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Article 9 Jan 2024

How to Supercharge Your Online Trading Payments with Instant Payouts

online trading payments hero image for the blog of the same name.

From Robinhood and Plus500 to eToro and CMC Markets – investing is more accessible than ever. Yet, online trading payments themselves – and the wealth customers seek – still lag. As a result, consumers are losing out on crucial profits from fast-acting markets.

Worst still, investment platforms must also weigh cash flow needs with customer service quality, resulting in a complex balancing act. Thankfully, these days are at an end. 

In this article, we’re outlining the current problems with today’s online trading payments and how open banking technologies can offer a solution. In turn, you can ensure online trading payouts match the speed of the market and meet traders’ expectations for modern financial services. Read on to learn more.

Problem: What’s wrong with today’s online trading payments?

The problem with most online trading payments boils down to three factors: slow, costly, and unreliable. While the advertised standard is less, online trading payouts can take nearly two weeks to complete, with bank transfers often taking the longest. For example, Robinhood advises that bank transfers can take up to five days to process, with Plus500 claiming up to seven days and eToro advising up to a staggering 10 business days.

These time lags can be even longer if customers use third-party digital wallets, which add further steps to online trading payouts finally arriving in customer bank accounts. Online trading payments then face even more scrutiny from identity checks (regardless of whether customers are depositing or withdrawing funds), creating more costs and errors along the way.

Combined, customers struggle to build wealth since payouts take too long or fail too often from false security alerts and daily withdrawal limits. And so, innovative online trading platforms must consider new payment solutions to live up to their company vision. Namely, democratising market access and helping retail investors build wealth.

Crucially, since consumers are also more empowered than ever to share their (bad) experiences far and wide, online trading platforms need to act swiftly. Between social media, brand review sites, internet forums and simple word of mouth, reputations are hard won and easily lost.

Solution: How open banking can transform online trading payments

Open banking-based payment solutions have the potential to transform the online trading payments/payouts process. To see how here are five benefits up for grabs for forward-thinking and fast-acting online trading platforms:

1. Improve your online trading service

First and foremost, instant online trading payouts help you improve your trading service by enhancing customers’ liquidity.  Whether customers want to reinvest their earnings or make payments elsewhere after a withdrawal, you can help customers manage their finances more efficiently.

This is because instant payouts can drastically cut settlement times by avoiding intermediary banks, clearance times and time zone complications. Instead, money arrives in as little as ten seconds. So, customers can seize financial opportunities as they identify them. Equally, customers can mitigate market risk more effectively by managing their finances in near real-time. 

2. Attract the next generation of customers

Per the 2023 Global Payments Report, European consumers are particularly interested in alternative payment methods (APMs), including account-to-account (A2A) instant payments. This is especially true in key markets like Germany and the Netherlands, where adoption is highest. 

And so, by embedding open banking within your online trading service, you can attract and retain younger investors seeking quick and easy investment solutions.

A word of warning though, make sure to choose your payment processing partner carefully. While Europe is the home of open banking in many ways, its infrastructure still presents challenges. Given this, proprietary Instant Payments Networks (IPNs) offer more reliable and scalable solutions.

3. Boost your balance sheet

This liquidity benefit goes both ways. Open banking-based instant payments mean customers don’t have to wait as long for funds to reach their bank accounts. So, customers are incentivised to keep their funds in their trading accounts longer and only trigger withdrawals when needed. 

As a result, you can stabilise your liquidity and empower your growth ambitions with a healthier balance sheet of operating capital. So, you can realise your growth ambitions, whether you want to expand your services by investing in software development or exploring new markets.

4. Build a reputable brand

Another dividend from offering instant online trading payouts is that you can build trust with customers more effectively. Amid a scam epidemic and a struggling global economy, consumers are taking higher financial risks due to the cost of living crisis.

For instance, an analysis from Lloyds Bank found that scam victims lose around £8,500 on average. Unfortunately, the same data showed that younger investors (who are generally poorer anyway) have been heavily affected. 

Taken together, it’s clear consumers are keen to find a reliable online trading platform to support their financial ambitions, meaning strong customer relationships are vital. While payments play a part alongside the wider UX, their speed and convenience disproportionately shape customers’ long-term loyalty.

5. Improve your cybersecurity

Finally, A2A online trading payments come with mandatory strong customer authentication (SCA) during customer onboarding. This is where consumers validate their identity before their transactions can be approved. 

Multi-factor authentication processes like these (which use passwords, mobile devices, or biometric data like fingerprints) prevent unauthorised account access and identity fraud. Similarly, working directly with customer bank accounts can remove even more insecurities from third-party digital wallets. . And so, you can substantially lower the risk of online trading payouts and protect customer funds. 

Brite, in particular, delivers bank-level security as standard via the ISO 20022 framework, which allows you to use customers’ own bank details to verify transactions (with their permission, of course). Best of all, brokerage platforms can improve their tax compliance by evidencing the direct connection between online trading payments/payouts and specific user accounts. 

Stay ahead of online trading payments trends with Brite

Brite is a leading second-generation fintech based in Stockholm, Sweden. Our proprietary Instant Payment Network enables seamless money flows, even when open banking infrastructure lags. And so, you can give customers superior trading solutions via seamless online trading payouts to capitalise on the latest market moves.

With instant access to more than 3,800 banks in 26 European markets, we can help drive new growth in your business. To learn more about Brite and other global payment trends, get in touch today.

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