Zuora's stunning IPO was a victory for the entire subscription payments space, though new competitors and talk of a market bubble stalk the market.

The San Mateo, Calif.-based Zuora traded nearly 50% above its April 12 IPO price, doubling its market valuation in its first trading day to more than $2 billion. It has held close to its first-day closing price in the three trading days that followed. The performance was a surprise, given expected competitive pressure from Amazon, though the two companies have collaborated on technology in the past.

Of course, subscription payments are nothing new. The secret to disrupting this model — much like Uber's secret to disrupting the taxi market — is in the technology operating behind the scenes.

Chart: Recurring success

"The IPO is a huge validation for our industry," said Erich Litch, chief revenue officer at 2Checkout, which offers subscription payments among its products. "But the subscription economy is just one part of a complex customer buying cycle."

This market has expanded quickly as online content delivery has evolved. The subscription market has been expanding at a 200% yearly rate for most of the this decade. What had been a bastion of newspapers, magazines and gym memberships now covers a nearly full range of products, with movies, food, grooming supplies and clothing all being sold digitally for recurring payments—and more than 2,000 subscription businesses in the current market.

"It started with digital goods and services, but now moving even into physical goods, such as 'you don’t buy a washing machine, you buy a number of washes,' so firms that provide merchants the right tools to manage those subscriptions will do well," said Zil Bareisis, a senior analyst at Celent.

But the success masks a major threat. Most subscription billing programs are not very robust, nor do they offer a comprehensive range of merchants services, and the popularity of the subscription billing market is attracting merchant acquirers that vary wildly in the range of services they offer. There's also concern about a bubble of subscription products flooding the market, creating a threat of consolidation.

Stripe got into the market this month, focusing on small to midsize business. Braintree and its parent company PayPal offer subscription billing software to third-party developers. And companies such Oracle, SAP Hybris and Vindicia plan to add merchant services to address other needs, according to Forrester Research. 2Checkout has expanded following its acquisition by Avangate, offering hosted checkout, a payments API and security in addition to recurring payments. Zuora has expanded its range to includes links to CRM and ERP systems.

Zuora's core is a software as a service platform that supports subscription billing, payments, invoices, pricing, product catalogs and taxation. Its clients include the Financial Times, The Guardian, Symantec and HBO.

Subscription billing providers have lots of challenges to stay competitive. The technology upgrades are complex, requiring the capabilities to add a payment and service interface to new channels and delivery models, such as tying web-enabled refrigerators to food subscription services as these products enter the market. Pricing and billing models are also constantly changing as sales and marketing strategies evolve.

In this environment, companies need the agility to sell both subscriptions and one-time sales, Litch said, "and value the simplicity of this type of solution and the additional benefits that come with it, such as time to market, agility, revenue uplift opportunities and flexibility to handle a number of business challenges."

Zuora wouldn't comment for this story, but sent a statement tied to its SEC filing stating: "Thousands of businesses are just beginning to take advantage of long-term customer relationships to fuel their growth. And they are realizing that the steady, predictable revenue generated from the subscription model is imperative to their future success. But perhaps more importantly, companies are starting to truly discover who their customers are."

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