Kill costs & boost OTT revenues with payments using Merchant

Enzo Bermond | Tue Apr 02 2024

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As the OTT landscape matures, more prominent players are gathering increased market share and focusing on margin optimization. With that, profitability is taking center stage in broadcaster agendas. This makes boosting both acquisition and retention critical to improving the bottom line. Interestingly, payment processing is where a significant part of subscriber retention takes place, yet payments remain a “black box” for broadcasters.

OTT Payments: A complex space & black box for broadcasters

OTT payment processing is a complex and tricky space that is less understood and can often be overwhelming for even the most seasoned broadcasters. In addition to optimizing checkout for conversions, payments also involve handling several operational aspects, ranging across:

  • Tax risks and complexities
  • Compliance challenges and liability
  • Extending local payment methods
  • Volatile fees
  • Chargeback management

While handling these aspects simultaneously is tricky and cumbersome, there’s more. Broadcasters commonly lack clarity regarding the associated fees, taxes, and refusals at the payment stage. This significantly impacts their costs and profitability

With a better grasp of payments and checkout optimization, broadcasters can boost acquisition, overcome involuntary churn, and raise retention rates. Furthermore, there’s a massive opportunity to curtail costs and grow the bottom line in payments. Merchant steps in here to cater to these twin objectives while helping broadcasters reduce costs and increase revenues. 


What is Merchant 

Merchant is a subscriber billing and tax management solution tailor-made for OTT broadcasters.

It empowers broadcasters to monetize content easily, both locally and across borders. With it, D2C streaming broadcasters can create secure and optimized payment experiences for their subscribers. This includes providing preferred payment methods and one-click registration and payments to end users. Moreover, Merchant integrates easily with multiple platforms and eliminates to individually operate a tool for chargeback management, payment processing, and so on. With this, it significantly simplifies a broadcaster’s operational workflow. It also provides complete access to analytics and information, eliminating ambiguity. Thus, it makes an excellent choice to boost ROI by improving revenue and reducing costs.


Examining Merchant as a Revenue Enabler 

Smooth payment processes and optimized payment settings are critical in subscriber retention and preserving revenues. Broadcasters often lose revenue opportunities due to events like payment failures due to lost or expired credit cards or insufficient funds. Sometimes, risk rules aren’t adapted for payments. For example, if the person transacting is in a different country from where the credit card is issued and is a fraudster. On the other hand, if fraudulent transactions get authorized, they lead to chargebacks and refunds, draining out the revenue. Merchant addresses such instances of involuntary churn, i.e., subscriber churn due to payment failure. 

Merchant’s clients have benefited from the following: 

  • Reduction in involuntary churn to 1.3%
  • Average chargeback rate of 0.5% 
  • Up to 25% uplift in authorization rate
  • Up to 65% uplift in recovery rate

With expertise in OTT payments, Merchant makes achieving results like these possible with features such as: 

  • Smart retry schedule: This includes optimized dunning settings to retry payment collection at specific days in the month when a subscriber is most likely to have received his payroll.
  • Network Token Optimization: This ensures tokens replace credit card details when a card is expired or lost. With this, broadcasters can still process payments successfully from subscribers with updated cards. Merchant’s NTO tool generates a 4% uplift in payment authorization rate.
  • Systematic risk rule improvements: These are implemented based on 12 years of historical subscriber data and behavioral analysis. It results in a better understanding of fraud patterns, issuers’ authorization, and regional specificities.

That’s not all. Merchant is not just a powerful revenue enabler, but also a cost killer.


Examining Merchant as a Cost Killer

As an external Merchant of Record (MoR), Merchant doubles as an excellent efficiency booster and cost killer. Cleeng’s Merchant is legally responsible for processing and managing customer transactions, including payment acceptance, tax collection, and compliance with relevant regulations. 

Leveraging Merchant as an external MoR provides broadcasters with a unified platform with affordable pricing that covers the entire payment flow. It enables legitimate users to pay automatically without manual retries. It allows them to do so from wherever they are and however they want. At the same time, Merchant also handles chargebacks and refunds and reduces fraud by blocking illegitimate payments with its risk rules. It also handles taxes and other regulatory compliances, simplifying operations. All these advantages come with feasible pricing and raise cost efficiency remarkably.

What’s the cost?

Merchant’s fee as an MoR is payable as a small fraction of the transaction processed. This fixed, transparent pricing includes all costs of ownership that would otherwise be much higher with other payment processing players. There are no volatile fees, hidden costs, salaries to pay professionals for tax, compliances, upfront infrastructure costs. Besides this, you don’t even have to deal with unpleasant occurrences like chargebacks.  Overall, this is a far superior and more resource-efficient solution to using PSPs (Payment Services Providers) or developing a full-blown payment infrastructure in-house. 

All in all, between 10% and 40% of the total cost of ownership (depending on revenue size) is saved with Merchant vs. using a PSP or an in-house solution.


Bottom Line: Leverage payments to your advantage with Merchant

Payments are a key influencer in boosting acquisition and retention in the D2C streaming space. Despite its critical role, payments remain a black box, with little broadcaster clarity around the hidden costs and the ways it leads to revenue leakages. Leveraging a specialized subscriber billing and tax management solution tailor-made for OTT broadcasters is the easiest way to streamline payments for OTT success. 

Want to fix revenue leakages, cut costs, and boost ROI with Merchant?

The Cleeng team is exhibiting at the NAB Show. We’ll be sharing secrets to help you streamline payments and boost ROI. 

Meet our experts to future-proof your streaming business.

Book a time at NAB to discuss Merchant!

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