and increase productivity. 

Here are a few ways to optimize for recurring payments:

• Ensure card-on-file details are valid to avoid payment errors, using tools such as Checkout.com’s Real-Time Account Updater 
• Implement automatic retries for failed payments to prevent interruptions and avoid customer churn
• Send reminders before charging for transparency 
• Offer different payment tiers to let customers choose the one that best fits their budget and preferences

Accepting recurring payments is crucial to the Financial Times’ business. Using Checkout.com’s Real-Time Account Updater to automatically update stored Mastercard and Visa card details when they change, the FT is able to prevent involuntary churn caused by expired card credentials. The FT also saves significant internal resources that would have been spent chasing customers to update their credentials manually. Discover more in the Financial Times case study.

Integrating smoothly

The easier a PSP’s solutions can integrate with your existing payment framework, the better. Any technical barriers can negatively impact your customer experience and transaction efficiency. 

PSPs with a reliable API allow you to take control of the entire payment lifecycle from one place, so you only have to manage one integration, putting less operational pressure on your business. 

A smooth integration will reduce payment processing errors and transaction times, and speed up the time it takes to launch anything new, such as payment methods. 

Both you and your customers will benefit from a smoother payment flow. Complicated checkouts and declined payments lead to high cart abandonment rates, which is antithetical to the success of digital goods or streaming businesses. 

While payment methods like Apple Pay, Venmo, and Revolut tend to be more popular among younger generations, traditional credit card payments are more popular with older generations. Customers who value security may prefer paying with digital wallets too. Make sure your target demographic’s preferences are covered. 

Optimizing for mobile

These days, everything must be optimized for mobile, payments included. It’s worth paying attention to the spending habits of different demographics through the lens of mobile specifically. Gen Z and Millennials convert more on mobile than their older counterparts, and for many consumers in emerging markets, smartphones are their main source of internet access. 

A large portion of digital goods and content is consumed on smartphones. If that’s where people use their digital goods products and services, they’re likely paying for them there too. To simplify the process, optimize the user experience (UX) design for mobile. Smartphone screen sizes are much smaller than tablets, laptops, and desktops, so use a responsive design that adjusts accordingly. A phone screen fits very little text and information, so reduce clutter by only showing what’s essential. 

Offer mobile-friendly payment methods such as Apple Pay and Google Pay, helping customers complete transactions in fewer steps. 

Use mobile-optimized input fields such as a numeric keyboard for credit card and CVV details. Implement real-time validation to provide instant feedback if the user enters incorrect details. 

Streamline checkout

One way of optimizing for mobile is streamlining your checkout. Auto-complete options are excellent for speeding up the payment process by allowing customers to use billing details saved from previous purchases. 

Network tokens also enable one-click payments. Tokenization securely saves card details to speed up the checkout process. Only collect essential information – don’t ask for an address where it isn’t necessary. Digital goods businesses that aren’t delivering products to a customer’s address may only require an email address and payment details. 

Offering guest checkout appeals to many customers who don’t want to create an account to buy a one-off digital product. It speeds up the purchase process and increases conversions. 

How Checkout.com can improve payments performance

If you’re a digital goods or streaming business looking to improve conversion rates, minimize cart abandonment, and provide an exceptional customer experience: optimize your payment performance across multiple touchpoints. You’ll achieve this, and drive more revenue, by offering multiple payment methods, streamlining the checkout process, and implementing robust security measures – to highlight just a few of the above strategies. 

Checkout.com’s teams are experts in partnering with digital goods and streaming businesses to bring the best outcomes, such as industry-leading acceptance rates and smooth-flowing recurring payments. Checkout.com can also support businesses by helping them answer vital questions like: what are the payments of tomorrow? With account-to-account payments, open banking, and variable recurring payments (VRP) all on the rise, Checkout.com is best positioned to help businesses take them on.