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19 Dec 2022 Press

What has Open Banking meant for payments from a merchant perspective?

Open Banking has given merchants more choice and the ability to differentiate themselves from those using traditional payment methods. It facilitates the use of new and innovative payment methods that are faster, more secure, and provide a better customer experience. As a result, merchants who adopt these new payment methods can get ahead of the competition and create a more desirable consumer proposition.

What are the biggest benefits for merchants when compared to existing payment methods?

Open Banking has driven innovation in the payments landscape and opened up superior payment methods that meet the needs of today’s consumers.

For instance, account-to-account (A2A) payments can offer significant benefits for merchants. Firstly, compared to card payments and the complicated pricing models connected to with this method, the cost of A2A payments is lower and more predictable.

Furthermore, it is easy for businesses to integrate and create a better cash flow, which is a significant factor for consideration, particularly during periods of economic uncertainty.

On top of that, A2A payments make the merchant proposition more interesting for consumers due to their security, speed, and ease of use. These factors are high on the list for consumer preference; therefore, they create better customer satisfaction and can help to increase brand loyalty.

How has customer experience influenced payment innovation in the wake of Open Banking?

The consumer desire for convenience has had a significant impact on payment innovation, asking for quick, secure, simple payment methods from merchants. There are a number of Open Banking-powered payment methods that illustrate this impact well.

Consumers have made it clear that they require methods that make the payment process quick and easy. The Open Banking- benefits A2A payment method is crafted with consumer convenience in mind. All you need is a bank account, and users do not need to complete difficult sign-up forms or create more passwords. All they need is the top-of-mind information they would use to log in to their banking app, making the process very simple.

Another consumer preference that we have seen influence payment innovation over the past few years is the desire to automate processes in order to make them easier. Consequently, we have seen the rise of Open Banking-powered recurring payments products entering the market to offer an automated/recurrent approach to subscription payments for example. The solutions allow monthly payments of a fixed amount to be sent directly from a customer’s account, without the need for updating or changing card details. This development is particularly valuable for people with long-term subscriptions who would currently face card expiry and hard detail re-entry every few years.

Where do Open Banking-based payments stand to make the most difference in the near future?

One of the most promising applications for Open Banking-based benefits in the near future is instant payments. With this technology, businesses and consumers can transfer money to each other in real time, without having to wait for the funds to clear through a bank. This could be particularly good for small companies, which often face days or even weeks for payments from their customers to clear. Therefore, instant payments stand to have a big impact on their cash flow management, which is timely given the current financial climate.

In the retail setting, retailers are currently under pressure like never before to provide their customers with convenient and personalised payment experiences. Open Banking payments can enable a particularly easy user experience on mobile, for example, for in-app payments across multiple verticals. Therefore, this is likely to be another area where Open Banking-based payments stand to make the most difference in the shorter term, in sectors where we already see higher interest, such as retail, ecommerce, banking/finance, lending, marketplaces, media, entertainment, and telecoms.