Why you may be paying more than you need to for digital subscriptions

Gorodenkoff/Shutterstock The way we watch TV, listen to music, order groceries and take photos has changed in the past decade or so. For many of us, all of these activities involve a monthly payment. Subscriptions have quietly become a major part of household spending across the world. But many people underestimate how much they actually pay. And there is evidence which suggests that the design of subscription services – combined with common human traits – can make these payments easy to overlook. In the UK, consumers spend around £26 billion a year subscribing to everything from digital media to cosmetics and coffee. (Around 69% of UK households subscribe to at least one video streaming service such as Netflix or Amazon Prime Video.) And a few small monthly payments can quickly add up. Data from Barclays bank suggests that individual consumers spend £50.60 on – so more than £600 a year. It also shows that spending on digital content and subscription services has increased by nearly 50% since 2020. In households where several people hold subscriptions, the combined spending can be considerably higher. The result is a subscription economy that is growing faster than many consumers realise. And one reason households underestimate their spending is that some subscriptions continue running even when people no longer use them. The UK government estimates that of the 155 million subscriptions currently active in the UK, nearly 10 million are unwanted – at a cost to consumers of £1.6 billion each year. The charity Citizens Advice has calculated that over £300 million a year is spent on subscriptions that people are not actually using, often because they automatically renewed after a free trial. In many cases the individual payments are small, which makes them easy to miss in a bank statement. Behavioural economics offers one explanation. Research shows that people tend to evaluate spending using what’s known as “mental accounting” – the tendency to treat small payments separately instead of thinking about how they add up overall. As a result, people group purchases into categories rather than looking at the total amount leaving their bank account. A £9.99 streaming subscription or a £4.99 app service may not feel significant on its own. But when several subscriptions accumulate, the combined cost can become substantial. Another factor is automatic renewal. Many services continue charging unless customers actively cancel. This interacts with what behavioural scientists call “status quo bias”, the tendency to stick with the default option. When cancelling requires effort or attention, people often postpone the decision and continue paying. Consumer groups have also raised concerns about so called subscription traps. These occur when people are unintentionally signed up to recurring payments or find it difficult to cancel them. It has been claimed that more than 20 million adults in the UK have signed up to a subscription without realising it and about 4.7 million people are still paying for one they did not knowingly sign up to. These cases often involve free trials that automatically convert into paid subscriptions or online sign up processes where the recurring payment is not clearly explained. Researchers studying digital interfaces have also identified design practices that make subscriptions easier to start than to cancel, sometimes described as “dark patterns” in online design. New rules The growing scale of the problem has attracted regulatory attention. The UK government has introduced measures aimed at tackling subscription traps, including clearer information about recurring payments and easier cancellation processes. A consultation is now taking place on how these rules will be implemented before they come fully into force. Unsubscribing is not so simple. Grustock/Shutterstock

The goal is to ensure that consumers understand the financial commitment they are entering when signing up to a subscription service. The new measures will probably help reduce some accidental subscriptions, particularly those created through unclear sign-up processes or free trials that automatically convert into paid plans. And it seems sensible to make sure that subscription contracts contain clearer information and easier cancellation rights to help consumers avoid unwanted recurring payments. But behavioural factors such as inertia and automatic renewal mean the problem may not disappear entirely. Even when cancellation is straightforward, consumers often delay reviewing small recurring payments, allowing subscriptions to continue. For households, digital spending often feels invisible. Subscriptions are typically spread across multiple platforms and paid automatically through bank cards or direct debits. Without a deliberate review of monthly statements, it can be difficult to see how much these payments add up to. Subscriptions can offer convenience and flexibility. But as the subscription economy continues to grow, it can also quietly increase household spending in ways that many consumers barely notice.

Erhan Kilincarslan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.