DebitSuccess touts subscription economy, targets the US and India

Having acquired UK-based payments platform DFC, New Zealand’s DebitSuccess promises US and Indian market entries.
Written by Rob O'Neill, Contributor on

In tough times, traditional billing has a fatal flaw – it too often forces the consumer to make a “value decision” about whether a product or service is worth the cost.

That, perhaps more than anything, is driving what has been dubbed the “subscription economy”, where goods and services are paid for by subscription rather than in a lump sum.

For New Zealand-based subscription payments platform DebitSuccess, already a mature company in Australasian markets managing around $1.2 billion in payments, the global shift to subscription payment is prompting a rapid global expansion.

CEO-04 (1)
Craig Marshall

In December, the company bought UK payments provider DFC to provide what DebitSuccess chief executive Craig Marshall describes as a “beachhead” into Europe.

Marshall said DFC already has its own platform and customer base. Both DebitSuccess’s billing engine and DFC’s systems will continue to be used, with “cross pollination between the two growing over time.

But now DebitSuccess is eyeing an even bigger market – the US. Marshall said the company would open a US office on the US west coast by the end of the year.

Subscriptions are changing the nature of today’s business, Marshall said.

“There’s not much time and lots of pressure on every dollar we earn,” he said. Organisations such as golf clubs and gyms, markets out of which DebitSuccess was born, increasingly understand they can’t send out one large yearly bill without risking dangerous levels of customer churn.

Breaking that up into weekly or monthly payments makes buying easier for the customer and can even improve business cash flow.

That subscription model is now being applied to a diverse range of industries. One Debit Success customer, for instance, is home ventilation provider HRV, which found providing a subscription offer helped overcome objections from customers about the high –upfront cost of ventilation systems.

Easy access to online subscription systems such as DebitSuccess’s is also potentially disruptive, encouraging new business start-ups in all sorts of areas.

In New Zealand university town Dunedin, for instance, two students launched a meat delivery business for their peers in 2012. Students could subscribe to MeatMail online and have their memberships and payments automatically processed.

MeatMail now operates in Christchurch and Wellington as well and aims to be able to service 90% of New Zealand’s urban population areas by the end of the year.

Marshall said all sorts of businesses are adopting subscription payments, including doctors and dentists, insurers, eyeglass companies and cosmetics suppliers.

“Instalments work,” he said. “If you are not doing it you have to be careful you are not missing out on a big bunch of business.”

Subscriptions can not only increase revenues, but can deepen the customer relationship and loyalty, he said.

DebitSuccess is owned by Transaction Services Group which in turn is owned by private equity firms Direct Capital and Bolton Equities. Marshall said the owners “see the vision” and the offshore opportunity and are in for the long term.

DFC, he said, had a strong management structure and relationships.

“We wouldn’t want to change what is a very successful formula. It’s an extremely good fit and is experiencing double digit growth.”

The buyout was the culmination of a year of planning, Marshall said. Further buys are possible, but some markets will be targeted with a direct launch of the DebitSuccess platform.

The DFC acquisition took DebitSuccess from around 180 staff to over 220. Over 80% of those staff are based in New Zealand, but more than half of the company’s revenue now comes from offshore. In turn, 70% of that offshore income is from Australia and 10% from the UK.

“North America and Asia are where we see our services getting real traction,” Marshall said.

India is a priority target. A burgeoning middle class and a large English-speaking population make it an attractive proposition, Marshall said. DebitSuccess is aiming to set up its own platform there and launch a “greenfields” office rather than enter by acquisition.

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